Shoppers Stop under pressure to scale up its online sales

Ever since Amazon.com and others started shipping items ranging from lingerie to iPads, Shoppers Stop, India’s oldest department chain store, has been under pressure to scale up its online sales.

That necessity is felt even more acutely now as it seeks to revive profit growth. Managing director Govind Shrikhande is looking at a combination of e-commerce plus physical stores to boost margins as rising land prices drive up rents. Online sales will account for 20 per cent of Shoppers Stop’s total by 2020, compared with less than 1 per cent now, he said.

“Physical retail space growth is going to be slightly challenged for sure, which really means we will have to drive our online business harder,” he said. “Not many are going to get into the mall business because of higher realty costs.”

The old-economy Indian retailer that started in 1991 even before any web browser became available but is now at a crossroads as more buyers in the country prefer to shop from the comfort of their homes. Gartner says total online sales will grow 70 per cent to $6 billion this year.

The Mumbai-based company, which doubled the number of stores in the last three years to 72, is slowing the pace of that expansion and will add 20 more in the next three years, Shrikhande said.

Online sales will account for 10 percent of total in three years, Shrikhande said, adding the company will become debt free once its Hypercity unit starts reporting profit in about 24 months.