Department Stores

INTRODUCTION A departmental store is a retail establishment which specializes in selling a wide range of products without a single predominant merchandise line. Department stores usually sell products including apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelry, toys, and sporting goods. In our country, departmental stores have emerged as a major and prominently-recognized organized retailing channel, especially for Indian and international fashion brands, targeted at the upper middle and higher income segments. Apparel is the most important product category sold by these retailers in India, accounting for nearly two-thirds of their sales. The major players in this segment in India include Shoppers' Stop, Lifestyle, Pantaloons, Westside, Piramyd and Globus.

Source: Indian Retail Report, 2007

MAJOR PLAYERS •

EBONY

Ebony Retail Holdings Ltd., a part of the DS Group, is a Delhi-based retailer with seven stores in seven North Indian cities spread across 1,50,000 sq.ft of total retail space. Having started off with a store in New Delhi in 1994, Ebony has expanded its presence in the years since. The chain also has an online B2C shopping portal (www.Ebonyclick.com) that offers customers a non-store retail format to shop from. In 2004 Ebony had nine operational stores in five cities, covering 167,000 sq.ft of retail space. A few of its outlets were probably closed down and new outlets opened in two more cities since 2004. The sudden and sharp rise in competition in the Indian retail sector at present seems to have taken this department store chain unawares. They have not expanded their retail operations in any major way in the last couple of years. Ebony clocked a turnover of Rs.85 crore in 200405. Sales realisation/sq.ft per annum stood at Rs.6,095 in 2005, an increase of eight per cent over the previous financial year. The average transaction value in 2005 was Rs.l, 1 02, up from Rs.l,009 in the previous fiscal. Ebony sells menswear, womenswear, lingerie, kidswear, home fashion and accessories, cosmetics, perfumes, books and music, personal care and cosmetics, jewellery and luggage. The store's private label, ETC, contributed towards seven per cent of the chain's total apparel sales in 2005. In its efforts to facilitate customers, Ebony runs a customer loyalty programme, Ebony Elite Club, which has approximately 52,000 members (up from 28,000 members in 2004-05.

It has also introduced a designerwear section, Studio Ivory, with collections for a middle-income target segment. The department chain also runs the concept bookstore, Wordsworth, which sells music too. •

GLOBUS

The Mumbai-based Rajan Raheja Group launched its first Globus department store in January 1998 at Indore and since then it has become a 20-outlet strong chain with a presence in 14 cities. Apart from the Globus department stores, the chain also runs a second retail format with Globus 2, the factory outlet format. Globus' flagship store was launched in Mumbai in November 2001. The department store chain's customer loyalty programme is called the Globus Privilege Club card programme. In 2004, the chain had seven outlets in five cities with a total space of 1,39,658 sq.ft by 2005 their retail presence had reached eight cities with 12 stores and a total retail space of 1,94,610 sq.ft. Today the chain runs 20 outlets in 14 cities with a total retail space of 2,90,000 sq.ft. Retail expansion plans include having 30 outlets by 2007, 100 by 2008, and taking it to 120 by 2010 with a total retail space of 12,40,000 sq.ft. The chain's in-store labels apparel labels, Globus and F21, contribute about 35 per cent towards total retail sales. Frequent consumer promotions during peak sales periods like traditional festive seasons bring in 25-30 per cent increase in average sales. From a retail turnover of Rs.82.0 1

crore in 2004-05 (and Rs.l 09 crore by 2005-06), the company targets to achieve a turnover of Rs.180 crore in the current fiscal. •

LIFESTYLE

The Dubai-based Landmark Group'sdepartment store chain, Lifestyle, started operations in India in 1998. It currently operates 19 Lifestyle departmental stores in nine cities with a total retail space of 7,45,711 sq. ft. In 2004 the chain had seven stores in five cities with a space of 2,68,436 sq.ft, which grew to 10 stores in the same five cities with an increased retail space of 3,41 ,587 sq.ft. By 2010 they plan to have 41 stores in 16 cities with a combined retail space of 19,33,931 sq.ft. The average store size of a Lifestyle department store is 46,000 sq.ft, the largest of them being the Chennai store with an area of 75,000 sq.ft. Lifestyle now plans to majorly expand into the tier-II cities in the country. Ginger, Baby Doll and JRS Active are the three major private labels of Lifestyle, besides segment-specific brands like 2xtremz for women and Juniors for infants. These private labels contribute approximately towards 10 per cent to the total revenue. Its customer loyalty programme is called The Inner Circle, which contributes 40 per cent to total sales. Each of the stores has a Coffee Island managed by Qwiky's. Lifestyle International has announced investments to the tune of Rs.400 crore in the next five years to fund its expansion in India. This includes plans to bring in its concept stores into the country, including the Max Hypermarkets and Lifestyle Centres. The Max chain of value stores and Home Centres have already been launched. Landmark is also working on a Lifestyle Centre

store to be opened in Bangalore late next year, which will include a Home Centre and a high value food retail store. Lifestyle International, with expertise in retail chains specializing in fashion and home furnishings, has also set up a new division for the international brands business for apparel labels such as Bossini and Kappa. The department chain's profitability grew by 70 per cent in 2005; while realisation of sales per sq.ft stood at Rs.7,187 per annum. The total turnover of the department store chain stood at Rs.306 crore in 2004-05 (Rs.340 crore in 2005-06), with targets of reaching Rs.525 crore in the current fiscal and Rs.l ,500 crore by 2010. •

PANTALOONS

Back in 1987, India's first branded trouserscompany, Manzwear Pvt Ltd, was launched by Future Group CEO, Kishore Biyani. Later the company's name was changed to Pantaloon Retail (India) Ltd in 1999. Pantaloons, the department store venture of Pantaloon Retail, operated 21 outlets in 15 cities with a total retail space of 4,85,000 sq.ft in 2005-06, with plans to open a total of 42 outlets by 2007. From 12 outlets in nine cities with a retail space of 2,88,000 sq.ft in 2004, the Pantaloons chain targets to launch 80 stores in 30 cities with a total retail space of20,00,000 sq.ft by 2010. Pantaloons has positioned itself as an affordable fashion retail outlet chain and is now beginning to focus on the premium-end of the market. Pantaloons' loyalty club membership grew to 2,10,000 in 2005 from 1,40,000 in the previous year; loyalty club members contribute around 38 per cent to the total sales. The chain's average sales/sq.ft per annum stood at Rs.8,900 in 2005. The chain recorded a turnover ofRs.213 crore in 200304, and targets to achieve Rs.l,500 crore by 2010.

Mumbai-based Piramal Groups' Piramyd Retail & Merchandising Pvt Ltd, currently operates with 11 stores in eight cities with a total retail space of 6,60,000 sq.ft. In 2004 Piramyd had three stores in three cities with 1,80,000 sq.ft of retail space; by 2010 the group plans on operating 30 stores in 14 cities with a total retail space of 18,00,000 sq.ft. The latest outlet was launched in Jaipur covering 50,000 sq.ft of retail space. Other tier-II cities that it retails through include Ahmedabad, Nagpur and Pune. Piramyd offers branded merchandise in men's apparel, ladies fashion, unisex casuals, kids apparel and toys, apparel accessories, footwear, perfumes and cosmetics. The chain operates a loyalty programme and offers members with privileges like discount offers, home delivery, home shopping, tickets for movie premieres, plays or music concerts, ete. As of 2004-05, sales realisation per sq.ft stood at Rs.5,500 per annum; while sales realised during 2003-04 was Rs.80 crore, an increase of about 43 per cent over the last financial year.

•

SHOPPERS'STOP

Shopper's Stop Ltd from the K Raheja Group, opened its first Shoppers' Stop department store in Mumbai in 1991; and over the last 16 years has established itself as the largest player in the department store category in India. From 16 stores in nine cities with an area of7,52,848 sq.ft, the chain today operates 26 outlets in 12 cities with a total retail space of 15,07,126 sq.ft, with plans to have 34 stores by 2007. By 2010 Shoppers' Stop plans to have nearly 50 outlets in 20 cities across a total retail space of 36,26,899 sq.ft. Shoppers' Stop was the first retailer in the country to have Bar-coded garments, Co-branded credit card; and Retail ERP Shoppers' Stop, unlike Pantaloon and Westside where the chunk of sales are driven by private labels, houses a large number of external brands. The chain is today the largest retailer for popular brands like Levi's Strauss, Pepe, Arrow, Zodiac, Ray-Ban, Swatch, ete. The launch of Buzz (the designer pret wear section) and Kasba by Raghavendra Rathore were some new additions. Some of the chain's private labels include Stop, Life, Vettorio Fratini, Haute Curry, indi-vidual and Acropolis, sales from which grew by 44 per cent in 2005, over the previous year. Shoppers' Stop customer loyalty programme, First Citizen's Club has approximately 4,40,000 members, who contribute to over 50 per cent of the total sales. Shoppers' Stop, which has tied up with Mothercare, the global brand for infants and children, will be opening 40 Mothercare outlets over the next five years. It currently has 11 Mothercare outlets. The bookstore section, Crossword; as well as food and beverages outlets such as Cafe

Brio and Desi Cafe have also been launched within the department stores. In 2006, Shopper's Stop Ltd signed a MoU with UK-based Nuance Group, a leading airport retailing company, for setting up a 50:50 joint venture to enter the duty-free retail market at Indian airports. Shoppers' Stop registered sales worth Rs.5,071 crore in 2004-05, with an increased turnover of Rs.6,775 crore in 2005-06. The chain is targeting a turnover of Rs.750-850 crore by 2008. Sales realisation per sq.ft per annum stands at around Rs.6,903; while the average transaction value is approximately Rs.1 ,278. Apparel Brands for Women ✔ ELLIZA DONATEIN

✔ PROVOGUE

✔ ENAMOR

✔ SEPIA

✔ HAUTE CURRY

✔ SLEEP-INS(CONSG)

✔ KASHISH

✔ STOP

✔ KRAUS

✔ SWEETDREAMS

✔ LEE

✔ TRIUMPH

✔ LIFE ✔ LOVABLE Accessory Brands for Women ✔ BLUE AND BLUES

✔ IMAGES

✔ CASIO

✔ INFINITY

✔ CROSS

✔ LIFE

✔ DKNY

✔ PIERRE CARDIN

✔ ESPRIT

✔ POLAROID

✔ FASTRACK

✔ PUSH AND SHOVE

✔ FERRARI

✔ RAY BAN

✔ FOSSIL

✔ SAMBENA

✔ GIORDANO

✔ SHEAFFER

✔ HIDESIGN

✔ SKAGEN

✔ SUNWAYS

✔ VAN HEUSEN

✔ TITAN

✔ XYLYS

✔ TOMMY HILFIGER

✔ ZAVERI

Apparel Brands for Men ✔ ACROPOLIS

✔ PARK AVENUE

✔ ALLEN SOLLY

✔ PEPE

✔ ARROW

✔ PROVOGUE

✔ AUSTIN REED

✔ SHAPES

✔ BLACKBERRYS

✔ SPYKAR

✔ DOCKERS

✔ STOP

✔ GIOVANI

✔ STORI

✔ INDIAN TERRAIN

✔ TANTRA

✔ JOCKEY

✔ TOMMY HILFIGER

✔ JUST NATURAL

✔ VAN HEUSEN

✔ KASHISH

✔ VETTORIO FRATINI

✔ LEE

✔ WARRIOR

✔ LIFE

✔ WRANGLER

✔ LOUIS PHILLIPE

✔ ZODIAC

✔ MARIO ZEGNOTI ✔ MUFTI Frangrance Brands ✔ DKNY

✔ CALVIN KLEIN

✔ DAVIDOFF

✔ FERRAGAMO

✔ BVLGARI

✔ NAUTICA

✔ ADIDAS

✔ RALPH LAUREN

✔ ARAMIS Cosmetics

✔ CHAMBOR

✔ L’OREAL

✔ MAYBELLINE Home segment ✔ ✔ CORELLE ✔ IVY ✔ MAGPPIE ✔ ARTD’INOX ✔ SERVEWELL ✔ PROGRESSIVE INTNL FNS

Watch brands ✔ CASIO

✔ PIERRE CARDIN

✔ DKNY

✔ POLICE

✔ ESPRIT

✔ SKAGEN

✔ FASTRACK

✔ TITAN

✔ FOSSIL

✔ TOMMY HILFIGER

✔ GIORDANO ✔ KENNETH COLE •

WESTSIDE

Westside, the lifestyle store by the Tata’s that caters to the upper middle class segment, has built

its customer base through its USP of affordable style. There are 23 Westside stores in 14 cities Price is crucial in the Indian retail scenario and Westside’s focus on this factor is part of the reason. If customers are looking for style, they will probably go to Westside and buy something for Rs 400 rather than go to Mango (a UK-based chain). Another issue is convenience of parking space. Almost everyone in major metros has a car and doesn’t want to go through the hassle of finding parking space. Westside has worked on moulding its outlets along the snazzy, well-designed, hands-on ambiences and coffee shop displays typical of Lacoste, Nike and Switch retail stores in the West, and personalized its offerings by offering style and accessory guides to its customers. Westside houses a collection of the finest merchandise for the entire family. There are spacious shopping areas for the various sections - women’s wear, men’s wear and the children's and the household sections occupy the floor level. Café West from the Taj group on a level above is an ideal place for a coffee break on a shopping spree. Westside offers customers the very best and latest international shopping experience. Westside has a team of dedicated stylists, merchandisers, helpful and courteous store staff and talented in-house designers. The combination of the very latest in-style fashion with affordability is highlighted in all of Westside’s merchandise. Westside stands out from the competition for a variety of reasons. One is that a majority of the brands the chain stocks and sells are its own, unlike retailers who store multiple labels. About 90 per cent of Westside’s offerings are home-grown, and they cater to different customer segments. The other 10 per cent includes toys, cosmetics and lingerie. However, recently Westside has recently expanded its range of merchandise by offering outfits from some of India’s best-known fashion designers, among them Wendell Rodericks, Anita Dongre, Krishna Mehta and Mona Pali. This is an interesting marketing shift, since it means moving away from the chain’s only-our-own-brands concept. The designers create collections exclusively for the store, and the prices for these are hardly eye-popping (the Wendell Rodericks range starts at Rs 600). Westside has managed to obtain this exclusivity at a lower price because it has multiple outlets.

•

CLUBWEST

It is an extraordinary rewards program designed exclusively for Westside regulars. It is a two-tier program, which comprises Clubwest Classic and Clubwest Gold. A purchase of Rs 2000 on the same day entitles you to a complimentary membership into Clubwest Classic. Alternately, you can enroll by paying a nominal one-time fee of Rs 150. A purchase of Rs 5000 on the same day entitles you to a complimentary membership into Clubwest Gold. Earn points every time you shop at Westside. These points can be exchanged against subsequent purchases made in the store. A dedicated Clubwest desk for a member's assistance is at each of the stores. There are exclusive shopping hours only for members during sales. Customers also have unprecedented access to a host of privileges and services through their exclusive tie-ups from time to time. They provide advance intimation of all in-store promotions and special offers through direct mailers. Also Special discounts on dining at select restaurants round the year.

Once a store enters a good catchment area, its competition loses that advantage. Trent would agree: When Westside first entered Mumbai in 2000, it opened shop in elite south Mumbai. At the time, the suburbs were ruled out because Shoppers' Stop cast a long shadow over the western suburbs. And even when Westside finally moved northwards into Andheri (where the first Shoppers' Stop outlet is located), in end-2004, it chose Link Road, which is away from Stop's line of vision. Being a quick mover and expanding fast brings in another advantage – of size. And size brings bargaining muscle and, hence, economies in sourcing. During 2005-06, the company witnessed a rapid expansion with the opening of six Westside stores across the country. From 16 outlets in 10 cities across 2,20,000 sq.ft of space, the chain today runs 23 stores with a total retail space of 5,50,000 sq. ft. Westside was one of the first retail companies to position itself as a 100 per cent private label retail store. Its in-house brands include Too Fast For You, Richmond, Urban Angels, etc, besides the store brand Westside and Westsport. The contribution from these private labels is to the tune of respective segments. SHOPPER’S LIFESTYLE GLOBUS WESTSIDE PANTALOONS Store experience Merchandise Sales Personnel Billing Packaging

STOP 76 67 62 64 58

68 51 57 51 58

68 56 58 57 59

70 70 66 63 56

65 52 55 47 51

Additional Service 54 57 54 62 50 Schemes & 57 49 54 53 51 Promotions Loyalty 3317 29 3917 4025 6313 Programmes Advertisements & 57 52 52 45 49 Communication All figures are in percentages; Superscript: Percentage of people who are unhappy in these parameters (Source: The Marketing White Book, 2007-2008)

CONSUMER BEHAVIOR The rise of departmental stores can be attributed to changing demographics. Branded apparels form the strength of departmental stores and we will see how demographics affect their purchase and challenges the departmental stores face. Today, brands have started shaping buying behavior. A large young working population with a median age of 24 years; growing numbers of nuclear families in urban areas; increasing workingwomen population and emerging opportunities in the services sector have increased the average consumer spend on branded clothing. Industry experts believe that apparel sales in retail stores posted a growth of between 25-30 per cent in 2003 and according to an estimate by McKinsey, the branded apparel market—is now worth nearly $ 1 billion. Now, across metros, apparel buying is the second biggest consumption after food products. Without question, the consumer boom is being driven by a new openness about using credit cards. Clothing, along with shopping for jewellery and eating out, contribute 45 per cent to credit card spends, up from 21 per cent a year ago. The influence of fashion Clearly, fashion has also played an important role in shaping apparel consumerism. As lifestyles change, fashion in India is becoming more stratified, as in the West. Technology, ideas and lifestyles are moving concurrently, and quickly. Companies and brands that offered monotonous, mundane products for years have now tripled their product ranges and new appealing shapes and forms are being launched each season. The lure of foreign labels The boom in domestic apparel, nevertheless, tells only part of the story. India has huge potential as a market for foreign clothing, given its large population and growing household incomes. A few significant foreign players—such as Levi Strauss, Benetton and Lacoste—have been selling their branded apparel in India for a number of years. But now, just like their Indian counterparts,

global apparel brands are setting up their own apparel outlets, instead of just selling through departmental stores. For the purpose of understanding consumer behavior towards the major business of departmental stores i.e. apparels we have broken the population into four groups. We have taken into consideration their apparel buying behavior in terms of purchase frequency, spending, outlets where the buying occurs, distance they are willing to travel and their loyalty towards apparel brand outlets. The apparels for this understanding are categorized as western for this understanding are categorized as western formals, western casuals, ethnic wear and fabrics. The four groups of consumers are:  Playful Pretenders (12-20 years of age)  Corporate Climbers (21-30 years of age)  Cautious Planners (31-50 years of age)

 Home Makers

 PLAYFUL PRETENDERS

Format

Purchased from Small shops selling local brands MBOs EBOs Large department stores Location of the store Popular, big shopping market Local neighbourhood/colony market Markets popular for selling that product Shopping malls Distance from home Upto 1 km 1.1-2 kms 2.1-5 kms More than 5 kms All figures in percent

Wester n formal s

Western casuals

Ethnic wear

39

40

42

26 25 10

25 23 10

26 18 10

51

50

43

34

37

42

12

9

11

5

5

4

26 28 35 12

27 27 33 13

32 31 27 9

Loyalty to the store

% who say I buy only from one or few shops that I like/trust If I don’t find a brand at my shop, I buy some other brand from the same shop All figures in percent

Western formals 52

Western casuals 52

Ethnic wear 51

Fabric

37

34

29

34

47

 CORPORATE CLIMBERS

Format

Wester n formal s

Purchased from Small shops selling local brands MBOs EBOs Large department stores Location of the store Popular, big shopping market Local neighbourhood/colo ny market Markets popular for selling that product Shopping malls Distance from home Upto 1 km 1.1-2 kms 2.1-5 kms More than 5 kms All figures in percent

Wester n casuals

Ethni c wear

Fabric

37

35

43

47

29 25 8

31 23 7

25 19 8

26 20 5

53

51

58

44

34

37

39

46

7

8

4

7

7

8

4

8

29 29 28 14

31 28 27 13

34 31 25 10

39 27 24 10

% who say I buy only from one or few shops that I like/trust If I don’t find a brand at my shop, I buy some other brand from the same shop All figures in percent Loyalty to the store

Western formals 46

Western casuals 48

Ethnic wear 44

Fabric

36

33

34

31

45

 CAUTIOUS PLANNERS

Format

Wester n formal s

Purchased from Small shops selling local brands MBOs EBOs Large department stores Location of the store Popular, big shopping market Local neighbourhood/colo ny market Markets popular for selling that product Shopping malls Distance from home Upto 1 km 1.1-2 kms 2.1-5 kms More than 5 kms All figures in percent

Wester n casuals

Ethni c wear

Fabric

38

35

41

45

39 24 10

30 23 11

28 21 9

27 20 5

45

44

48

38

41

42

40

51

8

7

4

7

7

7

6

4

33 28 30 10

36 28 25 11

36 33 21 10

39 30 22 9

Loyalty to the store % who say I buy only from one or few shops that I like/trust If I don’t find a brand at my shop, I buy some other brand from the same shop All figures in percent

Western formals 49

Western casuals 52

Ethnic wear 46

Fabric

37

32

30

33

45

 HOME MAKERS

Format

Wester n formal s

Purchased from Small shops selling local brands MBOs EBOs Large department stores Location of the store Popular, big shopping market Local neighbourhood/colo ny market Markets popular for selling that product Shopping malls Distance from home Upto 1 km 1.1-2 kms 2.1-5 kms More than 5 kms All figures in percent

Wester n casuals

Ethni c wear

Fabric

44

41

43

49

24 23 9

28 21 9

30 17 7

27 15 6

45

44

45

41

41

41

44

49

9

8

6

7

5

7

6

4

31 30 28 10

31 33 24 13

35 34 21 10

38 31 22 8

% who say I buy only from one or few shops that I like/trust If I don’t find a brand at my shop, I buy some other brand from the same shop All figures in percent Loyalty to the store

Western formals 48

Western casuals 51

Ethnic wear 45

Fabric

42

42

31

34

43