"I went back to the drawing board to try to understand what it was that was leading to the losses. I realized that there were 3-4 big areas of concern which needed to be corrected. It took me about eight months to get the corrections going, and by the end of the first year, we had turned the company around and made a profit"
Retail is one of the most dynamic professions in the world, and no one has a better view from the top than Govind Shrikhande, one of India’s leading mentors and the former MD of Shoppers Stop. Under his leadership, Shoppers Stop went from being a struggling company to becoming one of Indian retail’s biggest success stories. Corporate Citizen chats with him about his 34-year journey in retail, his insights on how to transform a brand, and how retail went from being a small sector to becoming the behemoth that we know today
I was studying Textile Technology at Victoria Jubilee Technical Institute (VJTI). I passed out in 1982. At that time, Mafatlal Industries had offered me a job. But if you look back at the history of India, 1982 was a dark period for the textile industry. We had just witnessed the biggest textile strike in Independent India’s history. The norm at that time was to work in the textile mills for seven days at a stretch, get a one day break, and then work for another seven days. I felt it was a very stifling work environment. In addition, this was at the peak of Unionism in India. Datta Samant had more than half a million textile mill workers in Mumbai on a year-long strike in 1982, which triggered the closure of most of the textile mills in the city. I had also seen at close quarters, the unsafe working environment and killings that the city was in the midst of with the heightened Unionism. I felt that, I shouldn't be taking such unwarranted risks at that time.
It made sense to me to not step into the professional environment for a while and continue with my studies at that point in time. MBA was a new stream which was rapidly gaining popularity in India. I found it fascinating and decided to pursue it. I moved to Pune and took admission at the Symbiosis Institute of Business Management. This was just the second batch of the institute. Once I graduated from Symbiosis, I had offers from five different companies-PSI, India Today, Hico, Philips, and Mafatlal. Mafatlal offered to place me in a marketing profile instead of working on the shop floor, which I had been initially offered post my BText. I felt that since I had studied for four years in the textile field, it would be more appropriate to join a company in the same field. Unlike in Philips (whose offer I was tempted to accept), in Mafatlal, my knowledge of textiles would be put to use, so I took them up the offer.
Liberalization brought a lot of global thought processes to India. When I look at 1984, we were in an era where we couldn't even imagine that everyone would have a mobile, much less a smartphone. There was no internet then. There weren't even any TV channels apart from Doordarshan at that time. Today we have 600 channels. This magnitude of transformation is difficult for any individual to really comprehend. The country and the economy changed beyond recognition. New companies emerged. New industries like telecom emerged. There was no concept of organized retail at that time. The unorganized sector was pretty much all there was to it. No one could imagine even joining the organized retail sector, much less heading a company in the sector and take it from five stores to 200 plus stores nationwide.
Mafatlal helped me connect with textiles trade, my basic core. I learnt Market Research, Retail Store Opening, Channel management & Product Sourcing. From there I went from strength to strength and learnt how to go from textile to retail to apparel and then to multiple other categories.
"Liberalization brought a lot of global thought processes to India. When I look at 1984, we were in an era where we couldn't even imagine that everyone would have a mobile, much less a smartphone. There was no internet then. There weren't even any TV channels apart from Doordarshan at that time"
It has changed beyond recognition. When I look back today, there have been two or three dramatic changes. Way back in the 80s, it was actually rationing shops which dominated retail. Everything was controlled. The big retail stores that you see everywhere today were not even thought about, because the supply chain wasn't there. Post 80s, we saw what is known as the franchise store concept coming up in a big way. We saw Bombay Dyeing, Calico, Raymond and Bata stores pop up everywhere. In 1991, Shoppers Stop was born. 1996,97 and 98 are the years when Westside, Lifestyle, Pantaloons and other such companies were born. While all these companies were formed and were growing, the biggest push came in 2001, when the retail policy was changed and it was opened up. Post-2005, most of the international players too entered India.
You can divide retail in India into three distinct phases. Phase 1 was mom and pop stores, Phase 2 was the entry of organized retail, and post 2013, we saw Phase 3, which is the growth of online. In fact in the last four years, online has grown exponentially.
Shoppers Stop, as I mentioned, started in 1991. It kept on adding space till 1994. From 1994-2001, till the time I joined, they had opened only seven stores and employed less than 500 people. The year I joined too was a difficult year. On the day I joined, the headline of Economic Times was 'Is Shoppers Stop going to fail?' On the seventh day, Business Today carried a cover story saying "Has Shoppers Stop failed?" Everyone was writing us off. Shoppers Stop then had a Rs.224 crore turnover and a Rs.24 crore loss. That was the number which made everyone worry about where the company was headed. I remember walking to my boss and asking him 'mujhko kaha fasa diya?' He said, 'We are in difficult times, and we want you to help us in getting out of this difficulty'.
I went back to the drawing board to try to understand what it was that was leading to the losses. I realized that there were 3-4 big areas of concern which needed to be corrected. It took me about eight months to get the corrections going, and by the end of the first year, we had turned the company around and made a profit. Since then, we have never looked back, other than one year where the whole world experienced a downturn during the Trillion Dollar Meltdown.
There are several things which I feel proud of. The first thing I did after I joined was addressing the burning issue of partnerships. Retail is a platform to connect partners to customers. The partners have to sell their brands and the customers have to pick a brand of their choice. Our relationship with our partners wasn't very good when I joined and we had a big fight with Madhura. They had moved out of our chain the year before. The first task I did was to create a concept called 'Partnership of Progress'. This was an annual summit that we created. It has been running for 17 years now, and we meet every year, share with our partners what our plans are and invite their inputs as well. We also starter a scorecard called Partnership Satisfaction Index. It was in addition to the Associate Satisfaction Index, which we were already running, and the Consumer Satisfaction Index, which we introduced. Together, these three indices are a good health indicator of your company. If your associates are as happy, they will give good service to your customers. If your customers are happy, your partners are happy too. We have been able to ensure that our relationship with partners remained strong through thick and thin. We have been able to ensure their support throughout, whether it is through a regular supply of merchandise or exclusivity. The suppliers also helped us in creating the new Trading Modules of Sale Or Return, Consignment etc. These new models helped us derisk the business in a big way and also ensured better cash flows for the company.
Around 2006, we repositioned the brand. We introduced a new modern logo and positioned Shoppers Stop as a more aspirational 'bridge to luxury' concept. We came up with a new store look, new visual merchandising and a new ad campaign. We became the first bridge to a luxury brand in India. We also launched a lot of new brands at that time. MAC cosmetics were launched at that time. Calvin Klein, Tommy Hilfiger, etc came in during that period.
The third step we took around 2007-08, we created a new anthem. Every day, at 10:45 am across India, all stores, offices and warehouses of Shoppers Stop play our anthem 'Hadh se aage'. This anthem is written by Gulzar Saab and sung by Sonu Nigam. This anthem binds together everyone across India. It unites the 10,000 of our employees with the spirit of service.
The next initiative I am proud of is creating larger than life events. Shoppers Stop earlier did a lot of events with bigger connotations. In 2009-10, we created 1,129 makeovers in an event we dubbed 'Makeover Marathon'. Post that event, the make-up sales in our stores nearly tripled. In the last 3-4 years, we created the largest Santa Claus, the largest cricket bat, the largest snowman and the largest jacket. Every year we come up with one event anchored around a product while creating a larger than life experience to boost the sale of that product or category. This continues from 2010-16. Other big initiatives were the number of stores. When I joined, we had only seven stores. When I became CEO in 2007, we had only 16. If you look at the last 11 years, we have opened more than 60 stores. We also opened a lot of new formats. We launched a lot of new brands for Shoppers Stop, including brands like Rheson by Sonam Kapoor and Virat Kohli’s Wrogn. We are the largest retailer of beauty across India by far. Nobody else has this big a collection of beauty brands, products and categories. We would be among the top two watch sellers in the country as well.
We felt customers needed better service standards, so we launched Personal Shopper. Today, if you visit any of our stores, you can actually ask for a personal shopper. The Personal Shopper can take you through the entire store, free of charge. If for whatever reason they are not free at that moment, you can book an appointment for a convenient time. You can also book an appointment online. It’s like the character Jeeves by P G Wodehouse. In a few cities, you can call a personal shopper, and they can come to your home with the merchandise that you want, and you can choose whatever you like. This is taking service standards to a new level. I believe that retail requires a lot of experience, a lot of theatres. This is why we have created this initiative called 'Bring back romance to retail'. We aim to deliver great merchandise, great service as well as a great experience through multiple action points.
We also revised our Vision, Values and Strategy to reflect our new Omnichannel Strategy.
"Around 2006, we repositioned the brand. We introduced a new modern logo and positioned Shoppers Stop as a more aspirational 'bridge to luxury’ concept. We came up with a new store look, new visual merchandising and a new ad campaign. We became the first bridge to luxury brand in India"
Initially, we were unsure of how to fight online, as they had money to burn and very low overheads. Then over a period of time, we realized that online is something that customers love. You cannot treat online as a curse; rather you must learn to treat it as a gift. That’s how the word omnichannel came into play. We created an entire strategy of how to be omnichannel and we have almost achieved it now, but the reality is that it is now a platform war. A platform war is very different from a purely omnichannel play. This platform war is played very differently all over that world. In the US, the market is dominated by local players like Facebook, Google and Amazon. In spite of that, one thing that stands out is that online has no taxes in the US. They don’t have to do any discounting there. Products are at the same price online and offline. In China, when Alibaba started, they had no takers. There was no trust in online transactions in China then. There was a trust deficit between buyers and sellers. So Alibaba created an escrow payment system called Alipay. You don't pay the buyer. The customer pays to Alipay. The seller ships the goods to the buyer. Once you receive the goods and are satisfied, then Alibaba releases the money to the seller. If you aren't satisfied, no payment is made and the goods are picked up. Alibaba is only a marketplace. They don't buy and sell anything. So they never make a loss. There is no Google in China. The Chinese ecosystem is called BAT (Baidu, Alibaba and Tencent). Coming to India, we are treated like a third world. Our eco-system is completely borrowed from the US and China. India's retail is being taken over by China and America. Walmart and Amazon are on one side and Alibaba on the other. The only fighting company that is remaining is Reliance. Reliance is creating an ecosystem from Petroleum to telecom. Future Group is also aligning itself to take this battle head-on.
To fight this onslaught, we created a strategy called ACE - Assortment, Customer service and Experience, along with the omnichannel investment. At the end of the day, customers also look at shopping at entertainment, and online is not entertainment. That is where we have the edge. Online doesn’t provide entertainment. It is only browsing, and eventually, people get bored. On the other hand, when you walk into a brick and mortar store, you can touch and feel the product, you can try it, touch it, and smell it. The job of the retailer is to strengthen this experience.
I thought that I had worked non-stop for 34 years from 9-9pm, 365 days a year. Retail, as you know, doesn't have any days off. We work on Diwali, we work on Christmas. We are busiest on Sundays. The challenge in such a long journey is that after a point of time your body starts aching. You burn out. If I think of my career, it is divided into three main areas. I started with textiles, moved to apparel and then to retail. So I decided to take the next step and move on to mentoring. I have been lucky. Two companies have got me on their board. I am also advising three private equity companies. I am also consulting two more companies. This gives me a broader perspective, a slightly more strategic insight and a top view perspective rather than the monotony of day to day work.
"When a new product is launched, within two days’ time you know whether it is working or not. You can't get such a fast response in any other industry. You have a lot of power to influence a customer, but you also have a lot of responsibility to ensure that the customer's experience is stellar"
I love watching movies. I like comedy as a genre, especially Marathi comedies. In the last three years, Marathi movies have stepped up their game and I really like the content. I am an avid cricket fan, and also like listening to music. My grandson is in Chicago. Every evening, I love chatting with him on FaceTime. It is a great relaxation for me.
The challenge is that it is dependent on what stage of life you are in. In the beginning, you need to acquire experience, acquire money. This race takes a decade of your life. Once you reach a position where you are running a company or are in upper management, there is so much responsibility that automatically you tend to spend more time at work. This is a race that is very difficult to win. You must find the right balance. One of the things I have realized is that when I started my career, companies can always find somebody else to replace you, but your family can never find anyone to replace you. Since mobile phones have evaded everyone's privacy, I switch off my mobile when I am at home and switch it on only when I get in my car. For 12 hours at least I am off mobile completely. That's something I have been practicing diligently for the past 15-16 years. Another thing I followed was when I am in the office, I wouldn’t respond to mobile calls. All those who know me would message me and they would know that I would call them back when I am driving back home. My commute was for an hour each way. All my calls would be answered between 7-8 pm in the evening or 9 to 10 am in the morning.
Other than that, it is difficult to segregate any more as the boss of the company, there are so many responsibilities on you. Ten thousand people depend on you, it’s a tightrope to walk.
If students are considering retail as an industry, the best part about this sector is that-this is one of the few industries where you are in direct touch with the customer. In FMCG, you are dealing with the manufacturer, distributor or retailer. In retail, you are the first point of contact with the customer. You don't need to go through channels to get their feedback. Every Friday, a new movie either bombs or explodes. Similarly, the sales number of the prior week which we get on Monday tell us if sales have bombed or exploded. When we see the sales numbers for the previous week, we know what is selling and what is not. When a new product is launched, within two days’ time you know whether it is working or not. It is that fast. You can't get such a fast response in any other industry. However, this also means that you have a lot of responsibility. You have a lot of power to influence a customer, but you also have a lot of responsibility to ensure that the customer's experience is stellar.
Absolutely correct. We sell dreams and experiences.
By Neeraj Varty
