Shoppers Stop will focus on private labels to improve operating margins

Shoppers Stop’s new Managing Director, Rajiv Suri, has unveiled his plan for improving the multi-brand retailer’s operating margins with a focus on expanding private-label brands.

Shoppers Stop’s new Managing Director, Rajiv Suri, has unveiled his plan for improving operating margins - Shoppers Stop

Rajiv Suri, who was appointed as Shoppers Stop’s Managing Director last month, told the Economic Times in his first media interaction in the role: “We are not in a turnaround stage as yet, but what we are talking about is the transitional stage.” Suri will be making an array of changes to the business in his new role including strengthening the management team, launching international and celebrity brands, renovating several stores, and increasing the contribution of private labels to the business’ overall revenue.

Suri believes that contributions from higher margin private labels can be doubled to improve the business’ operating margins. Private labels offer lower logistics costs and so provide higher margins for e-commerce stores which has led to an increase in private label brands across e-commerce stores such as Flipkart and Myntra as well.

Shoppers Stop reported operating margins of around four percent for the last financial year. Around ten years ago, Shoppers Stop had a wider array of private labels and they contributed around 25 percent of overall sales. However, Suri explained that, due to “issues around design, fashionability, fit and fabrics,” the contribution waned to only ten percent of overall sales in the 2018 financial year. As part of the plan to focus on private labels, Shoppers Stop recently created a garment testing lab and studio and also hired a private label head of design.

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