Physical retailers aim for better same-store sales

Physical retailers and brands have been facing tough times since the economic slowdown of 2008. Consumer sentiments continue to be muted and ecommerce with their lucrative deals and deep discounts are luring them away from brick and mortar stores. To attract footfalls and sales, offline retailers are now innovating and offering discounts anticipating same-store sales to improve in the coming season.

Retail industry expects better same-store sales

With the growing adoption of smartphones and greater number of Internet users, digital devices’ influence on in-store purchases is expected to grow significantly, highlighting the need for retailers to adopt an omni-channel strategy, says a report by consulting firm Deloitte Touche Tohmatsu India. The report, ‘Navigating the New Digital Divide’, states that close to 21 percent of the total shopping in India, or Rs 60,000 crores of in-store retail purchase, was influenced by digital devices.

Physical retailers are trying hard to battle this trend by offering exclusive in-store merchandise, extended sale seasons and services like free home delivery and alteration facilities. They are also launching online platforms while partnering third-party websites. And fruits of their efforts seem to be paying off now. But experts warn that their strategy of following online firms in offering deals and discounts may have improved same-store (SSSG) sales but it can negatively impact their margins.

While departmental store chain Shoppers Stop’s like-to-like sales grew one percent in the third quarter of last financial year, four percent in fourth quarter and 12.6 percent in first quarter. Bata reported double-digit same-store growth in June quarter. Future Home Retailing has also seen SSSG numbers moving up from 7.5 percent in December quarter to 16 percent in March quarter. But analysts find the upside in SSSG as just a matter of low base-effect. SSSG declined in FY15 from higher double-digit growth in FY14.

Pushing up sales top priority

Retailers are introducing various measures like bettering store interiors, merchandise, sale previews for loyal customers and so on, to take on the competition from online players and also to woo customers back to stores. While Shoppers Stop renovated its top four to five stores to drive like-to-like sales growth, it is using the loyalty programmes and analytics to increase customer response. Last year, Bata launched its loyalty programme, called the Bata club, which now has 3.6 million members.

They are also focusing on strengthening high margin private fashion labels category while also bringing international brands to India. Pantaloons, for instance introduced new brands Byford, Altomoda and Chairtypie last year and is promoting the exclusive brands outside its stores as well. Shoppers Stop recently tied-up with Femina to launch Femina Flaunt brand under its portfolio. The company expects private labels to contribute 15 to 25 percent sales. Shoppers Stop has exclusive brand tie-ups with cricketer Virat Kohli's 'Wrogn', 'Desigual', and will launch few more this year, including Sonam Kapoor and Rhea Kapoor's brand, 'Rheason'.

Retailers, who introduced schemes to bring customers back to stores reported better sales numbers than others. Shoppers Stop’s total income in first quarter was up 16.2 percent at Rs 711 crores against Rs 612 crores in the year-ago period. Net sales of Trent Retail grew by 8.4 percent during the quarter to Rs 341.53 crores and Westside sales grew 16 percent. Consolidated revenues of Arvind increased 6 percent to Rs 1,877 crores and V-Mart’s topline grew by 24 percent.

Most studies are indicating that omni-channel is the way physical retailers can move ahead in competition. The Deloitte report says, retailers need to create a strong meaningful digital presence to attract customer attention. Digitally influenced shoppers tend to research for a cross-category purchases and facilitating a shopper’s digital interaction within the store or otherwise increases the probability of conversion for a retailer by as much as 50 percent.