To invest Rs 22 cr to expand the franchise business.
Mumbai, July 31
After a profitable first quarter, Shoppers Stop is getting ready to splurge on its franchise operations through its arrangement with Mothercare. Marking an investment of Rs 22 crore, Shoppers Stop will be doubling the number of Mothercare outlets in the next three years.
Currently, the UK-based maternity and kidswear brand has nine standalone and 13 shop-in-shop formats and it plans to double the existing 22 outlets with an investment of nearly Rs 1 crore per store.
Mr Govind Shrikhande, Customer Care Associate and CEO, Shoppers Stop, told Business Line, “Mothercare has been in India for the past three-and-a-half years. We are now in discussions with Mothercare on how to fast forward this business. Shoppers Stop will be investing in this franchise business through internal accruals.”
However, the retailer has decided to put a stop to new franchise arrangements. Instead, it would focus on bringing in more international brands through a retail arrangement in which Shoppers Stop would not be the exclusive partner.
Even as its Mothercare franchise business is being put on the fast track, Shoppers Stop has been going slow with its airport retailing operations. Its joint venture with the Nuance group has been moving slowly with passenger traffic dwindling at the airports.
Unlike the Future Group which exited its joint venture with the Alpha Group in airport retailing in the recent past, Shoppers Stop is still waiting for its own joint venture company to make money. “There is slow offtake in the future of airport retailing and it will take us three-five years to break even. In the past year, passenger traffic has been hit hard and health concerns like swine flu have also taken its toll in the airport retailing business.”
In fact, Shoppers Stop has closed down its outlets at the Mumbai airport while it continues to have shops in Bangalore and Hyderabad airports.
Meanwhile, the pioneer in retail has been cutting down on operational costs, which has been primarily responsible for it reaping profits of Rs 2.5 crore this quarter after facing a loss of Rs 15 crore in the corresponding previous quarter.Related Stories:
Shoppers Stop makes a connect with younger customers
Shoppers Stop exits catalogue retailing through Argos