Within six months of launching a store in Jaipur, Shoppers Stop Ltd had to revamp the entire merchandise mix after buyers complained that they didn’t find many brands which they had bought at the store in Delhi or Mumbai. It is now one of the most successful and profitable stores for the big box retailer. It was in 2010, when the company started charting out plans to tap the opportunity in small towns.

 Another interesting finding for the Mumbai-based retailer was that Lucknow market demanded more premium watches and accessories, while high-end ethnic wear was a major hit in Agra.

 Govind Srikhande, Managing Director of the K. Raheja group-owned Shoppers Stop, is investing heavily in studying these markets, which a few years ago was not even on the company’s radar. The company is now entering small towns such as Latur, Siliguri, Vizag, Surat and Raipur.

 “Aspiration level in small towns is growing. They don’t want to be treated as second class citizens and are demanding premium brands. However, we just need to get the model and customer strategy right. For example, in those towns corporate and formal wear will not work,” Srikhande said.

 Of the 55 Indian towns with a million plus population, Shoppers is already present in 28 towns and will open stores in another 10 this year at Rs 8 crore investment per store. Shoppers Stop Ltd runs formats — Shoppers Store (departmental store), Hypercity (hypermarket), Homestop (furniture and furnishings) and Crossword (book store).  At present, the company has 63 stores and plans to take it to 75 in this fiscal.

 According to industry estimates, as of 2013, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 per cent of the industry, and these were present only in large urban centres.

 The company also plans to enter these small towns with premium brands (which rank below luxury brands in retail industry lingo). Shoppers Stop already offers luxury brands such as Tommy Hilfiger, Estee Lauder and Bobby Brown at its stores. Will premium brands improve the store’s success in these towns? The answer is a resounding yes from Srikhande.  

 “We are very carefully entering markets by studying the demography. For us the presence of multiplexes, colleges or a McDonalds or Pizza Hut is a very important indicator. This indicates the amount of money people are willing to spend. This is driving our expansion strategy,” Srikhande added.  

Priyanka.pani@thehindu.co.in

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