Department Stores

INTRODUCTION

A departmental store is a retail establishment which specializes in selling a wide range of

products without a single predominant merchandise line. Department stores usually sell products

including apparel, furniture, appliances, electronics, and additionally select other lines of

products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelry, toys,

and sporting goods.

In our country, departmental stores have emerged as a major and prominently-recognized

organized retailing channel, especially for Indian and international fashion brands, targeted at the

upper middle and higher income segments. Apparel is the most important product category sold

by these retailers in India, accounting for nearly two-thirds of their sales. The major players in

this segment in India include Shoppers' Stop, Lifestyle, Pantaloons, Westside, Piramyd and

Globus.

Source: Indian Retail Report, 2007

MAJOR PLAYERS

EBONY

Ebony Retail Holdings Ltd., a part of the DS Group, is a Delhi-based retailer with seven stores in

seven North Indian cities spread across 1,50,000 sq.ft of total retail space. Having started off

with a store in New Delhi in 1994, Ebony has expanded its presence in the years since. The chain

also has an online B2C shopping portal (www.Ebonyclick.com) that offers customers a non-store

retail format to shop from.

In 2004 Ebony had nine operational stores in five cities, covering 167,000 sq.ft of retail space. A

few of its outlets were probably closed down and new outlets opened in two more cities since

2004. The sudden and sharp rise in competition in the Indian retail sector at present seems to

have taken this department store chain unawares. They have not expanded their retail operations

in any major way in the last couple of years. Ebony clocked a turnover of Rs.85 crore in 2004-

05. Sales realisation/sq.ft per annum stood at Rs.6,095 in 2005, an increase of eight per cent over

the previous financial year. The average transaction value in 2005 was Rs.l, 1 02, up from

Rs.l,009 in the previous fiscal.

Ebony sells menswear, womenswear, lingerie, kidswear, home fashion and accessories,

cosmetics, perfumes, books and music, personal care and cosmetics, jewellery and luggage. The

store's private label, ETC, contributed towards seven per cent of the chain's total apparel sales in

2005. In its efforts to facilitate customers, Ebony runs a customer loyalty programme, Ebony

Elite Club, which has approximately 52,000 members (up from 28,000 members in 2004-05.

It has also introduced a designerwear section, Studio Ivory, with collections for a middle-income

target segment. The department chain also runs the concept bookstore, Wordsworth, which sells

music too.

GLOBUS

The Mumbai-based Rajan Raheja Group launched its first Globus department store in January

1998 at Indore and since then it has become a 20-outlet strong chain with a presence in 14 cities.

Apart from the Globus department stores, the chain also runs a second retail format with Globus

2, the factory outlet format. Globus' flagship store was launched in Mumbai in November 2001.

The department store chain's customer loyalty programme is called the Globus Privilege Club

card programme.

In 2004, the chain had seven outlets in five cities with a total space of 1,39,658 sq.ft by 2005

their retail presence had reached eight cities with 12 stores and a total retail space of 1,94,610

sq.ft. Today the chain runs 20 outlets in 14 cities with a total retail space of 2,90,000 sq.ft. Retail

expansion plans include having 30 outlets by 2007, 100 by 2008, and taking it to 120 by 2010

with a total retail space of 12,40,000 sq.ft.

The chain's in-store labels apparel labels, Globus and F21, contribute about 35 per cent towards

total retail sales. Frequent consumer promotions during peak sales periods like traditional festive

seasons bring in 25-30 per cent increase in average sales. From a retail turnover of Rs.82.0 1

crore in 2004-05 (and Rs.l 09 crore by 2005-06), the company targets to achieve a turnover of

Rs.180 crore in the current fiscal.

LIFESTYLE

The Dubai-based Landmark Group'sdepartment store chain, Lifestyle, started operations in India

in 1998. It currently operates 19 Lifestyle departmental stores in nine cities with a total retail

space of 7,45,711 sq. ft. In 2004 the chain had seven stores in five cities with a space of 2,68,436

sq.ft, which grew to 10 stores in the same five cities with an increased retail space of 3,41 ,587

sq.ft. By 2010 they plan to have 41 stores in 16 cities with a combined retail space of 19,33,931

sq.ft. The average store size of a Lifestyle department store is 46,000 sq.ft, the largest of them

being the Chennai store with an area of 75,000 sq.ft. Lifestyle now plans to majorly expand into

the tier-II cities in the country.

Ginger, Baby Doll and JRS Active are the three major private labels of Lifestyle, besides

segment-specific brands like 2xtremz for women and Juniors for infants. These private labels

contribute approximately towards 10 per cent to the total revenue. Its customer loyalty

programme is called The Inner Circle, which contributes 40 per cent to total sales. Each of the

stores has a Coffee Island managed by Qwiky's.

Lifestyle International has announced investments to the tune of Rs.400 crore in the next five

years to fund its expansion in India. This includes plans to bring in its concept stores into the

country, including the Max Hypermarkets and Lifestyle Centres. The Max chain of value stores

and Home Centres have already been launched. Landmark is also working on a Lifestyle Centre

store to be opened in Bangalore late next year, which will include a Home Centre and a high

value food retail store.

Lifestyle International, with expertise in retail chains specializing in fashion and home

furnishings, has also set up a new division for the international brands business for apparel labels

such as Bossini and Kappa. The department chain's profitability grew by 70 per cent in 2005;

while realisation of sales per sq.ft stood at Rs.7,187 per annum. The total turnover of the

department store chain stood at Rs.306 crore in 2004-05 (Rs.340 crore in 2005-06), with targets

of reaching Rs.525 crore in the current fiscal and Rs.l ,500 crore by 2010.

PANTALOONS

Back in 1987, India's first branded trouserscompany, Manzwear Pvt Ltd, was launched by Future

Group CEO, Kishore Biyani. Later the company's name was changed to Pantaloon Retail (India)

Ltd in 1999. Pantaloons, the department store venture of Pantaloon Retail, operated 21 outlets in

15 cities with a total retail space of 4,85,000 sq.ft in 2005-06, with plans to open a total of 42

outlets by 2007. From 12 outlets in nine cities with a retail space of 2,88,000 sq.ft in 2004, the

Pantaloons chain targets to launch 80 stores in 30 cities with a total retail space of20,00,000 sq.ft

by 2010.

Pantaloons has positioned itself as an affordable fashion retail outlet chain and is now beginning

to focus on the premium-end of the market. Pantaloons' loyalty club membership grew to

2,10,000 in 2005 from 1,40,000 in the previous year; loyalty club members contribute around 38

per cent to the total sales. The chain's average sales/sq.ft per annum stood at Rs.8,900 in 2005.

The chain recorded a turnover ofRs.213 crore in 200304, and targets to achieve Rs.l,500 crore by

2010.

PIRAMYD

Mumbai-based Piramal Groups' Piramyd Retail & Merchandising Pvt Ltd, currently operates

with 11 stores in eight cities with a total retail space of 6,60,000 sq.ft. In 2004 Piramyd had three

stores in three cities with 1,80,000 sq.ft of retail space; by 2010 the group plans on operating 30

stores in 14 cities with a total retail space of 18,00,000 sq.ft. The latest outlet was launched in

Jaipur covering 50,000 sq.ft of retail space. Other tier-II cities that it retails through include

Ahmedabad, Nagpur and Pune.

Piramyd offers branded merchandise in men's apparel, ladies fashion, unisex casuals, kids

apparel and toys, apparel accessories, footwear, perfumes and cosmetics. The chain operates a

loyalty programme and offers members with privileges like discount offers, home delivery, home

shopping, tickets for movie premieres, plays or music concerts, ete. As of 2004-05, sales

realisation per sq.ft stood at Rs.5,500 per annum; while sales realised during 2003-04 was Rs.80

crore, an increase of about 43 per cent over the last financial year.

SHOPPERS'STOP

Shopper's Stop Ltd from the K Raheja Group, opened its first Shoppers' Stop department store in

Mumbai in 1991; and over the last 16 years has established itself as the largest player in the

department store category in India. From 16 stores in nine cities with an area of7,52,848 sq.ft,

the chain today operates 26 outlets in 12 cities with a total retail space of 15,07,126 sq.ft, with

plans to have 34 stores by 2007. By 2010 Shoppers' Stop plans to have nearly 50 outlets in 20

cities across a total retail space of 36,26,899 sq.ft. Shoppers' Stop was the first retailer in the

country to have Bar-coded garments, Co-branded credit card; and Retail ERP Shoppers' Stop,

unlike Pantaloon and Westside where the chunk of sales are driven by private labels, houses a

large number of external brands.

The chain is today the largest retailer for popular brands like Levi's Strauss, Pepe, Arrow,

Zodiac, Ray-Ban, Swatch, ete. The launch of Buzz (the designer pret wear section) and Kasba by

Raghavendra Rathore were some new additions. Some of the chain's private labels include Stop,

Life, Vettorio Fratini, Haute Curry, indi-vidual and Acropolis, sales from which grew by 44 per

cent in 2005, over the previous year. Shoppers' Stop customer loyalty programme, First Citizen's

Club has approximately 4,40,000 members, who contribute to over 50 per cent of the total sales.

Shoppers' Stop, which has tied up with Mothercare, the global brand for infants and children,

will be opening 40 Mothercare outlets over the next five years. It currently has 11 Mothercare

outlets. The bookstore section, Crossword; as well as food and beverages outlets such as Cafe

Brio and Desi Cafe have also been launched within the department stores. In 2006, Shopper's

Stop Ltd signed a MoU with UK-based Nuance Group, a leading airport retailing company, for

setting up a 50:50 joint venture to enter the duty-free retail market at Indian airports.

Shoppers' Stop registered sales worth Rs.5,071 crore in 2004-05, with an increased turnover of

Rs.6,775 crore in 2005-06. The chain is targeting a turnover of Rs.750-850 crore by 2008. Sales

realisation per sq.ft per annum stands at around Rs.6,903; while the average transaction value is

approximately Rs.1 ,278.

Apparel Brands for Women

ELLIZA DONATEIN

ENAMOR

HAUTE CURRY

KASHISH

KRAUS

LEE

LIFE

LOVABLE

PROVOGUE

SEPIA

SLEEP-INS(CONSG)

STOP

SWEETDREAMS

TRIUMPH

Accessory Brands for Women

BLUE AND BLUES

CASIO

CROSS

DKNY

ESPRIT

FASTRACK

FERRARI

FOSSIL

GIORDANO

HIDESIGN

IMAGES

INFINITY

LIFE

PIERRE CARDIN

POLAROID

PUSH AND SHOVE

RAY BAN

SAMBENA

SHEAFFER

SKAGEN

SUNWAYS

TITAN

TOMMY HILFIGER

VAN HEUSEN

XYLYS

ZAVERI

Apparel Brands for Men

ACROPOLIS

ALLEN SOLLY

ARROW

AUSTIN REED

BLACKBERRYS

DOCKERS

GIOVANI

INDIAN TERRAIN

JOCKEY

JUST NATURAL

KASHISH

LEE

LIFE

LOUIS PHILLIPE

MARIO ZEGNOTI

MUFTI

PARK AVENUE

PEPE

PROVOGUE

SHAPES

SPYKAR

STOP

STORI

TANTRA

TOMMY HILFIGER

VAN HEUSEN

VETTORIO FRATINI

WARRIOR

WRANGLER

ZODIAC

Frangrance Brands

DKNY

DAVIDOFF

BVLGARI

ADIDAS

ARAMIS

CALVIN KLEIN

FERRAGAMO

NAUTICA

RALPH LAUREN

Cosmetics

CHAMBOR

MAYBELLINE

L’OREAL

Home segment

CORELLE

IVY

MAGPPIE

ARTD’INOX

SERVEWELL

PROGRESSIVE INTNL FNS

Watch brands CASIO

DKNY

ESPRIT

FASTRACK

FOSSIL

GIORDANO

KENNETH COLE

PIERRE CARDIN

POLICE

SKAGEN

TITAN

TOMMY HILFIGER

WESTSIDE

Westside, the lifestyle store by the Tata’s that caters to the upper middle class segment, has built

its customer base through its USP of affordable style. There are 23 Westside stores in 14 cities

Price is crucial in the Indian retail scenario and Westside’s focus on this factor is part of the

reason. If customers are looking for style, they will probably go to Westside and buy something

for Rs 400 rather than go to Mango (a UK-based chain). Another issue is convenience of parking

space. Almost everyone in major metros has a car and doesn’t want to go through the hassle of

finding parking space.

Westside has worked on moulding its outlets along the snazzy, well-designed, hands-on

ambiences and coffee shop displays typical of Lacoste, Nike and Switch retail stores in the West,

and personalized its offerings by offering style and accessory guides to its customers.

Westside houses a collection of the finest merchandise for the entire family. There are spacious

shopping areas for the various sections - women’s wear, men’s wear and the children's and the

household sections occupy the floor level. Café West from the Taj group on a level above is an

ideal place for a coffee break on a shopping spree. Westside offers customers the very best and

latest international shopping experience. Westside has a team of dedicated stylists,

merchandisers, helpful and courteous store staff and talented in-house designers. The

combination of the very latest in-style fashion with affordability is highlighted in all of

Westside’s merchandise.

Westside stands out from the competition for a variety of reasons. One is that a majority of the

brands the chain stocks and sells are its own, unlike retailers who store multiple labels. About 90

per cent of Westside’s offerings are home-grown, and they cater to different customer segments.

The other 10 per cent includes toys, cosmetics and lingerie.

However, recently Westside has recently expanded its range of merchandise by offering outfits

from some of India’s best-known fashion designers, among them Wendell Rodericks, Anita

Dongre, Krishna Mehta and Mona Pali. This is an interesting marketing shift, since it means

moving away from the chain’s only-our-own-brands concept. The designers create collections

exclusively for the store, and the prices for these are hardly eye-popping (the Wendell Rodericks

range starts at Rs 600). Westside has managed to obtain this exclusivity at a lower price because

it has multiple outlets.

CLUBWEST

It is an extraordinary rewards program designed exclusively for Westside regulars. It is a two-tier

program, which comprises Clubwest Classic and Clubwest Gold. A purchase of Rs 2000 on the

same day entitles you to a complimentary membership into Clubwest Classic. Alternately, you

can enroll by paying a nominal one-time fee of Rs 150. A purchase of Rs 5000 on the same day

entitles you to a complimentary membership into Clubwest Gold. Earn points every time you

shop at Westside. These points can be exchanged against subsequent purchases made in the

store. A dedicated Clubwest desk for a member's assistance is at each of the stores. There are

exclusive shopping hours only for members during sales. Customers also have unprecedented

access to a host of privileges and services through their exclusive tie-ups from time to time. They

provide advance intimation of all in-store promotions and special offers through direct mailers.

Also Special discounts on dining at select restaurants round the year.

Once a store enters a good catchment area, its competition loses that advantage. Trent would

agree: When Westside first entered Mumbai in 2000, it opened shop in elite south Mumbai. At

the time, the suburbs were ruled out because Shoppers' Stop cast a long shadow over the western

suburbs. And even when Westside finally moved northwards into Andheri (where the first

Shoppers' Stop outlet is located), in end-2004, it chose Link Road, which is away from Stop's

line of vision. Being a quick mover and expanding fast brings in another advantage – of size.

And size brings bargaining muscle and, hence, economies in sourcing.

During 2005-06, the company witnessed a rapid expansion with the opening of six Westside

stores across the country. From 16 outlets in 10 cities across 2,20,000 sq.ft of space, the chain

today runs 23 stores with a total retail space of 5,50,000 sq. ft. Westside was one of the first

retail companies to position itself as a 100 per cent private label retail store. Its in-house brands

include Too Fast For You, Richmond, Urban Angels, etc, besides the store brand Westside and

Westsport. The contribution from these private labels is to the tune of respective segments.

SHOPPER’SSTOP

LIFESTYLE GLOBUS WESTSIDE PANTALOONS

Store experience 76 68 68 70 65Merchandise 67 51 56 70 52Sales Personnel 62 57 58 66 55Billing 64 51 57 63 47Packaging 58 58 59 56 51Additional Service 54 57 54 62 50Schemes & Promotions

57 49 54 53 51

Loyalty Programmes

3317 29 3917 4025 6313

Advertisements & Communication

57 52 52 45 49

All figures are in percentages; Superscript: Percentage of people who are unhappy in these parameters (Source: The Marketing White Book, 2007-2008)

GLOBUS

PANTALOONS

LIFESTYLE

SHOPPER'S STOP

WESTSIDE

0 10 20 30 40 50 60

39

42

43

53

54

CUSTOMER SATISFACTION INDEX

All figures are in percentage

SOURCE: The Marketing White Book, 2007-2008

INDUSTRY AVERAGE

GLOBUS

PANTALOONS

LIFESTYLE

SHOPPER'S STOP

WESTSIDE

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

26

36

32

24

18

20

31

38

33

37

30

23

6

7

3

10

7

6

36

20

32

30

44

51

LOYALTY SEGMENTATION

High Risk

Trapped

Accessible

True Loyals



CONSUMER BEHAVIOR

The rise of departmental stores can be attributed to changing demographics. Branded apparels

form the strength of departmental stores and we will see how demographics affect their purchase

and challenges the departmental stores face.

Today, brands have started shaping buying behavior. A large young working population with a

median age of 24 years; growing numbers of nuclear families in urban areas; increasing working-

women population and emerging opportunities in the services sector have increased the average

consumer spend on branded clothing. Industry experts believe that apparel sales in retail stores

posted a growth of between 25-30 per cent in 2003 and according to an estimate by McKinsey,

the branded apparel market—is now worth nearly $ 1 billion. Now, across metros, apparel

buying is the second biggest consumption after food products. Without question, the consumer

boom is being driven by a new openness about using credit cards. Clothing, along with shopping

for jewellery and eating out, contribute 45 per cent to credit card spends, up from 21 per cent a

year ago.

The influence of fashion

Clearly, fashion has also played an important role in shaping apparel consumerism. As lifestyles

change, fashion in India is becoming more stratified, as in the West. Technology, ideas and

lifestyles are moving concurrently, and quickly. Companies and brands that offered monotonous,

mundane products for years have now tripled their product ranges and new appealing shapes and

forms are being launched each season.

The lure of foreign labels

The boom in domestic apparel, nevertheless, tells only part of the story. India has huge potential

as a market for foreign clothing, given its large population and growing household incomes. A

few significant foreign players—such as Levi Strauss, Benetton and Lacoste—have been selling

their branded apparel in India for a number of years. But now, just like their Indian counterparts,

global apparel brands are setting up their own apparel outlets, instead of just selling through

departmental stores.

For the purpose of understanding consumer behavior towards the major business of departmental

stores i.e. apparels we have broken the population into four groups. We have taken into

consideration their apparel buying behavior in terms of purchase frequency, spending, outlets

where the buying occurs, distance they are willing to travel and their loyalty towards apparel

brand outlets. The apparels for this understanding are categorized as western for this

understanding are categorized as western formals, western casuals, ethnic wear and fabrics.

The four groups of consumers are:

Playful Pretenders (12-20 years of age)

Corporate Climbers (21-30 years of age)

Cautious Planners (31-50 years of age)

Home Makers

PLAYFUL PRETENDERS

Western Formals Western Casuals Ethnic Wear0

10

20

30

40

50

60

20 1916

5154

51

29 2733

OUTERWARE PURCHASE FREQUENCY FOR PLAYFUL PRETENDERS

Once in 3 months

Once in 6 months

Once in a year



Western Formals Western Casuals Ethnic Wear0

5

10

15

20

25

30

35

40

45

50

2225

29

47

42 42

18 1816

811

95

3 4

SPENDING ON OUTERWARE BY PLAYFUL PRETENDERS

Upto Rs. 250

Rs. 251-500

Rs. 501-750

Rs. 751-1000

Rs. 1000 +



Loyalty to the store

% who say Western formals

Western casuals

Ethnic wear

Fabric

I buy only from one or few shops that I like/trust

52 52 51 47

If I don’t find a brand at my shop, I buy some other brand from the same shop

37 34 29 34

All figures in percent

Format Western formals

Western casuals

Ethnic wear

Purchased fromSmall shops selling local brands

39 40 42

MBOs 26 25 26EBOs 25 23 18Large department stores 10 10 10Location of the storePopular, big shopping market

51 50 43

Local neighbourhood/colony market

34 37 42

Markets popular for selling that product

12 9 11

Shopping malls 5 5 4Distance from homeUpto 1 km 26 27 321.1-2 kms 28 27 312.1-5 kms 35 33 27More than 5 kms 12 13 9All figures in percent

CORPORATE CLIMBERS

Western Formals

Western Casuals

Ethnic Wear Fabric0

10

20

30

40

50

60

20 19 1620

51 54 51 48

29 2733 31

OUTERWARE PURCHASE FREQUENCY FOR CORPORATE CLIMBERS

Once in 3 months

Once in 6 months

Once in a year



Western Formals

Western Casuals

Ethnic Wear Fabric0

5

10

15

20

25

30

35

40

45

50

1921

24

31

44

34

41

35

19

24

18 18

13 1412 12

47

4 3

SPENDING ON OUTERWARE BY CORPORATE CLIMBERS

Upto Rs. 250

Rs. 251-500

Rs. 501-750

Rs. 751-1000

Rs. 1000 +




Western casuals

Ethnic wear

Fabric


46 48 44 45


36 33 34 31

All figures in percentLoyalty to the store


Western casuals

Ethnic wear

Fabric


37 35 43 47

MBOs 29 31 25 26EBOs 25 23 19 20Large department stores 8 7 8 5Location of the storePopular, big shopping market

53 51 58 44


34 37 39 46


7 8 4 7

Shopping malls 7 8 4 8Distance from homeUpto 1 km 29 31 34 391.1-2 kms 29 28 31 272.1-5 kms 28 27 25 24More than 5 kms 14 13 10 10All figures in percent

CAUTIOUS PLANNERS

Western Formals

Western Casuals

Ethnic Wear Fabric0

10

20

30

40

50

60

20 19 1620

51 54 51 48

29 2733 31

OUTERWARE PURCHASE FREQUENCY FOR CAUTIOUS PLANNERS

Once in 3 months

Once in 6 months

Once in a year



Western Formals

Western Casuals

Ethnic Wear Fabric0

5

10

15

20

25

30

35

40

45

50

1921

24

31

44

34

41

35

19

24

18 18

13 1412 12

47

4 3

SPENDING ON OUTERWARE BY CAUTIOUS PLANNERS

Upto Rs. 250

Rs. 251-500

Rs. 501-750

Rs. 751-1000

Rs. 1000 +



Loyalty to the store


Western casuals

Ethnic wear

Fabric


49 52 46 45


37 32 30 33

All figures in percent


Western casuals

Ethnic wear

Fabric


38 35 41 45


45 44 48 38


41 42 40 51


8 7 4 7


HOME MAKERS

Western Formals

Western Casuals

Ethnic Wear Fabric0

10

20

30

40

50

60

20 1916

20

5154

5148

29 2733 31

OUTERWARE PURCHASE FREQUENCY FOR HOME MAKERS

Once in 3 months

Once in 6 months

Once in a year



Western Formals

Western Casuals

Ethnic Wear Fabric0

5

10

15

20

25

30

35

40

45

50

1921

24

31

44

34

41

35

19

24

18 18

13 1412 12

47

4 3

SPENDING ON OUTERWARE BY HOME MAKERS

Upto Rs. 250

Rs. 251-500

Rs. 501-750

Rs. 751-1000

Rs. 1000 +




Western casuals

Ethnic wear

Fabric


48 51 45 43


42 42 31 34

All figures in percentLoyalty to the store


Western casuals

Ethnic wear

Fabric


44 41 43 49


45 44 45 41


41 41 44 49


9 8 6 7


Department Stores

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