Department stores forever changed the Indian shopper and her shopping experience and expectations. Here we track the evolution of this expansive format that is the epitome of modern retail
New Delhi: Globally, department stores became a popular shopping destination for middle- and upper-class consumers in the late 19th and early 20th centuries. Since then, the concept of exhibiting large scale retail stores selling a host of fashion and lifestyle brands under one roof and single control, picked up pace. The variety of goods, divided into different departments, each selling a particular merchandise, making shopping convenient for consumers, was one of the turning points in the evolution of organised retail.
Shoppers took to the format as they could find clothing, accessories, home goods, electronics, cosmetics, and more in a single location. This eliminated the need to visit multiple specialized stores, saving time and effort.
In comparison, modern-format department stores arrived late in India. The launch of Shoppers Stop in 1991 is widely believed to have started India’s journey into organised retail, featuring department stores.
In 1997 Pantaloons was launched in Kolkata. In 1999, Dubai-based Landmark Group entered India with Lifestyle department stores that stocked goods made in the middle east, ushering in another crucial chapter in India’s modern retail history. The entry of Indian business giants including Reliance and Tata into India’s retail business further fueled the transformation of the Indian retail market and the category.
Tata entered the segment in 1998 after renaming a British retail chain Littlewoods that it had acquired and renaming it Westside. Reliance came with Trends in 2006 shortly after Future Group launched Central in 2004.
In 2012, Kishore Biyani sold Pantaloons to Aditya Birla and focused on expanding his Central.
Advantage Department Stores
With their modern ambience and design in an air-conditioned environment, department stores offered a differentiated experience, making them popular hangouts. Here are the benefits they offered:
Variety: Department stores offer a wide variety of products under one roof, allowing customers to find everything they need in a single visit, across categories.
Convenience: Customers can browse and shop for various items for the entire family without having to visit multiple stores.
Customer Experience: Department stores, with their well-designed layout and large formats, offer an affluent and enjoyable shopping experience. They also offer loyalty benefits, the leisure to browse through products, try them and shop at their own pace as well as get assistance when required. This worked as the main draw for consumers who were so far not used to shopping in this manner.
Location and Accessibility: The location of the department stores was another popularity factor, as these centrally located outlets were easily accessible across cities. As the mall culture developed, the department stores found space in the malls, in the form of anchor stores as well, adding more to the accessibility factor.
Innovation and Adaptation: The ability to evolve and stay relevant as per consumer preferences, market trends, and technological advancements played a significant role in their continued popularity.
Innovative Retail Concepts: The introduction of concepts like fixed pricing, customer service, and in-store amenities like cafes and restrooms, gave them a superior edge from traditional shops.
Market Growth
The global department stores market is expected to grow at a compound annual growth rate of 5.1% from 2022 to 2028 to reach $166.08 billion by 2028. For India, as per Deloitte’s Future of Retail report, modern retail (comprising malls, supermarkets and department stores), will grow to $230 billion by 2030, while online retail will grow 2.5 times to reach $325 billion.
From Shoppers Stop to Lifestyle International and other big players in the market, modern-format department stores saw overall growth since they were introduced in the ’90s with players expanding their reach. The last few years has seen the brands expand their presence online as well as in tier 2 towns of India.
Today, Shoppers Stop is present in 166 stores across 22 states and three territories in India. Lifestyle International recently opened its 100th store in India.
The current growth rate has been a much-needed boost for the department stores, after the downfall it witnessed due to the Covid-19 pandemic. During the pandemic, retailers around the world reported a severe drop in their revenue due to the prolonged closure of physical stores. Also, with supply chains disturbed, the revenue generated from department stores declined.
Numbers Speak
To put things in perspective, let’s take a look at the financials of leading department store chains since the pandemic. In financial year (FY) 2020 Shoppers Stop posted a net loss of Rs 140.9 crore, in FY2021, its losses widened to Rs 275.22 crore. In FY2022, the chain reported a loss of Rs 86.68 crore. In March 2023, it finally recorded a profit of Rs 119.25 crore.
In the latest quarter ending June 2023, Shoppers Stop reported a drop in its net profit by 36.5% to Rs 14.49 crore compared to Rs 22.83 crore in profit in the same quarter ending June 2022. Meanwhile, sales rose 4.76% to Rs 993.61 crore in the April-June months compared to Rs 948.44 crore for the same quarter in 2022.
Lifestyle International Pvt. Ltd. reported a profit of Rs 269 crore for the financial year ended on March 31, as per data accessed by business intelligence platform, Tofler.
Trent declared a 40.4% on-year jump in standalone net profit in the fourth quarter ended March 2023 at Rs 105.13 crore, on robust sales along with margin expansion. For the full year, standalone net income more than doubled (122.15 %) to Rs 554.57 crore, while the March quarter revenue increased 76% to Rs 2,209 crore, giving a CAGR of over 34% since FY20.
Pantaloons added 25 new stores in Q4 FY23, as Aditya Birla Fashion and Retail (ABFRL) reported a total revenue of Rs 124.18 bn ($1.49bn) in the fiscal year (FY) 2023, increasing 53% compared to FY22.
1-India Family Mart reported revenue of Rs 420 crore ($59 million) last fiscal year and expects to close this fiscal year with sales of around Rs 700 crore. The brand witnessed its fastest growth in six years and currently stands with 101 stores pan India.
Waning Popularity
Despite their initial popularity, department stores have been losing their sheen in the past few years with the explosion of e-commerce. Some of the reasons for the same are:
Limited Choice: For consumers who are now used to browsing endless collections online, department stores offer a limited selection of each product type in comparison.
Frustrating Checkout Experience: Departmental stores tend to be crowded during weekends, which takes long time for trials and even more at tills with serpentine queues, which frustrates customers.
Popular Department Store Chains in India
Shoppers Stop: One of the most popular, well-known department store chains in India, Shoppers Stop is home to a multitude of leading international and national luxury, prestige and premium brands for apparel, shoes, watches, bags, beauty, home décor and much more. The brand houses over 400 international and national brands across all categories.
Lifestyle International: Lifestyle stores provide a variety of fashion and lifestyle products, including clothing, footwear, accessories, beauty products, and home furnishings. A part of Dubai based retail and hospitality conglomerate – The Landmark Group, Lifestyle brings multiple categories including men, women and kids’ apparel, footwear, handbags, fashion accessories and beauty under the convenience of a single roof. The brand houses more than 350 national and international brands.
Central: Central is known for its comprehensive range of products, including apparel, accessories, cosmetics, and more. It aims to provide a complete shopping experience. At present, there are 35 Central stores in different cities across India with new stores expected to come up in Mumbai, Delhi, Bengaluru, Hyderabad, Kolkata, Guwahati and Indore, among others to take the store count to 50. With the downfall of Future Group and the ongoing legal tussle, the future of Central stores is uncertain.
Pantaloons: Pantaloons a unit of Aditya Birla Fashion and Retail Ltd. (ABFRL) and it was acquired by the Mumbai conglomerate from Kishore Biyani-run Future Group in May 2015. The ABRL-owned department store chain offers over 100 licensed and international brands at its outlets including its exclusive in- house brands for men, women and kids. Pantaloons operates over 344 stores across more than 170 towns and cities in India.
Reliance Trends: A subsidiary of Reliance Retail, Reliance Trends focuses on providing fashionable and affordable clothing for all age groups. Trends, has a diversified portfolio of own brands, national and international brands. Spread over 8,000 – 24,000 square feet of shopping area, each Trends store is designed to offer a unique shopping experience for the entire family through wide aisles, coordinated displays and highly trained fashion professionals offering best in class customer assistance.
Through www.trends.ajio. com, shoppers can access a large collection of deliverable products at their doorstep. Reliance Trends currently has over 750 retail stores across India.
Westside: Established in 1998 as part of the Tata Group, Trent Ltd. operates Westside, one of India’s largest and fastest growing chains of retail stores, offering a wide range of clothing, accessories, and home decor products of leading brands, including 28 in-house brands.
Being part of the Tata fold, the core values echo sustainability, compliance and engaging in mindful business. The chain has 231 stores across the country, as per the Tata Group website. Westside contributes 96% to the revenue of Trent, the retail arm of the Tata Group.
