Stop pulls out of gourmet business

Just over two years after it announced a big-bang foray into food and beverage retailing with three brands, retail major Shoppers Stop, promoted by the K Raheja Corp, appears to be exiting them one by one.

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Fresh Basket, Desi Caf頡nd Caf頂rio, the three brands started by the department store chain in 2006 to enhance shopping experience, build guest loyalty and eventually increase revenues, may well exemplify a business diversification gone wrong.
Back in May 2006, Shoppers Stop CEO Govind Shrikhande had told DNA they were keen to push up the share of customer spend on food items at its stores to over 5% from 2% at that time. To achieve this, the retailer planned to open around 100 food outlets over the next 30 months.
Over 30 months later, the number of food outlets is barely a fourth of that -- 19 Caf頂rio and 3 Desi Caf頯utlets.
According to B S Nagesh, customer care associate and managing director, Shoppers Stop, the management is working on the way forward for Desi Caf鮼/p>
The Caf頂rio outlets, meanwhile, would be replaced with Caf頃offee Day (CCD) outlets over the next couple of months. As per the memorandum of understanding signed by Shoppers Stop with Amalgamated Coffee Bean Trading Co (ABCTCL) recently, the CCD outlets will be run under a revenue sharing agreement.
Fresh Basket has become a private label of Hypercity Retail, serving a whole range from fruits and vegetables to staples.
"We have in a way moved out of the food business," Nagesh said in response to a DNA Money questionnaire.
According to Nagesh, the group had set a target of 50 departmental stores and 100 Crossword Bookstores by 2010-11. At least two-thirds of these were to have Caf頂rio outlets.
As of today, it has 26 Shopper's Stop outlets 54 Crossword stores.
Nagesh said the company has not expanded the food business aggressively as it required certain scale.
But more importantly, while initiatives such as Crossword, Mac and Mothercare have become profitable, the F&B business has not.
"In future, our F&B business will be operated in concession, association or alliance with third party operators," said Nagesh.
In fact, K Raheja Corp might be looking to extend the CCD alliance to its Hypercity Retail and Crossword stores.
Alok Gupta, director of ABCTCL, while refusing to make a specific comment, said they planned to have CCD cafes in all their retail outlets.
The Shopper's Stop management is also learnt to have toggled with a bunch of food and beverage entrepreneurs who were invited to make business plan presentations. The entrepreneurs may either be recruited to head a business or be allowed to run it as third-party management entity.
"The company seems to have gone through the whole learning curve, getting operational insight and starting out on its own, and then deciding it's better to leave the business to experts than burn cash on its own," said one of those invited.