Shoppers' Stop - Employee Focus

Employee Focus in Shoppers' Stop
Shoppers' Stop was started by C.L. Raheja in 1991 when organized retailing was unheard of in
India. Since then, this form of organized retailing has grown from just Rs 50 bn in 1999 to an
estimated Rs 300 bn in 2004, making it the fastest-growing industry in the country. By December
2004, Shoppers' Stop was the leading player in the Indian retail sector with 16 stores (across
India), with a total retail space of 725,000 sq ft. Shoppers' Stop had 2,100 employees in 2004, up
from 1,150 in 2003. The retailers1 main focus was on the customer and the person who attended
to the customer - the employee. In their bid to delight customers, every retail player, namely
Westside, Lifestyle, and Shoppers' Stop continually emphasized training employees through
various programs.
At Shoppers' Stop, right from the CEO to the front-end sales person, everyone was called a
customer care associate. This move improved employee self esteem, and reflected the level of
commitment the company had towards boosting employee morale. It had a specialized induction
program to groom recruits, who were mostly first timers. The induction program included
classroom teaching on the basics of retail store design, store space planning, visual
merchandising, selling and cashiering. This was followed by a two week "mentoring" program,
where the new recruit was attached to a senior in the workplace. Finally, to give new recruits a
sense of belonging, their parents were invited to breakfast to get a feel of the environment at
Shoppers' Stop.
In 2002, Shoppers' Stop realized that their customer care associates were not performing up to
the mark and were not able to satisfy the customer, which was a cause for concern. This made
Shoppers' Stop put in place a 'Customer Satisfaction Index' (CSI) and an 'Employee Satisfaction
Index' (ESI), designed by CSMM Walker, an American company. Shoppers' Stop found that there
was a direct relation between CSI and ESI. Hence, it started exploring ways to improve the
motivation levels of its associates, who were in direct contact with customers. Interestingly, ESI
showed that employee satisfaction largely depended on their supervisors. Shoppers' Stop
immediately launched a "skill upgrading" training program aimed at supervisor improvement in
terms of product knowledge and customer handling skills. The four month training program
showed immediate results, as there was a 101% increase in average sales made to a First Citizen
Card member.1 To improve motivation levels, Shoppers' Stop introduced incentive programs like
'Jo Jeeta Wohi Sikandar'. Under this program, associates who excelled in their jobs and delighted
customers were awarded points and on collecting a certain number of points, they were given
recognition in the form of medals/trophies at public gatherings. Commenting on this initiative,
Sanjay Badhe, Director (Operations), Shoppers' Stop, said, "The challenge is basically to keep the
customer satisfied, so that he keeps coming back." 2
In May 2003, the top 16 executives of Shoppers' Stop underwent special training with Douglas
Tigert, a Professor of Retail Marketing with Bapson College in the US, to improve efficiency levels.
In 2004, the training sessions were increased from 45 hours to 52 hours a year, with attention on
improving communication skills of employees. Promotions given to associates working at any
level at Shoppers' Stop were based on the recommendations of the assessment centers or
through other assessment programs.
Top-level managers were assessed by SHA. London and for all other levels there were custom-
made assessment programs for various levels called Baby Kangaroos (sales associates &
supervisors), Kangaroos (store managers), and Senior Kangaroos (senior managers). Through this
program, a supervisor was assessed and on passing, he or she could be promoted to store
manager and then senior manager. This program was based on mentoring rather than
recommendations of superiors. Through this, there was a mentor attached to each employee, and
once he or she gains a certain level of expertise, they are taken to the next level and are
designated Kangaroos depending on the level they are elevated to.
Despite all these measures, Shoppers' Stop faced a high attrition rate. This was mainly due to its
associates taking up lucrative offers from other organizations. According to a senior official at
Shoppers' Stop, the tendency to change jobs in their young front- end employees (average age 23
years) was high and it was very difficult to curb that tendency. However, the attrition rate at the
managerial level was less than at the sales level (26-27%). Shoppers' Stop tried its best to retain
talented associates and it became the first company (in retailing) to offer employee stock options.
In addition, they also had a profit linked reward plan in place, which attached 15%-35% of
bonuses to employee performance. They were able to curtail attrition levels by maintaining an
employee satisfaction index, which was updated every six months.
All these employee development initiatives resulted in Shoppers' Stop nurturing the best work
force in die retail industry and it became a lucrative human resource capital for upcoming retail
chains. All these initiatives paid off in 2003, when the company made a profit before tax of Rs 102
million for the financial year ending March 2003. This increased to Rs 120 million by March 2004.
Questions for Discussions:
1. Retailing is a very competitive industry, where customer satisfaction is the key to success. How
has Shoppers' Stop met this objective through its employees?
2. Retaining employee morale has contributed a lot to the success of Shoppers' Stop. How much
of the company's turnaround can be attributed to human resource management?
Additional Readings & References:
1. "Reflections on the Growth of a Retail Chain," www.domaiii-b.com, March 23, 2000.
2. Chaiterjee, Purvita, "At Last, Retail Wags," The Hindu Business Line, May 22, 2003.
3. "Shoppers' Stop Bets Big on CRM Moves Attracting Sales," -www.rmgindia.com. June 07,
2004.
4. Venkatraman, Lath a, "Falling Short on HR," The Hindu Business Line, June 28, 2003,
5. Howard, Elizabeth, "Ready to Scale up: India's Shoppers' Stop," European Retail Digest, Issue
38, Summer 2003.
6. Sabnavis, Madhukar, "Retail Brand Power," Business Standard, December 03, 2004.
7. Majumdar Jaidev, "Shoppers' Stop: Pulling out the Training Stops," The Financial Express,
December 11, 2004.
8. Kedia, Ankit, "IPO Profile-Shoppers Stop," www.content.icicidirect.com. April 28, 2005.

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