Morgan Stanley’s head of European research Teun Draaisma is out with a market outlook for 2010. According to the Morgan Stanley after an easy 2009, characterized by a sharp rebound in expectations and a river of cheap money, 2010 will be a slog.
Shopper’s Stop is trying to turn around Home Stop, its home solutions retail business
Shopper’s Stop is working on its subsidiary brand Home Stop to turn it around by the end of this financial year. Home Stop has been operational since the past three years.
“We are focusing on Home Stop and we believe that it will turn around by the end of this year. It should break even by the end of this financial year as the real-estate market is slowly reviving,” said Govind Shrikhande, president and chief executive officer, Shopper’s Stop.
He also added, “The home retail segment is one of the toughest categories for a retailer. You need to take care of the timing of entering this segment, examine the situation and judge the market. It is difficult to earn healthy margins from this segment as taxes, transportation and delivery costs are very high.”
Because the real-estate market was in the doldrums for the past 18 months, very few consumers were buying new homes. This directly impacted furniture sales in the home retail market. “Consumers expected a further fall in prices. So we reported subdued sales in the furniture segment over the past few months. But now, at the current rates, a few deals have started happening. We expect our sales also to pick up,” Mr Shrikhande told Moneylife.
He also pointed out that kitchen goods contribute more than 50% of the revenue generated from Home Stop.
“Kitchen goods have given us the maximum throughput in the home category. These goods can even be used as gift items for different occasions (irrespective of the fluctuations in the real-estate segment),” said Mr Shrikhande. He also said that earlier, Indians regarded furniture to be a lifetime investment. However, the mindset is gradually changing and furniture is being replaced in five to seven years, said Mr Shrikhande. — Pallabika Ganguly