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8/8/2019 Shopper's Stop UK Entry Analysis
http://slidepdf.com/reader/full/shoppers-stop-uk-entry-analysis 1/21
Entry to the UK Market
Entry Strategy to
the United Kingdom Market
For Shoppers Stop (India)
May 2010
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Entry to the UK Market
List of Contents Page
Chapters and Appendices
Executive Summary 1
1 Introduction to the Assignment Brief 2
2 Market Analysis – The United Kingdom 3
2.1 General Information 3
2.2 Cultural and Social Analysis 4
2.2.1 Languages 4
2.2.2 Religions and Its Influence on business 4
2.2.3 UK Traditions and Manners 4
2.2.4 Attitudes relating to foreign products 42.2.5 Rankings on Hofstede’s Cultural Dimensions 5
2.3 Economic Analysis 5
2.3.1 Demographic Analysis 5
2.3.2 Income Analysis 6
2.3.3 Provision of Infrastructure 8
2.3.4 Inflation Rate and Exchange Rate 9
2.3.5 International Trade Statistics 10
2.3.6 Business Investment 10
2.4 Political and Legal Analysis 11
2.4.1 Political Ideology and Role of Politics 11
2.4.2 Relationship: India and United Kingdom 112.4.3 Legislation, and Import & Export Regulations 12
3 Marketing Strategy and Plan to enter the UK market 13
3.1 Introduction to the Product 13
3.2 Situation Analysis and Justification to enter the UK market 13
3.3 UK Market Entry Strategy and Plan for the Shopper’s Stop 13
3.3.1 Product Decisions 13
3.3.2 Marketing Decisions 14
3.3.3 Financial Projections 14
3.3.4 Overall Strategy Aspects 14
4 Bibliography 16
5 Shoppers Stop 17
5.1 Shoppers Stop First Citizen - a loyalty programme and a virtue 17
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Executive Summary
The Shopper’s Stop is a prime retailer in India and is the only member of the prestigious
organisation IGDS. The Shopper’s Stop has become a household name since opening in 1991.
This technical paper discusses the potential for Shopper’s Stop to enter the UK market and thestrategy aspects that the Shopper’s Stop should focus on.
The analysis of the UK market suggests that the recent economic downturn has had a huge
impact on the country’s GDP. Also, the spending power was reduced which has now increased,
giving a good sign of recovery. The political situation does appear to be favourable and the
relationship (be it business or education or general) the two countries – India and United
Kingdom – share is also favourable.
The entry strategy suggested in this paper suggests that the Shopper’s Stop should enter the UK
market as a ‘sole’ entrepreneur and that the pre and post marketing is crucial to the overall
success in the business operation. Also, Shoppers Stop is advised to meet the regulators to
completely understand their requirements and how Shoppers’ Stop can meet these and stillensure the business in the first year of its operation and many more to come.
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Entry to the UK Market
1 Introduction to the Assignment Brief
For the purpose of this assignment, I have chosen The Shopper’s Stop, a Fashion and Lifestyle
store in India, whose foundation was laid by Raheja Group of Industries (RGI) in the early
1990s. RGI is a leading hospitality and real estate developer and they have achieved yet another
milestone with its lifestyle venture – The Shopper’s Stop.
It is noted that Shoppers Stop is a household name but it started as just another retail outlet in
India. Today, its services, quality of products, and overall customer experience have become
world class. With enormous credibility they have become the highest benchmark for the retail
industry in India. They continue to expand and try to achieve even higher goals than they have
already achieved.
It is understood that Shopper’s Stop has become the member of the prestigious Intercontinental
Group of Departmental Stores (IGDS), and there is only one retailer from India. IGDS consists
of 30 experienced and well known retailers from all over the world, including Selfridges
(England) and Marks & Spencer (M&S).
The Shopper’s Stop’s vision is to be a global retailer in India and maintain its No. 1 position inthe market in the Department Store Category. Their vision also includes the following1:
• We will not take what is not ours.
• The obligation to dissent (against a viewpoint that is not acceptable).
• We will have an environment conducive to openness.
• We will believe in innovation.
• We will have an environment conducive to development.
• We will have the willingness to apologies and forgive.
• We will respect our customers’ rights.
• We will create an environment of trust.
• We shall be fair.
• We will be socially responsible.
The remaining report will attempt to analyse the market in the United Kingdom and based on
this analysis will form a marketing strategy and marketing plan.
(Source: See ‘Bibliography)
1Shopper’s Stop – Official Corporate Website (http://corporate.shoppersstop.com)
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2 Market Analysis – The United Kingdom
I have selected the United Kingdom as a market the Shopper’s Stop wish to enter, as instructed in the
assignment brief.
A budget allocation of £1000 is made for this preliminary market analysis which will inform the brief
marketing strategy and plan discussed later in the report.
2.1 General Information
The United Kingdom (UK) was created out of kingdoms of England, Wales, Ireland and Scotland. The
UK is a constitutional monarchy. The Queen Elizabeth II is head of state for the UK and other 15
Commonwealth Countries.
Figure 2.1 illustrates the location of the chosen countries in the context of the rest of the world.
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Figure 2.1 – the United Kingdom – in world context
2.2 Cultural and Social Analysis
2.2.1 Languages
The UK’s national language is English. Although, the mostly spoken language is English, the country
also has some population speaking Irish, Ulster Scots, Scottish Gaelic, Scots, Welsh, and Cornish.
Overwhelming proportion of people speak English and this is considered as a positive note for the local
and international business who have either established or being considering doing business with the UK.
2.2.2 Religions and Its Influence on business
The main religion in the country is Christianity (72%) and second biggest share, as per statistics, are
people who do not believe in religion.
It is understood that there is not a great range of religions in the UK and most of the other religions suchas Hinduism and Sikhism have been brought into the country by the migrants.
Figure 2.2 illustrates the distribution of the UK Religions, based on the Census 2001 information.
72%
15%
8%
3%
1%
1%
0%0%
UK Religion Distribution
Christianity
None
Not stated
Islam
Hinduism
Sikhism
Judaism
Buddhism
Figure 2.2 – UK Religions
2.2.3 UK Traditions and Manners
The UK people are considered to be traditional people with particular inclination towards personal
hygiene. The majority of the UK’s population (including migrants) is thought to be spending fair amount
of the earnings on food, drink, clothing and travel.
2.2.4 Attitudes relating to foreign products
Historically, the UK market and its consumers have given a decent reception to the business owned by a
foreign national (e.g. Iceland, TESCO)
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2.2.5 Rankings on Hofstede’s Cultural Dimensions
Prof. Geert Hofstede conducted arguably a very comprehensive study and analysis on how culture
influences the values in the work place.
Basically, there are five dimensions which are given scores from 1 to 100 and when compared with the
world average score for each this gives a good indication of how market, society and the culture willinfluence on the values in the work place.
Figure 2.3 presents the UK’s rankings on Hofstede’s Cultural Dimensions. Of all 5 dimensions, the UK
scores considerably higher on the ‘Individualism’ dimension with 89, compared to the world average of
43. Another dimension which the UK scores higher is the ‘Masculinity’ where the country scores 66
compared to the world average of 50.
35
89
66
3528
5543
50
64
45
Power Distance
Index (PDI)
Individualism
(IDV)
Masculinity
(MAS)
Uncertainty
Avoidance Index
(UAI)
Long-term
Orientation
(LTO)
Geert Hofstede
Cultural Dimensions
UK World Average
Figure 2.3 – Hofstede Cultural Dimensions – United Kingdom
2.3 Economic Analysis
2.3.1 Demographic AnalysisIt is noted that the population of the United Kingdom was 61million in mid-2008 and it has seen an
increase of 0.7 percent compared to a year ago (i.e. mid-2007). This is equivalent to an average increase
in population of over 1,000 per day.
Population growth has increased in a steady stream over the past few years. Since 2001, the population
has seen an average growth of 0.5 percent per year, compared to 0.3 percent and 0.2 percent growth
between 1991 – 2001 and 1981 – 1991.
The recent growth is due to increase in birth rate and reduction in death rage and also due to changes seen
in the pattern of international migration into and out of the UK.
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0
50
100
150
200
250
300
1998 2000 2002 2004 2005 2006 2008
o p u a o n o u s a n s
Population Change (2008)
Natural Change
Net migration & other changes
Figure 2.4 – Population Change (2008)
The UK population is arguably ageing. The percentage of the population of 65 years old has gone up by 1
percent between 1983 and 2008. This is an increase of 1.5 million people for this age group. Over the
same period, surprisingly, there has been a 2 percent reduction is the population of people aged 16 and
under. The trend is projected to continue over the next couple of decades. It is predicted that by 2033,
there will be an 18 to 23 percent increase in the population aged 16 & under and aged 65 respectively. It
is noted that the population aged 85 and over has seen the fastest increase. The number of people aged 85
is estimated to double to reach 3.2 million.
2.3.2 Income Analysis
Further to the recent recession, it is reported that an average earning of household has increased in the
year to March 2010. In February rate of growth in income was 2.5 percent which has increased by 1.5
percent reaching 4.0 percent in March 2010. Refer to Figure 2.5.
The recession has had a huge impact on the United Kingdom’s Gross Domestic Product (GDP). It was
reported to be at steady growth of 2.5 percent between 2005 and 2007. However, since later part of 2008
till late 2009 or early 2010 it has been negative. However, recently the country appears to be emerging
out of recession and has managed to achieve 0.3 percent of average growth in GDP in the first quarter of
2010. Refer to Figure 2.6.
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Figure 2.5 – Average Weekly Earnings
Figure 2.6 – GDP Growth: 2005 to 2010
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2.3.5 International Trade Statistics
The United Kingdom current account deficit has reduced by £4 billion in 2009 reaching £18.4 billion
compared to a year ago when it was £22.0 billion. The 2009 deficit is equal to -1.3 percent of the
country’s GDP, compared to -1.5 percent of GDP a year ago.
The improvement in the current account deficit is largely the result of the reduction in the deficit on tradegoods by £11.6 billion. This reduction in the deficit on trade goods was due to the surplus on trade in
services decreased and also the surplus on income decreased by some margin.
Figure 2.10 – the United Kingdom Current Account Deficit
2.3.6 Business Investment
There has been an increase of 6 percent in business investment in the first 3 months of the 2010. Although
this is 11 percent lower than the first quarter of the previous year.
The recent rise in investment is contributed by the increase in capital spending by industries classified as
private sector non-manufacturing companies.
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Figure 2.11 – Business Investment (1983 – 2010)
2.4 Political and Legal Analysis
2.4.1 Political Ideology and Role of Politics
The 2010 has seen radical changes in politics of the United Kingdom. In May 2010, two of the biggest 3
parties – The Conservatives and The Libral-Democrats, achieved a coalition government, a first for nearlyfour decades.
However, the outlook appears positive as the new coalition government has been reported quoting:2
“We will make it easier for people to set up new enterprises by cutting the time it takes to start a new
business. Our ambition is to make the UK one of the fastest countries in the world to start up a new
business. We will reduce the number of forms needed to register a new business, and move towards a
‘one-click’ registration model.
We will support the creation of Local Enterprise Partnerships – joint local authority-business bodies
brought forward by local authorities themselves to promote local economic development – to replace
Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where
they are popular.”
2.4.2 Relationship: India and United Kingdom
The relationship between the two countries have been established in such a good terms no government
from either side shows any sign of intention to not continue nurturing over the next coming years.
2
The Coalition: our programme for government(http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_187876.pdf)
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The United Kingdom has seen a steady inbound flow of skilled workers. However, the relationship
between India and United Kingdom is not limited to this, but extends its horizon to education and
business. India is the second largest investor in Britain, while UK is the fourth in India. Approximately
over 500 Indian companies undertake business operations in London and generate revenue of around £16
billion, comparing with the UK investment in India of £4 billion.
2.4.3 Legislation, and Import & Export Regulations
From the legislation and regulations point of view, the Office of Fair Trade and European Commission
advise that any company wishes to undertake business in the United Kingdom will need to ensure the
following:
- The business has a complete knowledge of VAT and its various aspects
- The business has complete knowledge of the Import & Export regulation and its exemptions
- The business has complete knowledge of safety and labelling requirements and overall safety and
quality standards.
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3 Marketing Strategy and Plan to enter the UK market
3.1 Introduction to the Product
To start with, the Shopper’ Stop should aim to enter the UK market to sell its own products such as
women’s wear and men’s wear. As they gradually progress and establish themselves in the UK market,they should then attempt to introduce what they have been selling for years in Indian market (i.e. books,
home goods, etc.).
3.2 Situation Analysis and Justification to enter the UK market
The Shopper’s Stop’s business in India is surviving and, in fact, growing in these difficult times. They
have achieved £1.93 million of net profit in the first few quarter of the 2010.
The clothing and fashion industry in India is ever growing with the national average earning expected to
rise as the economy growth at 8 to 9 percent annual growth rate.
Further to the 2008/09 global economic downturn, the UK market and its’ consumers have seen some positive signs of economic growth. The Marks and Spencer (one of the only two IGDS member retailer)
has achieved 5% growth in net profit in the first quarter of the 2010. This shows a good sign of recovery
and encourages foreign retailers to come to the United Kingdom and establish themselves.
The exchange rate supports the argument to come and undertake business in India.
3.3 UK Market Entry Strategy and Plan for the Shopper’s Stop
3.3.1 Product Decisions
(i) Establishment
The shoppers stop is advised to enter the UK market as a ‘sole’ entrepreneur, and not as a joint venture.
This is because of the fact that due to various factors such as political status of promoting small
businesses and also likeliness of requiring less capital.
(ii) Pricing
The pricing will be derived based on detailed analysis of various costs incurred. The pricing should be
based on the price at other retailers and should also comply with competition standards and regulations
set by the Government of United Kingdom.
(iii) Target Consumer Base
Without any doubt, the consumer base should target the population group aged between 16 and above.
(iv) Channels of distribution
As this strategy suggests, the business should acquire shops at locations appropriate for its capital in hand.
3Shoppers Stop Official Corporate Site (http://corporate.shoppersstop.com/uploaded_files/575d0de-d30a.pdf )
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3.3.2 Marketing Decisions
(i) Pre-establishment Research and Decisions
There are a number of ways the Shopper’s Stop can promote their products. They have a joint venture
with Nuance Group in Switzerland. If possible the Shoppers Stop should acquire some knowledge from
their European partner.
Also, there must be a detailed and extensive research undertaken before any clear plans or strategies are
drawn up.
In addition to the market research, the Shoppers Stop are advised to arrange meetings with key regulators
and the Government officials to discuss its intention to enter the market and set out clearly what is and is
not agreed in principle. These meetings will provide a lot of useful information that will be most helpful
in defining the business plan for the proposed venture in the United Kingdom.
(ii) Pre-entry Marketing
There are a number of ways the Shoppers Stop can promote their products in United Kingdom. This does
not have to be only via the Internet. The Shoppers Stop should promote their products through various
other opportunities for example international trade fair. Also, some retailers (who work not in the same
industry) could provide assistance with the product marketing if it is proven that there could be
advantageous for them (i.e. offering the same type of arrangement through shoppers’ stop Indian outlets if
they wish (in short term of long term)) should they wish to enter the every buoyant Indian market.
3.3.3 Financial Projections
It is advisable for the Shoppers Stop to undertake a full analysis of costs involved in this venture. The
likely costs incurred to enter the UK market are:
- Pre-entry costs (i.e. strategy formulation, market analysis, research, etc.)
- Establishment costs (i.e. capital required to buy space for outlets and transportation of products
etc.)
- Post-entry marketing (i.e. Ads, in store promotions, etc.)
From the experience of other retailers who have explored UK market, it is not unreasonable to expect a
5% gain in profit in the first year. This is totally achievable.
3.3.4 Overall Strategy Aspects
In order to draw up a robust strategy, the Shoppers Stop should ensure that they:
(i) Set Objectives based on a timetable
The strategy should include a step-by-step and a complete guide to monitor their progress before and after
the entry to the UK market
(ii) Timing
The strategy should clearly identify the exact time of various activities. This is to ensure that the company
enters the market at the right time. This is very important some factors such as government policy,
seasonal sales gain, may not be same throughout the year.
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In addition to the above two points, the company should ensure that they are not rushing into the market
and the strategy should not underestimate the risks involved and should not over estimate the potential
return. Should the strategy show a ‘rosy picture’, it should be revisited as in most cases this ‘rosy’ looking
image of the foreign market is due to the ignorance about various risks that may have gone unnoticed
while the business formulates the strategy.
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4 Bibliography
Clothing Market Research in the United Kingdom. Article Available online at:
http://www.infomat.com/research/infre0000282.html
Geert Hofstede’s Cultural Dimensions. Available online at:
http://www.geert-hofstede.com/hofstede_united_kingdom.shtml
Information on Taxes, Import & Export Licence. Available online at:
http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1077947902
Information on Trade in United Kingdom. Available online at:
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?
_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000242&propertyType=document
Information on Population, Income, Age, etc is available at
http://www.statistics.gov.uk/census2001/glossary.asp#eng_wales
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Appendix A The Shopper’s Stop profilt
PROFILE
Shopper’s Stop Limited
Shopper’s Stop Ltd is a professionally managed and systems driven organisation promoted bythe K Raheja Corp Group (Chandru L Raheja Group), one of the leading players in the countryin the business of real estate development and hotels.
Pioneer of modern retail in India, Shopper’s Stop Limited has been instrumental in bringingabout retail revolution in India. Since it opened its doors, the chain has become the highestbenchmark for the Indian retail industry. Since it’s inception in 1991, Shopper’s Stop Ltd hasintroduced various retail formats in India. Apart from the flagship business of department stores,there are also specialty stores for books, home decor, cosmetics and maternity care & infant
care.
Symbolizing the era of global recognition for Indian retailers, Shoppers Stop Ltd is the onlyIndian retailer to be shortlisted in the Retail Advertising Award category for its in-store marketingat the retail industry’s globally recognized event – World Retail Congress. It is also the onlyIndian retailer to be nominated across all the categories this year. Shoppers Stop had beennamed the ‘Emerging Market Retailer of the year’ at the prestigious World Retail Awards, whichtook place on 10th April '08, in Barcelona. The World Retail Congress is the most influential andhighest profile gathering of the retail industry across all retail segments across the globe.
5 Shoppers Stop
Shoppers Stop is India’s largest retail chain of large format department stores with 30 stores in13 cities across the country occupying an aggregate area of over 1.97 million sq.ft with anoffering of more than 400 finest international and national brands.
India’s premier fashion and lifestyle destination, Shoppers Stop currently has 30 stores in 12cities viz. Bengaluru (3 stores), Chennai, Delhi (3 stores), Ghaziabad, Gurgaon, Hyderabad (3stores), Jaipur (2 stores), Kolkata (3 stores), Lucknow, Mumbai (8 stores), Noida, Pune (2stores) and Amritsar.
Shoppers Stop is also the only Indian member of the Inter Continental Group of DepartmentStores (IGDS) along with 29 other experienced retailers from all over the world. This has helpedthe company gain insight into the new and emerging practices followed internationally.
5.1 Shoppers Stop First Citizen - a loyalty programme and a virtue
Shoppers Stop’s virtue of always ‘putting the customer first’ has enabled it to pioneer a reward-based loyalty programme called Shoppers Stop First Citizen. With a growing base of over 1.5million members contributing over 72% to sales annually, Shoppers Stop First Citizen loyaltyprogramme is the biggest and most successful programme in this category.
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HomeStopHomeStop is the first-of-its-kind premium home concept store at Bengaluru, Mumbai – Maladand Vashi and New Delhi offering a wide range of products and some of the most reputednational and international brands.
It is a one-stop-shop for all home needs ranging from home décor to furniture, bath accessoriesto bedroom furnishings, mattresses to draperies, carpets to modular kitchens & healthequipment all under one roof.
Crossword Book StoreSpacious, well laid out bookstores that feature methodical classifications, clear signages,dedicated enquiry /orders desks and attractive displays along with cafés, reading tables andchairs within the store make Crossword the leader in the lifestyle bookstore category.
Its unique product mix of books, magazines, CD-ROMs, music, stationery and toys is further
enhanced with services like Dial-a-book and Email-a-book and facilities like gift vouchers and‘Return, Exchange & Refunds’ policy.
Mothercare & Early Learning Centre (ELC)
Shoppers Stop Ltd. has an exclusive retail arrangement (for the department store segment) withMothercare PLC of UK to open & operate shop-in-shops of Mothercare and ELC stores in Indiawithin Shoppers Stop stores. Mothercare, UK's premium international brand for maternity, infantand childcare products, currently has 23 stores at Shoppers Stop stores in leading metros.
Early Learning Centre (ELC), UK's number one educational toy brand for children aged 0-6years, is now available at Shoppers Stop stores in Mumbai - Malad & Juhu, and Hyderabad –Cyberabad, Amritsar and now in Bengaluru - Malleswaram.
Estee Lauder groupShopper’s Stop limited has entered into non exclusive retail agreement with world-renownedcosmetics major Estee Lauder to open M.A.C, Clinique and Estee Lauder stores in India. M.A.C(Makeup-Art Cosmetics) the professional brand of choice, is the first brand under the EsteeLauder Group of Companies' portfolio to enter the Indian retail market. Currently, with ShoppersStop Ltd. there are 12 stores operating in Mumbai, Bengaluru, Delhi, Chennai and now inAmritsar. Clinique currently has three "Clinique" stores i.e. two standalone (Delhi and Mumbai)and one shop in shop (Shoppers stop Malad –Mumbai).And, Estee Lauder has 3 stand alonestores, one each in Mumbai, Bengaluru and Delhi.
HyperCityShopper’s Stop Ltd. has a 19% stake in HyperCity with the option to acquire 51% in thecompany by June 30, 2010. HyperCity operates 6 stores of which two are in Mumbai – Maladand Vashi, one each in Jaipur, Hyderabad, Amritsar. And now also in Bengaluru.
HyperCity has redefined the experience of the Indian consumer in the big store format. Itsoffering includes food and grocery, general merchandise and apparel. The business operates a“More to Discover” by-line and delivers quality product at great value in a bright, spacious,modern environment.
Airport Retailing
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Shopper’s Stop Ltd.’s foray into airport retailing is marked by a joint venture with The NuanceGroup AG of Switzerland, the world’s leading airport retailer. Shopper’s Stop Ltd will handle theretail operations in the domestic terminals while the joint venture company will handle theoperations at the duty free zones in international terminals.
Shopper’s Stop Limited currently operates 1 store in Hyderabad domestic airport and 2 stores inBengaluru domestic airport. And 4 duty free stores are run by the JV Company in theinternational airports at Bengaluru and Hyderabad.
TimeZone EntertainmentShopper’s Stop Ltd. believes that the Indian consumers are looking for multiple options toentertain themselves and their families. It has forayed into the Entertainment sector by acquiringa 45% stake in Time Zone Entertainment Private Limited which is in the business of operatingFamily Entertainment Centres (FECs). It has 7 doors in Mumbai, Ahmedabad, Kolkata andHyderabad.
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