Is India the next global beauty retail destination?

From being ‘fair and lovely’ to groomed, gorgeous and confident, India has seen its big beauty makeover. With social media boosting the awareness, and companies trying to encash on the growing demand, a bevy of products are now available in the market. In the last couple of years, Reliance Retail has entered the beauty retail market with Tira and acquired Sephora India’s operations, signalling a robust market potential. Nykaa too launched its IPO in 2021. India has one of the lowest per-capita spending on beauty and personal care (BPC) at USD12 per annum, as per Euromonitor International. While of course the large population leads to India having a much lower per capita, and add to that, the use of this category varies vastly from urban to rural parts of the country; new players, both Indian and international retailers, entering this market signals to the fact that they are betting heavily on India’s potential as a key player in the global BPC market. Anchit Nayar, CEO, beauty e-commerce, Nykaa, says, “the per capita consumption of beauty in which India is still relatively low compared to other similar markets and so that number is set to grow on a per capita basis quite meaningfully over the coming years,” during the Q4FY24 earnings call. “We are seeing a shift in the consumption behaviour from personal care to beauty, and that is again a trend seen in other markets as their GDP per capita and consumption per capita increases, there is this shift that does occur which is beneficial to a platform like Nykaa, which is predominantly a beauty retailer,” adds Nayar. Credits to social media that Indians are now increasingly embracing BPC products. Platforms like Instagram, YouTube, and Facebook are filled with tutorials namely “Get Ready With Me” or “#GRWM”, where beauty influencers demonstrate new products usage. This widespread access to information has shifted consumer behaviour, indicating a growing desire among Indians to take better care of themselves and look more presentable. Will the expected increase in grooming expenditure make India the next global beauty retail destination? It certainly seems to be heading that way. 110597352The UK-based premium skincare brand, The Body Shop, is among the beauty companies that is capitalising on India’s expected growth. The company, which is shutting down half of its outlets in its home turf and undergoing management restructuring, is expanding rapidly in India. It has products now available across quick-commerce platforms like Blinkit and Swiggy Instamart. Iconic celebrities like Rihanna and Selena Gomez have launched their brands Fenty and Rare Beauty, respectively, over the last few years in India as well. New retail channel driving growth The rise in demand for BPC has led brands to ensure that their retail strategy is on point. While general trade or kirana stores continue to be the primary retail channel for all well-established products, the significance of e-commerce and quick commerce has grown, especially with the rise of newer product launches such as serums, primers, and tints to name a few. 110597329Indian brands specially have successfully managed to work out a retail strategy to be omnipresent across all platforms, from neighbourhood kirana stores to quick-commerce apps. Interestingly, even international brands that were earlier primarily store-based or only e-commerce based are also focusing on expanding their retail presence. Harmeet Singh, VP, marketing e-commerce and product, south Asia, The Body Shop, says “over the past decade or so the retail landscape has gone through a massive shift, especially due to the pandemic. Quick commerce, which is the new highlight, where consumers don’t want to wait for more than 10 minutes to get their order, is giving huge competition to all retailers in terms of how to keep up and stay ahead of the innovations and the experience that consumers are exhibiting while shopping.” Speaking about quick-commerce, Kaushik Mukherjee, co-founder, SUGAR Cosmetics, told ET Prime, “we were one of the early adopters of Q-commerce. We have our affordable brand SUGAR POP and skincare brand QUENCH on quick commerce. These happened in a phased manner. The earliest brand we partnered with was Zepto.”“SUGAR with all its three brands (SUGAR, SUGAR Pop, and Quench) is doing nearly INR1.5 crores to INR2 crores a month from these platforms,” adds Mukherjee. The continued relevance of physical storesThe consumer lifecycle for BPC products across the globe now starts with social media, followed by online research, checking their availability across various digital retail platforms, and finally seeking the best discounts to buy the same. However, the need to try the products physically, especially colour cosmetics, remains unchanged, leading customers to visit stores. Nykaa, the poster girl for BPC e-commerce retail in India, is now operating 187 outlets across 68 cities, as of March 31, 2024. “If I look at the organised sector, that is expected to grow from USD5 billion to USD9 billion, so 14% growth, and that’s where our specialty retail brick-and-motor stores, such as Nykaa Luxe, Nykaa On Trend, and Nykaa Kiosks, are playing in that segment of the market,” says Nayar. He does mention that the online channel is expected to grow at CAGR of 29% to reach USD10 billion by 2027 and is therefore the fastest growing channel still. In addition to opening the largest beauty retail outlet, Tira, spanning 4,300 sq ft, Reliance Retail also acquired the India rights of Sephora for INR99 crore in November 2023, and is now operating 26 Sephora stores across 13 cities. Shoppers Stop, one of the leading department stores in the country, launched its first SSBeauty Store in 2019. The company, as of Q4 FY24, is operating 87 SSBeauty stores. Additionally, it launched a 9,000 sq ft store in Kolkata, two beauty exclusive brand outlets (EBOs), and a 3,000 sq ft store at Bengaluru airport. Beauty as a category contributed 18% of the total sales for the quarter and outperformed every other category. One last thingIndia’s BPC market overall is expected to grow at a CAGR of 3% during the next four years. In addition, India has been amongst the fastest-growing markets in the world between 2019 and 2024, growing at approximately 7% CAGR. The large population of the country, combined with the percentage of consumers representing the millennials, GenZ, and Gen Alpha, positions it as one of the most lucrative markets globally. Combine that with the stickability of the brands, repeat purchase, and high value-to-volume ratio when it comes to stock keeping, BPC is a retail golden goose, which keeps on giving. The competition for the beauty retail market of India is just beginning, with both domestic and international brands and/or retailers vying for a piece of this market. (Graphics by Manali Ghosh)