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What’s behind the beauty retail boom in India?

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The rise of D2C brands, technological innovations, and changes in consumer lifestyle and awareness are all leading to the makeover of the beauty and personal care market in India

Bengaluru: Nykaa opened 45 offline stores in 2022, taking its total store count to 141. Tata Group forayed into the cosmetics business with an e-commerce marketplace Tata Cliq Palette. Shoppers Stop expanded the retail footprint of SS Beauty stand-alone stores to 10 and is aiming to add 12-15 standalone stores and 12-14 departmental stores in FY24. Furthermore, Reliance Retail launched its own online beauty platform Tira with the first store expected to open in Mumbai in April to compete with the aforesaid beauty giants.

Add to this the numerous direct-to-consumer (D2C) brands that are mushrooming and going omnichannel. According to media reports, there are over 80 D2C brands across the beauty, personal care, cosmetics, and men’s grooming in the country. Clearly, the beauty and personal care (BPC) industry scene in India is heating up.

The BPC market size of India reached $26.3 billion in 2022, from $15 billion in 2021 according to research by IMARC Group. Going forward, the market is expected to reach $38.0 billion by 2028, exhibiting a growth rate of 6.45% during 2023-2028.

Fast-paced growth of homegrown giants

E-commerce beauty retailer Nykaa is one of the key players in the cosmetics and personal care market. The company recorded a 33.2% increase in operating revenue to Rs1,462.8 crore in the reporting quarter from Rs. 1,098 crore in Q3 financial year (FY) 2022.

Seven-year-old omnichannel beauty brand Sugar founded by Vineeta Singh also emerged as one of the biggest players in India’s D2C segment. The cruelty-free makeup brand achieved a milestone of operating 50 high street stores in January this year. Its count of exclusive brand outlets (EBOs) touched 150 in February.

Other brands in the category too are witnessing significant growth. “We have grown our revenues almost 3X in FY2022-2023 compared to the previous fiscal year,” said Priyank Shah, co-founder of Renee Cosmetics. The brand started operations onset of the pandemic in 2020 but managed to reach over 50 million consumers in two years.

Skincare brand The Body Shop has also been on an expansion spree. The company reached 200 store milestone in 2023 with a presence in over 65 cities in India.

Natural personal care brand Lotus Herbals expanded its presence at the international level selling its products in more than 16 countries including Canada, the USA, New Zealand, UAE, Mauritius, Bangladesh, Nepal, etc. “Our global ambitions shall revolve around reaching 32 countries through our home-grown and partner brands,” said Nitin Passi, managing director of Lotus Herbals.

New entrants

Multiple retailers have forayed into the BPC sector post-pandemic.

Reliance Retail is planning to open offline stores of its soon-to-be-launched e-commerce beauty platform Tira. The company would open its first offline Tira store in Mumbai and plans to expand its presence in the country, both in a shop-in-shop format and standalone stores.

Designer Masaba Gupta’s fashion and lifestyle brand House of Masaba has launched its own dedicated makeup line named Lovechild Beauty in-store and online in August 2022. Recently LoveChild by Masaba also launched on Myntra’s live shopping platform.

Tata Group’s e-commerce platform Tata Cliq launched its own beauty e-commerce brand Tata Cliq Pallete in 2022. The brand is looking to open physical stores with an initial focus on metro cities followed by expansion in tier-2 cities.

Indian department store chain Shoppers Stop launched SS Beauty in 2022 and it is already contributing 16% of the overall sales of Shoppers Stop. Within a year the company opened 10 stand-alone stores of SS Beauty.

What’s behind the boom?

The majority of the growth of the sector can be attributed to changing lifestyles and growing consumer awareness.

“Consumers in India are evolving, becoming increasingly conscious of skincare and body care, thus fuelling growth of the segment. It is therefore no surprise that the beauty business is slated to grow to almost $25-$26 billion by 2025,” said Anmol Sikka, director of beauty and personal care at Myntra.

The pandemic led to the launch of myriad online D2C brands as online shopping surged, particularly during the lockdown when supermarkets, department stores and salons were not accessible.

“There are multiple niches that have emerged due to the diverse consumer demand for beauty and personal care products, which has given rise to a number of D2C brands that are filling in this need gap. The early adoption of makeup among teens and early jobbers have also been huge growth drivers to the beauty and personal care market,” added Sikka from Myntra.

A growing number of working women and higher disposable incomes are also contributing to the sector’s sudden expansion. “Our market research says that the purchasing power of the middle-income group has widened, especially women; the market size has also grown, coupled with higher spending per customer within the market. We are optimistic that this trend is here to stay and will continue to grow for India in the near future,” said Shah of Renee Cosmetics.

Interestingly, the growth is not just seen in metros or big cities but also in smaller towns of the country.

“The boom of e-commerce also caused this wave of self-care to hit tier-2 and tier-3 cities, which further widened this industry post-Covid. Non-metro cities contributing to 65% of Pilgrim’s sales are proof that this widened industry will further power India’s $5 trillion GDP (gross domestic product) dream,” said Anurag Kedia, chief executive officer of skincare brand Pilgrim.

The pandemic has led to a trend where people strive for better and more conscious self-care, studying cosmetic formulas and using ‘clean’ beauty products. Brands too are coming up with such products and innovations to cater to the evolving consumer needs.

“Consumers today are looking for products that offer convenience, efficiency, and effectiveness,” says Aanchal Malhotra Gupta, co-founder of amág Beauty. For instance, the brand recently introduced products with BLIP (blue light insta protects) technology, which blocks out blue light rays from devices, a major cause of skin damage, premature ageing and wrinkles.

Since the fashion industry is changing body standardization, beauty brands are also becoming increasingly transparent and inclusive. “The beauty and wellness market in India is vast, with different sections catering to diverse skin and body types. This diversity among people has resulted in an increased demand for different products, creating a wealth of opportunities for brands to enter the industry,” said Sachin Chadha, director of Milap Cosmetics, a Delhi-based cosmetic brand.

“Another major fillip to the beauty and personal care market has been the emergence of men’s grooming, which has recorded a 135% growth (in Jan 2023), on Myntra, with brands like Bombay Shaving Company and The Man Co. gaining in popularity and momentum,” said Sikka.

Future growth scenario

Globally, the total market opportunity for the cosmetics industry was $401.10 billion in 2021 and is expected to grow at 5.25% CAGR (compound annual growth rate) over the forecast period to reach $604 billion by 2029, according to Maximize Market, a consumer goods and services-consulting firm.

Looking further into the future, the industry is likely to expand and introduce cutting-edge technological innovations with the incorporation of artificial intelligence.

Many companies are investing in expansion and digital presence, Milap Cosmetics, for instance. “In 2023, the company is getting aggressive with digital marketing and planning to get a face for its brand. This indicates that the company is continuing to invest in its marketing efforts and is prioritizing building its brand identity,” said Chadha from Milap Cosmetics.

Since consumers are back in stores retailers are planning massive offline expansion. “We want to increase our beauty advisors-assisted multi-brand outlets by approximately 2X as to our present ones, foray more into airports across the country and launch EBOs; we are currently present in 150 cities and intend to increase our presence to 350 cities,” said Shah from Renee Cosmetics.

D2C vegan beauty brand Plum is planning to open 100 stores across India, “We have charted out a roadmap for the next two years wherein we will be opening over a 100 stores across the country,” said Shankar Prasad, chief executive officer of Plum in a previous release.

Luxury beauty and hair product brand Maison D’ Auraine is also focusing on offline expansion. “We currently have partnerships with over 10,000 premium salon chains across 250 Indian cities. We are all set to introduce nine new brands exclusively in the hair, beauty and personal care space along with eight new store launches in 2023,” said Arpit Jain, founder of Maison D’Auraine.

The brand also plans to expand its offline footprint to over 500 cities by the end of the fiscal year, he added.

Several homegrown brands are also looking for a global expansion in the coming years. “Our global ambitions shall revolve around reaching 32 countries through our home-grown and partner brands,” said Passi from Lotus Herbals.

“We also want to penetrate more GCC (Gulf Cooperation Council) countries with retail partners in the form of our EBOs,” he added.

The global teams of Lotus are already working on a long-term strategy based on distribution networks, retail partnerships, D2C, and B2B (business to business) market scope according to Passi.

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