Anchit Nayar, CEO of beauty e-commerce, Nykaa, said that India has become a “key priority market” for many global beauty brands.
“Especially after everything that happened in China, the kind of lockdowns that they faced in China that impacted their businesses. I think a lot of global partners are looking to diversify and de-risk from that market and India is a clear winner in that scenario,” he said during the firm’s 2023 full-year earnings conference.
“In terms of long-term strategic priority, India has emerged as probably the top two or three priority market for most global beauty companies. So that is, of course, very good news for players like ourselves.”
Over the last quarter, L’Oréal-owned Lancôme launched with Nykaa both online and in physical retail stores.
CosmeticsDesign-Asia previously reported that L’Oréal was aiming to grow its business in India, with CEO Nicolas Hieronimus admitting that the firm could do more to improve its presence in Asia.
In February, Japanese beauty major Shiseido announced that it was expanding its footprint in India with the launch of NARS Cosmetics into Indian department store chain Shoppers Stop.
Pressures in India will ease
Nayar highlighted that the beauty market in India had faced significant challenges due to price hikes and inflationary pressures.
“I think there was slight pressure on consumption of beauty in India in the short term in the past few months because of inflation and certain price hikes that brands had passed on to the consumers,” said Nayar.
He added that despite these challenges, the company’s beauty growth outpaced that of its competitors.
Over the past year, the company acquired more beauty customers in one year compared to the previous two years as a result of the company’s customer acquisition acceleration.
The company believes India was moving past these challenges and the beauty sector would flourish.
“We think that it should be less of an issue for our consumers, it wasn't much of an issue for our premium consumers last year, it should become even less of an issue for this year. We are quite optimistic that that should help further fuel demand for both the online, as well as the offline beauty business.”
Nayar continued: “We do see consumption at quite healthy levels in the short term. I think long term, the picture is still very, very bright, as I said, a lot of global focus on India as a market and as I spoke about earlier, the per capita consumption is at some of the lowest levels in the world. And we are all seeing very early signs that this is improving in a very meaningful way.
‘The right mix is needed’
Nykaa CEO Falguni Nayar highlighted the importance of investments in the brick-and-mortar retail space for its beauty business.
“Obviously, e-commerce profitability is better than physical retail profitability, but we believe that the right mix is needed. Why should my customers go into third-party retail stores, when they want to once in a while try out something like a foundation or a lipstick?
“So in my mind, physical retail is a certain investment that we need to make, even if it is adverse to overall profitability. So, the optimum mix of online offline and beauty is what we are chasing.”