The Indian omnichannel retailer, which has worked with beauty multinationals like L’Oréal, Estée Lauder and Amorepacific, is anticipating an increase in the expansion of global beauty brands into India.
During an earnings call with investors, Anchit Nayar, CEO of beauty e-commerce, revealed that the firm was in close talks with global brand partners in the Americas, Europe and Asia.
“The feedback we’re getting [from global brand partners] is that India is clearly now very much on everybody’s radar,” he said.
“We hear a lot about this across manufacturing and electronics and other categories. I think it's equally the case for beauty. Everyone is now looking to invest into India.”
With more global beauty brands eyeing India as a potential future market growth driver, Nayar noted the importance of Nykaa’s focus on expanding its brick-and-mortar network.
“I think they see the work Nykaa has done in India, leveraging technology but also focusing on building stores. Having a very extensive network of physical stores is crucial for global brands when they are deciding on their go-to-market strategy.”
Currently, Nykaa has a network of 152 stores. These offline stores account for 8.2% of Nykaa’s beauty and personal care gross merchandises value (GMV).
In the first quarter ending June 2023, Nykaa recorded that offline retail GMV grew by 27% year-on-year.
A long-term opportunity
Nayar highlighted that India was a primary target market for many global beauty brands, following the market challenges experienced in China.
“A lot of global brands, both on the premium side, as well as the FMCG side have always historically prioritised China for driving a majority of the growth. But I think, with everything that they’ve seen – the lockdowns and impact of supply chain and the relatively tepid recovery of the luxury and premium market in China, everyone is looking for China plus one strategy,” he said.
The company has partnered with L’Oréal-owned Lancôme launched to launch on Nykaa both online and in physical retail stores.
Recently, Cosmetics major Estée Lauder has recorded a growth of 50% in India over the past year thanks to success of The Ordinary, which was launched in partnership with Nykaa.
Nayar noted that it was still “early days”, but international beauty players recognise that India represented a long-term opportunity.
“Everyone is very excited by the growth opportunity. And they know it's a multi-decade story. We're seeing a lot of interest and for the first time this level of interest from global brands.”
Nayar emphasised that the beauty majors were “keen to partner with the right retailers”.
“The optimism is high. There is an understanding that the market is still subscale, but there is a belief that it can be a very meaningful contributor to their business in the coming years and they are looking to partner with like to achieve their goals in India.”