Livemint: November 27, 2017
Bengaluru: French beauty and cosmetics retailer Sephora, part of luxury conglomerate LVMH Moët Hennessy Louis Vuitton SA, plans to introduce 14 additional exclusive brands in India over the next year and is in the process of increasing its average store size. It also plans to open 6-8 new stores every year and will set up its next store in Kolkata, a top executive at Sephora India said.
While the popular beauty retailer has been in India since 2012, it started expanding in the right earnest only after textile firm Arvind Ltd came on board as a partner in September 2015. There are now 14 Sephora stores in the country and the goal is to get to 50 stores across the top 15 cities.
“We are seeing some fantastic double-digit (revenue) growth in the business from like-for-like stores. That’s been the journey and I think it’s going to continue for years to come,” Vivek Bali, chief operating officer of Sephora India at Arvind Lifestyle Brands Ltd, a unit of the larger Arvind Ltd group of companies, said in an interview.
Arvind Lifestyle Brands also retails foreign labels such as Tommy Hilfiger, Nautica, Ed Hardy, GAP, Aeropostale and The Children’s Place in India.
Sephora already sells 23 exclusive brands, i.e. brands that are only available at its stores or on its website, in India and plans to add more to that list in the coming year.
Exclusive brands account for about 30% of the retailer’s sales in the country and include names like Benefit Cosmetics, Make Up For Ever and Smashbox.
Its eponymous makeup and skincare label accounts for nearly 24% of total sales. The rest comes from third-party brands.
Sephora India is also transitioning from existing stores to bigger stores, as the number of brands it stocks increases, Bali said. The average size of the older Sephora stores was between 2,700-2,800 sq. ft. It has now gone up to about 3,200 sq. ft.
The beauty retailer plans to open its next store in Kolkata by early December. Over the next three months, it also plans to open a store in Hyderabad and launch its second store in Chennai.
Within categories, makeup is both the largest contributor and the fastest growing for Sephora in India, Bali said. Makeup is growing at 40%, while the second and third-largest categories—skincare and fragrances—are clocking close to 25% each.
Makeup is the fastest-growing category at Nykaa too, especially products that are in the mid-to-premium pricing range, the cosmetics e-tailer’s founder Falguni Nayar said. That’s in contrast with the typical global scenario where skincare is the largest category, Nayar added.
The colour cosmetics industry in India grew at a compounded annual growth rate (CAGR) of 21.3% between 2011 and 2016 in terms of value, Euromonitor International said in a report. In contrast, the skincare market grew at a 14.7% during the same period. Colour cosmetics will grow at a CAGR of 8.8% between 2016 and 2021, Euromonitor predicts, faster than skincare that will likely grow at a 4.8%.
“The beauty and personal care sector is showing promise in India. There is significant increase in consumers discovering new products digitally, increasing spend and the number of male customers, and each member of a family choosing their own product and brand rather than sharing just one,” said Sreedhar Prasad, partner at KPMG in India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.