‘We should never underinvest’: Nykaa reinforcing offline business with 50 more store openings in 2023

Last year, Nykaa opened its 100^th​ brick-and-mortar store. By year’s end, it had launched 135 beauty and personal care stores across 56 cities in India.

CEO Falguni Nayar revealed that the company will continue this momentum with 50 more offline stores as she sees more opportunities for growth.

“In spite of growing our stores quite aggressively now, a very large number [of consumers] are online. Our offline sales in beauty still account for less than 10% of our total sales – 8.6% for this quarter and 8.1% on a nine-month basis. We will continue to roll out more stores. Expect another 50 more stores over the next year,”​ she said during the firm’s latest third-quarter (Q3) earnings call.

In the three months ending December 2022, Nykaa’s physical retail stores achieved a gross merchandise value (GMV) of INR1.65bn (USD19.9m). This accounted for 8.6% of total beauty and personal care GMV for Nykaa, up from 3.2% last year.

“There is a fair amount of uptick in offline sales growth. I think offline sales growth throughout this year has been very robust,” ​said Nayar, who is also the executive chairperson and managing director.

In addition to its new store openings, the company has also invested in increasing its fulfilment capacity. The company now has 37 fulfilment centres, with a total capacity of 1.2 million square feet in 15 cities across India country.

The company’s investments into new brick-and-mortar stores and fulfilment centres played a part in the 71% slump in consolidated net profits in Q3 to INR85 crore (USD1.02m), despite a 33% increase in revenue to INR1,462 crore (USD177m).

However, Nayar emphasised the importance of its beauty and personal care business to Nykaa’s future growth.

“Our consolidated beauty business is very important, and, in our opinion, we should never underinvest in that. We will continue to acquire customers for the beauty business both online and offline.”​

Nayar continued: “Our number one priority is towards investments, and I don’t think we would deprive this business of any amount of investment. Investments in inventory, warehouses, and stores will be needed to continue to support it.”​

She added that the firm aspires to emulate international beauty titans such as the Estée Lauder Companies or L’Oréal Group.

“We would like to build private label brands in beauty and become a consumer company like an Estée Lauder or L’Oréal coming from India.”​

Quoting consultancy firm Reedseer, Nykaa said that over the next five years, India’s online beauty market was expected to outpace India’s beauty and personal care market at a CAGR of 29%, while retail was