Compared to rest of the world, prestige beauty is just getting started in the Indian market, said Anchit Nayar, chief executive of beauty e-commerce, Nykaa.
“The premiumisation of beauty is a trend that's happened globally, especially if you look at China over the past 15 years. And India has not even begun that trend yet,” he said during the firm’s latest third quarter earnings conference.
“Today, prestige or premium is less than 10% of overall BPC spend in India, so it's very under indexed.”
Nayar continued that Nykaa expects this to grow at a faster rate than brands at the mass or masstige level. He noted that mass and masstige brands were already well distributed in India at a “reasonably large scale”.
He assured that Nykaa was well-placed to benefit from this growth as it has large consumer base that consists of premium as well as non-premium shoppers.
“That is a massive opportunity for us to continue to acquire customers in the country because today's value shopper is tomorrow's prestige shopper,” said Nayar.
“The advantage that we have is ten years of being in this business. We have tremendous, we feel, brand equity in the market. We are recognised as thought leaders and are almost synonymous with beauty by the consumers.”
He pointed out that beauty overall has a relatively low penetration rate in India, giving Nykaa a “massive opportunity” to convert these consumers.
“India has historically been a personal care market, but if you look at other comparable markets, today's personal care shopper is tomorrow's beauty shopper, so there is a large number of consumers who will come into the beauty funnel.”
Nayar continued: “There are millions and millions of customers who currently are either buying personal care or other lifestyle categories who are not consuming beauty yet. So that is also low hanging fruit for us and that's where a lot of investment in terms of new customer acquisition will go.
Education and awareness key
The biggest challenge hindering the growth of premium beauty in India was education.
“It's not really an affordability issue. It's more of an awareness issue,” said Nayar.
“[There are] millions and millions of shoppers in India who are shopping online, who are comfortable with using digital forms of payment, who are shopping large ticket items in other discretionary categories but are still not buying beauty. There is tremendous opportunity for us to acquire those customers and do a lot of category awareness work on them.”
Nayar concluded: “We are very early in our journey in terms of total number of transacting customers on our platform. It is still small compared to the opportunity in India. So, there is a lot of investment and a lot of work, which we plan to do to bring more customers onto our platform.”
For the quarter ending December 2023, Nykaa’s parent company, FSN E-Commerce Ventures, reported that revenue from operations grew 22% to INR17,888m (USD215.4m) from INR14,628m (USD176,2m) the previous year.
The firm’s profit before tax grew 109% to INR265m (USD3.19m) compared to INR127m (USD1.52m) the previous year
