Nykaa expands with posh Mumbai store; heats up beauty market game

In 2013, when Nykaa made its debut, the Indian beauty market was a vast landscape waiting to be explored. Offline retail choices were few and far between, confined to a handful of brands, while e-commerce platforms were just starting to explore their potential.

The emergence of e-commerce has transformed the beauty industry, enhancing product accessibility for consumers from diverse demographics. Nykaa is leading the charge in this transformation.

The beauty and wellness marketplace has opened its latest ‘Luxe’ store in Mumbai, located at the Phoenix Palladium in Lower Parel. The 3,000 sq ft showroom offers a curated selection of renowned international beauty brands, including Yves Saint Laurent, Tom Ford, Estee Lauder, Charlotte Tilbury, and Huda Beauty, among others.

afaqs! engaged in a conversation with Anchit Nayar, ED & CEO of Nykaa, during the launch of the store.

“Nykaa has revolutionised beauty consumption in India, democratising access for both consumers and brands." 

Anchit Nayar, ED & CEO of Nykaa

According to him, in the past, international brands had difficulty entering the Indian market because there were not enough partners or retail infrastructure. "We developed the ecosystem that made it possible for this category to expand," he added.

 "India's beauty consumption is still one of the lowest in the world. On the other hand, this highlights the promise that has not yet been realised," 

Anchit Nayar, ED & CEO of Nykaa

What are the key gaps in the market that still need to be addressed?

"When you ask about the market gap, the entire market is a gap." However, he was optimistic that the beauty category in India "will continue to expand for many years in the future".

Pioneering omnichannel retailing

Nykaa understood early on that enhancing customer experience across various touchpoints, such as physical stores, e-commerce websites, mobile apps, social media, etc., could be the key to its success. 

Nayar says that Nykaa has used an omnichannel approach since the beginning. A year after the launch of its e-commerce platform, the company built its first retail store in 2014.

"We have 228 stores in India today, which is more than any other beauty platform." This approach has enabled Nykaa to cater to customers with a wide range of preferences, from those who appreciate the tactile experience of buying in-store to others who emphasise the convenience of online replenishment.

Beauty is a category in which customers desire to touch and experience the products. He points out that it is not something that can depend only on e-commerce or offline shopping. Nayar adds that, in spite of this, the online segment remains the most important, accounting for 90% of Nykaa's total sales.

Competing in a dynamic environment

In India's online beauty and personal care sector, Nykaa has a 38% stake. This makes it the biggest player in this sector, far ahead of competitors such as Amazon and Flipkart.

The opening of the new store at Palladium is a reflection of the evolving and expanding dynamics of India's beauty business. The new store is located in the same building as the Tira store and the Sephora Beauty store.

When asked if this is a deliberate move and how the brand would tackle competition, Nayar responded, "Since its inception, Nykaa has faced scepticism and fierce competition."

In 2012, when the company was conceptualised, e-commerce giants such as Amazon, Flipkart, and Snapdeal dominated the market. Critics were sceptical about the feasibility of a platform that centred on beauty, and they suggested that the founder change their focus to areas like electronics or fashion.

"We have shown that everyone was mistaken." Nykaa continues to be unaffected, even with the arrival of new competitors such as Tata and Reliance. The company believes that there is plenty of opportunity for several players to expand in a market as large and underdeveloped as India's.

"The beauty category in India has a lot of potential for growth in the future. This is the best opportunity," he added.

Plans for expansion and innovation

Nykaa has ambitious aspirations to further consolidate its dominance. The company plans to increase the number of its physical stores by almost double over the next three years by adding 220 to 250 additional locations. 

"After that, we will evaluate the state of the market again. If the market grows, we might open even more stores," said Nayar.

The brand is also trying out quick commerce with its 'Nykaa Now' programme, in addition to its physical shop. This concept is already exceeding expectations in Mumbai, Delhi, and Bangalore, where it has been piloted. Nayar said that additional announcements on its rollout will be made in the near future.