The battle for the $14 billion Indian beauty market is heating up, and there are at least two contenders vying for the retail crown.
One is a giant owned by LVMH that has spent decades building a network of 2,600 stores worldwide; the other is a homegrown upstart founded in 2012 from a small office in Mumbai. So far, Sephora’s attempts to outmanoeuvre Nykaa have failed to keep the nimble unicorn at bay.
“I think Sephora will have a tough challenge given that Nykaa [currently] dominates the market,” said fashion industry veteran and former editor of the Indian edition of Elle magazine Aishwarya Subramanyam.
Beauty industry leaders contend that, in just a few short years, Nykaa has leapt ahead of international competitors like Sephora, which entered India in 2015 through a partnership with Arvind Fashions Ltd. On the back of its strong e-commerce play, Nykaa has pursued an aggressive offline expansion plan resulting in 76 brick-and-mortar stores across India carrying an inventory informed by hyperlocal consumption patterns.
Now, according to Bloomberg, Nykaa E-Retail Pvt is readying for an initial public offering (IPO) as early as this year, which could see the firm reach a valuation of $3 billion or more. Despite the severe impact of the pandemic on the Indian economy, Nykaa says it will surpass the 100-store mark by the end of this year’s expansion.
Sephora, by comparison, has 24 stores across India and a dedicated e-commerce business.
In 2019, the French emporium bullishly announced it would open 75 stores over the next few years across Indian cities, but observers like Subramanyam are sceptical about its ability to meet this goal — and the pandemic is not the only reason for their doubts.
Though they are quick to acknowledge Sephora’s strong presence in India, some Indian beauty insiders suggest that it lacks Nykaa’s flair for social media marketing and, in particular, content that is fine-tuned to local tastes. It is this hyperlocal mindset that gives Nykaa an edge, they say.
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