Shoppers Stop has launched its first standalone beauty store SS Beauty in Malad, Mumbai. By March, the retail chain, owned by K Raheja Corp, plans to launch two more stores, one in Mumbai and Ludhiana, and 12 more in cities like Delhi and Kolkata in the next fiscal year. All of its 80 stores in the country have a dedicated beauty department. Additionally, it also operates standalone stores of MAC Cosmetics, Estee Lauder, Clinique, Bobbi Brown, Jo Malone, and Too Faced in the country.

The beauty and personal care market in India was valued at around $15 billion in 2021 and is expected to grow at a CAGR of 8% over the next five years, according to Euromonitor.

Growth mode

Spread over 2,000 square feet, the SS Beauty store in Malad has trained beauty consultants to help and offer suggestions on makeup and beauty products. Focused on the high-end beauty space, the store is home to more than 200 beauty brands, including Kora, Caudalie, Jeffree Star Cosmetics, Bobbi Brown and Parfums de Marly. The company plans to launch a dedicated SS Beauty website and app in the coming months.

“Currently, the beauty segment accounts for approximately 17% of our total sales. We are seeing growth in this segment across all of our channels; therefore, we believe that SS Beauty stores will give us the opportunity to grow faster,” says Venu Nair, MD and CEO of Shoppers Stop.

Shoppers Stop launched its own brand in the beauty space last year, called Arcelia, which includes a range of bath and body care, as well as perfumes and deodorants. The brand plans to add nail paints this month, followed by lipsticks and other makeup products.

The company also launched two private labels in the apparel segment – Insense and in.fuse. Insense is a sleepwear and loungewear brand for women, while in.fuse is an online-only brand that caters to clothing for men, women and children. “Private brands currently contribute about 14% of our overall sales. We intend to increase this figure to 20-25% over the next two years. Besides our stores and website, private labels are also available on Amazon,” says Nair.

Private labels give retailers better control over prices and inventory. “They offer markups of up to 50%. They bridge the price gap between what the customer is willing to pay and what the big brands charge,” says Sanjesh Thakur, Partner, Deloitte India.

Additionally, the retail chain aims to consolidate its offline presence by launching 12 stores by FY23. The online channel, Nair says, has grown over the past year and “currently contributes 6% of total sales, up from 1.5% in FY21.”

Market potential

Analysts say a compelling reason to venture into this business is the higher margins associated compared to those in the apparel category. “The gross margin for this segment is around 30%; there is also a recurring demand in this category, which makes it an attractive segment to invest in”, explains Thakur.

But players like Shoppers Stop may find it difficult to compete with the discounts offered by online marketplaces such as Amazon, and the mass, premium and private label offerings from specialty retailers like Nykaa and Purplle. Direct-to-consumer brands like SUGAR Cosmetics and MyGlamm have also gained traction over time. “Reach would be another challenge, as online players have a better capacity in terms of catering customers in Tier II and III cities, compared to offline players with limited stores,” says Neelesh Hundekari, partner at Kearney.

To stand out, analysts say, retail chains could use AR in stores for testing and personalization. Creating bespoke products through digital consultations based on skin textures and lifestyles, and offering beauty regimens instead of stand-alone products could attract customers.

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