By Kritika Arora
Nykaa on Thursday said it is entering into a strategic alliance with UAE-based Apparel Group, which would see it expand its footprint in the Gulf Cooperation Council (GCC).
Nykaa will play the role of a multi-brand beauty retailer in countries such as Kingdom of Bahrain, State of Kuwait, Sultanate of Oman, State of Qatar, Kingdom of Saudi Arabia, and the United Arab Emirates (UAE).
The Indian cosmetics and fashion retailer has entered into the region through its international subsidiary, FSN International Private.A new entity will be incorporated in Abu Dhabi Global Market in which FSN International will hold a 55% stake and the balance will be with Apparel Group, Nykaa said in a regulatory filing. The name of the new entity has not been decided yet, said Falguni Nayar, founder and CEO at Nykaa.
The alliance would help Nykaa leverage Apparel Group’s offline retail network and its understanding of the market in the region. The group is present in the region since two decades and has more than 75 lifestyle and beauty brands with over 2,000 stores in 14 countries. Nykaa will bring to the table its consumer understanding, content , marketing and technology, Nayar said. It is an all-cash transaction between Nykaa and Apparel Group and the transaction is expected to be completed by March 31, 2023.
According to a RedSeer report, Kingdom of Saudi Arabia and the UAE, two of the region’s biggest beauty and personal care markets, were sized at $17.1 billion and $6.6 billion, respectively, in 2021 and are projected to grow at a compound annual growth rate of 7% and 9%, respectively, over the next three years. The capital investment is small initially, but the potential for revenues was good, Nayar said.“We have entered into the GCC market looking at the long-term growth potential in region,” said Nayar, adding that the company is not considering multi-brand retail business in any other country at present.
Nykaa will be involved in retailing beauty and personal care brands only in the GCC region for now and the digital platform will go live in six months from now, Nayar said.
Nykaa’s own beauty and personal care brands like Nykaa Naturals, Nykaa Cosmetics are already present in the UAE , while the focus of the partnership with Apparel Group will be to retail multi-brands.