According to RedSeer Consulting, the Indian beauty and personal care market are expected to grow at a CAGR of 9% to $22-23 billion in 2022.
Internet-first beauty and personal care brands such as SUGAR Cosmetics, Mamaearth and Plum Goodness, which gained popularity online and later launched their products offline, are now trying to scale up their retail presence. These players, operating in the mid-premium segment, are not only eyeing general and modern trade stores, but also have plans to launch exclusive outlets in future.
According to RedSeer Consulting, the Indian beauty and personal care market is expected to grow at a CAGR of 9% from $14-15 billion in 2017 to $22-23 billion in 2022. While general trade holds the largest share of this market (75%), online commands only 2-5%. Evidently, these players realise that a robust offline presence is imperative for growth. But that’s not without its challenges.
Casting a wider net
Mamaearth, which is present in 2,000 stores across 43 cities, plans to scale up to 5,000 stores over the next 18 months. “Offline accounts for 10% of our business; we plan to increase this to 20% in the next two years. We will tap 100 smart cities for this,” says Varun Alagh, co-founder, Mamaearth. The company also plans to offer assisted sales at 500 of these stores.
Mamaearth products can be seen at general and modern trade outlets, and specialist stores such as Wellness Forever, Health & Glow, Mothercare and FirstCry. Going ahead, the company plans to increase its presence in large format stores such as Lifestyle and Shoppers Stop, as well as on specialist channels.
Plum Goodness, too, has similar plans. Shankar Prasad, founder, Pureplay Skin Sciences, the company that owns Plum Goodness, says assisted sales is important since the brand is into specialist skincare products. The company currently has 300 assisted and more than 3,000 non-assisted points of presence, and plans to grow its retail business fivefold in the next one year. Plum Goodness claims to get 25% of its sales from offline currently.
Read Also: Incentivised ads and the catch 22 situation
SUGAR Cosmetics, meanwhile, has already introduced eight exclusive business outlets (EBOs), apart from being present in 300 modern trade stores. “We plan to launch 100 stores, including kiosks and increase our presence to 1,500 general and modern trade stores by the end of 2020,” says Vineeta Singh, co-founder and CEO, SUGAR Cosmetics.
For this, the company plans to tap tier II and III markets primarily. Its marketing strategy, which was skewed towards digital, will now equally focus on ATL and BTL activities.
Experts say, as these players expand their offline reach, they will face challenges in distribution, planning inventory and hiring sales teams.
“Since the new-age, direct-to-consumer players are feature loaded and specialised, the quality of sales people and the choice of flexible sales channels become critical. These companies will need to invest in a good team and training to build the brand, and enable a good conversion rate offline,” says Ankur Pahwa, partner and consumer internet leader, EY India.
Getting the inventory right will be crucial, too. While online has centralised warehouses, an offline presence necessitates that these players have local inventory. This could be a challenge until they figure out products that are in demand in specific areas.
According to Ankur Bisen, senior vice president, retail and consumer products, Technopak, opening exclusive stores could be trickier. This would require the brand to identify the right locations, stock their stores with a range of products and SKUs, and also build mass appeal through marketing.