When French luxury fashion house Chanel announced its partnership with Indian beauty and lifestyle retailer Nykaa earlier this month, it became one of over 8,000 brands to sell on the platform. Considering the platform has launched over 680 Indian and international brands in this fiscal alone, Chanel’s decision makes perfect sense.
Other international brands that have recently launched on the platform include YSL Beauty, global sun care brand Supergoop! and dermo-cosmetic brand Eucerin from Beiersdorf, the makers of Nivea. Launched in 2012, Nykaa today caters to an estimated 40 million Indian consumers.
So, what could Nykaa do to take advantage of this elevation as la plateforme préférée?
Dr Kiran Sharma, professor, marketing and international business, KJ Somaiya Institute of Management, observes that its broad market reach, omnichannel presence and brand equity has helped facilitate multinational businesses connect with a large consumer segment. “Nykaa’s actionable consumer insights, and ability to develop tailored experiences enable such businesses to navigate the cultural milieu of the Indian market. International brands gain from a low-risk and scalable market entry strategy,” says Sharma.
Nykaa has been aggressively expanding its beauty segment, recording a 27% year-on-year revenue increase in Q3 FY25, with beauty-related earnings reaching `2,060 crore. Although it expanded into fashion in 2018, its beauty business accounts for 91% of its topline. It has 221 stores and over 70 of these stores are Nykaa Luxe.
The Nykaa-Chanel partnership, much like those between other international brands and Indian platforms, is beneficial for both parties, says Amit Sharma, managing partner, OPEN Strategy & Design.
Chanel has incidentally been in India for nearly two decades and even has a few stores in large metros. Last year in August, it launched its own e-commerce site. “With this partnership, the Chanel brand can now reach millions more. These platforms are effective route-to-market, as they help global luxury brands to penetrate in a way that protects their codes of being – premium, selective and experiential,” says Sharma.
Changing face of beauty
As per estimates, India’s online beauty and personal care market is projected to reach `95,000 crore by 2028, growing at a 24% CAGR. This growth significantly outpaces the overall beauty sector’s 10% CAGR across all channels, making digital platforms particularly attractive for international brand entry.
Himanshu Trivedi, associate vice-president, Avalon Consulting, points out that the limitations of India’s brick-and-mortar luxury retail landscape have driven even the most exclusive brands online. It’s not just Chanel, but also other international entrants like Fenty Beauty by Rihanna, and Kylie Cosmetics that have opted to launch online.
As per industry estimates, Nykaa controls 25-30% of the online beauty market in the country. However, it does have swiftly growing competition as seen in the growth of brands like Reliance’s Tira Beauty, French multinational retailer Sephora and even Shoppers Stop’s SS Beauty. Clearly, everyone wants a share of the fast-growing beauty pie.
Trivedi notes that the premium beauty segment is growing faster than mass beauty, translating into higher average selling prices, improved margins and enhanced profitability. “Moreover, partnerships with global luxury players attract high-value consumers who demonstrate greater spending potential, generating increased website traffic that benefits the platform’s entire brand portfolio,” explains Trivedi.
There is always however the challenge of operating in a price-sensitive market like India. But as Amit Sharma argues, the next battle for market share among these beauty marketplaces will be won by brands that offer a more nuanced value delivery.