The beauty market may have been built in the metros, but Nykaa believes its next phase of growth will come from smaller towns, where rising incomes, greater digital adoption and changing aspirations are creating a new generation of beauty consumers.
Unlike most e-commerce companies chasing Bharat through logistics and faster deliveries, the omnichannel retailer is betting that deeper store networks, AI-powered personalisation and wider product availability will expand beauty consumption itself. The strategy underpins Nykaa’s ambition of building a $5-billion beauty and lifestyle business by FY30.
Nykaa targets deeper reach in smaller cities
The company is no longer focused on entering new markets as much as deepening its presence in ones it already serves. Having established a footprint across the country’s top 99 cities, Nykaa now plans to increase store density in Tier-2 and Tier-3 locations, expanding to more than 600 stores by FY30 from 313 beauty stores currently. “We’re already covering the top 99 cities. Now, it’s more about increasing the density of our store network in tier two, tier three towns to get to maybe anywhere from two to five stores per city,” Vishal Gupta, chief executive, eB2B at FSN E-Commerce, said during a recent analyst call.
Morgan Stanley estimates that Tier-2 and Tier-3 markets already contribute around 60% of Nykaa’s beauty revenues, underscoring the growing importance of these markets. The company has also introduced differentiated retail formats, with Nykaa On-Trend stores targeting mass and masstige consumers in smaller cities while premium formats such as Nykaa Luxe continue to cater to larger urban centres.
Nykaa is also using technology to overcome one of beauty retail’s biggest barriers outside metros: the absence of expert advice. AI-powered tools such as Skin Scan, Virtual Skin Analyser and personalised recommendation engines are designed to replicate in-store consultations and improve product discovery online. The company believes these capabilities, along with omnichannel investments, will help expand its beauty consumer base to 100 million by FY30 from around 45 million today. Analysts at Kotak Institutional Equities say Nykaa’s focus on improving affordability, awareness and accessibility is aimed at attracting first-time beauty users, Gen Z, Gen Alpha and aspirational consumers in Tier-2 and Tier-3 markets, where demand for premium products is steadily increasing.
Nykaa deepens B2B presence
The company’s strategy extends beyond consumers through Superstore by Nykaa, its B2B distribution platform that supplies neighbourhood beauty retailers across underserved markets. The business has grown nearly four-fold over the past three years to a GMV of Rs 1,187 crore, supported by almost 493,000 registered retailers and over 220 brands. Citi expects the platform to expand its reach from about 12,500 PIN codes to around 19,000 and from roughly 1,250 cities to about 3,500 over the medium term, with Tier-3 and smaller markets projected to contribute 75% of Superstore’s GMV by FY30.
Together, Nykaa’s physical stores, AI-led digital experiences and B2B distribution network reflect a strategy that goes beyond improving access. The company is betting that the next phase of growth in Bharat will come from creating new beauty consumers, not merely serving existing ones.