Focus: India's Tata to open 20 'beauty tech' outlets, in talks with foreign brands

Honest

16/11/2022 24:30

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      Tata plans beauty sector expansion in latest retail bet
    

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      Eyes tech-led push with skin analysers, virtual try-on at
kiosks
    

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      Tata targets at least 20 stores next year
    

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      Company to face competition from Sephora, Nykaa
    

  
    By Aditya Kalra
       NEW DELHI, Nov 16 (Reuters) - India's Tata Group is
planning to open at least 20 "beauty tech" stores where it will
use virtual makeup kiosks and digital skin tests to get young,
affluent shoppers to buy premium cosmetic products, according to
a company document and a person familiar with its strategy.
    The move pits Tata, whose interests range from cars to
jewellery, against LVMH's  LVMH.PA  Sephora and domestic rival
Nykaa  FSNE.NS  for a share of the fast-growing $16 billion
beauty and personal care market in the world's second-most
populous country.
    Tata is eyeing what it calls a "beauty enthusiast" in India
aged between 18 and 45 years who likes to buy foreign brands
such as Estee Lauder's  EL.N  M.A.C and Bobbi Brown, according
to the document, which lists The Honest Company  HNST.O , Ellis
Brooklyn and Gallinee as potential partners. Tata is in talks
with more than two dozen companies to supply exclusive products
to the new stores, according to the person familiar with the
strategy, who did not name specific brands. 
    Tata declined to comment on its planned beauty stores and
the contents of the document seen by Reuters. Representatives of
The Honest Company, Ellis Brooklyn and Gallinee did not respond
to Reuters requests for comment.  
    The store opening plans, still under wraps, follow the
recent launch of Tata's beauty shopping app, called Tata CLiQ
Palette. The company is already in the brick-and-mortar retail
business in India, where it has joint-venture partnerships with
global brands such as Zara and Starbucks. 
    The stores will have a bright red facade showing Tata CLiQ
Palette branding, with 70% of the products inside being skincare
and make up, according to the Tata document. Inside the stores,
Tata is planning to install technology allowing customers to try
on dozens of lipstick shades virtually on screens and to get
digital skin tests to find out what products might work best for
them, according to the document. 
    The technology is not new and is in use by other beauty
retailers around the world, but this venture into what industry
experts call "experiential retail" is still a relatively new
concept in Indian malls and high street shops.
    "Experiential retail is going to be a big thing in India as
more customers will spend their leisure time at such stores,"
said Pankaj Renjhen, joint managing director at India's Anarock
Retail consultancy. "In the premium segment - where a customer
is looking for things beyond price - experiential retail helps
trigger impulse shopping and can entice them."
    Renjhen added, however, that "the product and the brands
have to be exclusive and good – if they are not that, she (the
customer) is not going to come back."
    MILLENNIAL DRIVE
    As India's economy grows, and people return to shops after
coronavirus lockdowns, Tata is looking to target relatively
young and affluent customers who like to shop in comfortable
surroundings and are willing to pay the sticker price for
premium international brands. Tata calls such customers
"non-bargainers" in the document seen by Reuters, in contrast to
most Indians who buy low-priced local brands of lipsticks or
skin creams from small mom-and-pop beauty stores where haggling
for discounts is common.
    The company is targeting shoppers with an annual income of
at least 600,000 rupees ($7,358), which is more than three times
the average earnings of $2,000 per year among India’s 1.4
billion inhabitants. The new stores should drive "sales across
channels as a leading Beauty Tech destination for Gen Z &
Millennials," the Tata document says.
    India's $16 billion beauty and personal care market is much
smaller than China’s $92 billion, but market research firm
Euromonitor estimates India's will grow an average 7% a year
over the next few years. 
    "The Indian beauty market is not saturated - far from it,"
said Devangshu Dutta, head of New Delhi-based retail consultancy
firm Third Eyesight. "If you are investing for the long term,
with higher income profiles and changing lifestyles in mind,
there's a long runway of growth ahead." 
    Tata faces strong competition to take advantage of the
projected growth. Sephora, which has been in India for around a
decade, has 26 outlets selling beauty and fragrance brands.
Reliance, led by billionaire Mukesh Ambani, has a long-term plan
to open 400 beauty stores, the first of which may open inside a
Mumbai mall next month, according to a person familiar with its
plans. Reliance did not respond to a request for comment. 
    Indian beauty retailer Nykaa, backed by private equity firm
TPG, asset manager Fidelity and endorsed by a Bollywood
celebrity, has said it plans to open as many as 300 stores, from
124 now. The 10-year old company, which started as an
online-only retailer, attracted attention to the sector last
year when its stock nearly doubled after listing on the Mumbai
stock exchange, valuing the company at the time at $14 billion.
    HURDLES AHEAD
    Tata's first "beauty tech" store will likely open by March,
with further expansion stretching into next fiscal year
beginning April that could see it open as many as 40 stores,
according to the person familiar with the plan, who added the
company will start with bigger cities such as New Delhi before
considering smaller places. 
    However, Tata is struggling to persuade owners of upscale
malls, where space is scarce, to take on a new beauty store
where one already exists, if it does not have enough exclusive
products or another differentiating factor to attract new
customers and increase foot traffic to the mall as a whole,
according to another person with direct knowledge of the
discussions.
    Alongside exclusive product launches, Tata is focusing on
the in-store technology, which the document seen by Reuters
describes as a "key differentiator."
    One of the tech tools will be a device Tata calls a "skin
analyzer," a device with a mirror that can read and analyse a
customer's skin to reveal 25 to 30 attributes that can help make
product choices. There will also be "virtual try-on" kiosks for
eye and face makeup. Among them will be a circular stand with
lipsticks slotted in; as someone lifts one, a digital
mirror-screen in front will automatically start showing how the
colour shade will appear on the face, eliminating the need for
repeated manual try-ons before a purchase. 
    Tata is also testing use of so-called geofencing technology
to allow its store staff to detect when a customer using its app
enters, and share the shopping history and wish-lists with staff
to make better recommendations, the person familiar with the
plans said.
 (Reporting by Aditya Kalra in New Delhi
Editing by Bill Rigby)
 ((aditya.kalra@tr.com; Twitter @adityakalra;))