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Mumbai: Indian conglomerate Tata Group plans to exit the beauty business 23 years ago, with the local market for cosmetics projected to be worth $20 billion by 2025.
Beauty products will be “a major focus for us” from now on, along with footwear and underwear, Noel Tata, non-executive chairman of Trent Ltd., a Tata Group entity that operates a chain of retail stores, said in an interview at his office. said in. in Mumbai. “Expanding product lines and experimentation with formats for these products are in progress as we see these as growth areas in retail.”
India’s cosmetics and beauty market is projected to nearly double from $11 billion in 2017 by 2025, according to data from Statista, aided in good measure by online retailers led by Mumbai-based Nykaa, which has helped in the fight against the pandemic. During this there was a tremendous growth. The startup, now a $13 billion company following a blockbuster IPO, helped Millennial and Gen-Z consumers buy high-end beauty brands as well as tutorials and testimonials from social media influencers.
This is a far cry from the beauty sector dominated by India’s biggest business house decades ago. Noel Tata’s mother Simone Tata helped create Lakme – the French name for the Indian goddess of wealth, Lakshmi – in 1953 as the country’s first cosmetics company. The group sold it to a local unit of Unilever plc in 1998. While the coffee-to-car group re-entered the fray in 2014, not long after the 10-year non-compete clause ended, it is only now that the group has begun to raise its game again.
According to data provided by the company, revenue from the beauty, footwear and underwear category for Trent is around $100 million, while the market is now worth around $30 billion.
“These three segments will be low-hanging fruits for Tata at a time when they are aggressively expanding stores and distribution channels,” said Kranti Bathini, equity strategist, Wealthmills Securities Pvt Ltd. “While competition is high in these sectors, the pie itself is expanding rapidly as consumption bounces back into the economy.”
new formats
Tata said the $103 billion conglomerate under Trent is looking at creating new lines of in-house cosmetic brands that can be growth vehicles. These products can be retailed through existing sizable outlets under Westside – Trent’s flagship chain of retail outlets – or through standalone stores and through digital channels, he said.
Ratan Tata’s half-brother Noel is one of the trustees on the board of Ratan Tata Trust, part of the collective charity, which owns two-thirds of the equity in the Tata Group’s main holding firm. He has been overseeing the group’s retail operations for more than two decades, mostly based in Trent.
Indian women were used to buying makeup and hair care products at mom-and-pop neighborhood stores, where the selection was scant and testing was unheard of. With the proliferation of mall and supermarket store chains and, more recently, online stores, this sector has transformed into a rapidly growing one, especially in the three segments targeted by Tata.
“I think we have barely scratched the surface in these categories and a significant portion of these markets are still unorganized and there is bound to be a shift in organized retail. We are also seeing changes,” Tata said.
Shares of Trent, founded in 1998, have jumped more than 9 times since 2014 under Tata’s leadership, overtaking Aditya Birla Fashion & Retail Ltd and Shoppers Stop Ltd. In November, he moved to a non-executive role at Trent.
online offline
“I see a digital opportunity to help us reach as many customers as possible,” Tata said, whether it’s online browsing and shopping or brick-and-mortar stores.
Trent has been an early adopter of the omni-channel model in Indian retail with TataClick and has recently expanded its online presence with Westside.com. A super app, which is being developed by the Tata group, will expand the reach to the customers, he said.
But Tata’s retail business will stay away from the deep discount strategy of e-commerce giants including Amazon.com Inc and Flipkart Online Services Pvt. To woo the price conscious buyers, Tata said.
As per the data provided by the company, around 90% of the total sales of Trent are on full price. ,bloomberg
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