Written By Akanksha Nagar

Urban Company aims to bring quality, innovation and affordability to the unorganised beauty services market

As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces.

The bulk of the Indian beauty services industry remains unorganised and fragmented, dominated by expensive salon brands or small players that offer dubious products, inconsistent service and unsolicited advice. With a push from the pandemic-led restrictions, there has been a sudden rise of a clutch of organised, on-demand players that offer professional beauty care services in situ. Urban Company, for one, has witnessed a big rise in service calls in recent months, driven by rising aspiration levels and disposable income, and the growing demand for standardised and safe in-home services. The segment contributes over 40% of the total revenue for the company already. As per published documents, the firm posted a 13.8% increase in revenue from operations to `239 crore in FY21 compared to `210 crore in FY20.

According to Expert Market Research report, the Indian beauty and personal care industry attained a value of `54,558 crore in 2020, and is set to grow at a CAGR of 11% in the 2022-27 period. Of this, the Indian salon market, which stood at `55,000 crore in FY20, is expected to touch a whopping `2 trillion in FY25, at a CAGR of 28%.

Numbers aside, the spread of the Covid pandemic forced the industry to switch to reverse gear as many salons shut down permanently or closed down unviable outlets just to stay afloat. Enrich Beauty which had salons in cities like Mumbai, Delhi, Bangalore and Ahmedabad, for instance, shut down five salons since 2020, bringing the total count down to 83.

As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces. Says Anand Ramanathan, partner, Deloitte India, “Service aggregator marketplaces have helped increase organisation and bring standardisation in delivery.” It was a win-win for both the customer and the brand. Brands could directly engage with the end consumers and the customer was assured quality—of both the products used and the services rendered.

Mukund Kulashekaran, chief business officer, Urban Company, says the fundamental shift in the beauty service market has been in terms of improved quality. As long as the market remained fragmented, there was zero investment in training or upgradation of services, or in product innovation. None of the small regional players really had the wherewithal to take that leap.

Focus on quality

Urban Company devoted a lot of time and attention to training the service providers while also pursuing innovations to raise the standard of the products on offer. While it uses a number of high-end brands, it has also begun to develop its own to make its services more accessible and compete on a larger scale. It operates three levels of salons: the luxury (average ticket size `2,500), the mid-mass premium (`1,200), and the classic, which is at the economy end of the spectrum (`750) and uses proprietary products for the classic and mid-mass premium segments.

Quality is assured by continuous testing and keeping a sharp eye on customer feedback. There is also significant investment in training and automation. It currently has an in-house team of over 200 full-time trainers across 50 cities. It is stepping up investments in technology to both improve product quality and to act promptly on feedback.

The firm had introduced in-home hair and nail services for women amid the pandemic, which, Kulashekaran says, has scaled quite well. Demand for men’s salon services, launched right before the pandemic, has increased from 20,000 transactions pre-pandemic to as high as 150,000 transactions per month. It launched a Skin Clinic for laser and advanced facials in seven cities and has signed on more than two million clients already.

In terms of geographical spread, while the top ten cities account for more than 80% of its revenue, non-metros are rising fast in terms of revenue share.

Long haul

The company prioritises brand-related communication rather than performance-related. The focus is more on the video medium than the click-through media. So the focus area is TV, but YouTube in case of a targeted campaign.

In the next stage of expansion its communication strategy will be key. Jagdeep Kapoor, founder, chairman and MD, Samsika Marketing Consultants, says that while expanding beyond metros the brand has to be less urban in terms of perception and imagery and take into account the culture and taboos, and the differing definition of beauty.

Samit Sinha, managing partner, Alchemist Brand Consulting, says to keep up the pace of growth the brand has to invest in its service providers, and not just its customers. This is a business model that will not be difficult to replicate. The trick will be to incentivise the beauty care technicians so that they are able to offer high-quality services to the customer and have little reason to join a rival brand. The thing to remember: Like most other service businesses, beauticians too can bypass the company and establish direct relationships with customers — a phenomenon that has plagued the ride hailing and ride share services in India.

BOX: Staying on track (Insights from Devangshu Dutta, CEO, Third Eyesight)

Three factors that will determine success

• The customer sees the aggregation platform as the “provider” of service, rather than a listing agency. So the company needs to totally own the customer experience, end-to-end.

• Ensuring quality of service consistently is the biggest enabler for growth.

• Over time, UC has moved to this “ownership” of the experience, which does mean additional investment, but also pays off in the end.

Three factors that might undo the good work:

• If it doesn’t keep working on customer experience ownership, it could slip

• Given the high customer acquisition costs, it has to drive repeats rather than one-time or low-frequency purchases.

Source: financialexpress

Written By Aditya Kalra & Abhirup Roy

MUMBAI, June 30 (Reuters) – Reliance Industries (RELI.NS) said on Thursday it would open outlets of Pret A Manger in India under a franchise deal with the British sandwich and coffee chain, a first foray by the Indian firm in the country’s growing food and beverage industry.

Reliance Brands Ltd (RBL), a unit of the conglomerate that also runs India’s biggest retail chain, would start by opening branches of Pret, as the brand is known in Britain, in big Indian cities, both companies said.

RBL Chief Executive Darshan Mehta said in joint statement the partnership was “rooted in the strong growth potential” of the Pret brand, known for its organic coffee and upmarket sandwiches, and the Indian food and beverage industry.

The first outlet would open in Mumbai before March 2023 and India was expected to become one of Pret’s top three markets in three years, a source familiar with the matter told Reuters.

Pret A Manger, whose name means “ready to eat” in French, first opened in London in 1986. It now has 550 outlets globally, including in the United States and several European states. It is owned by investment group JAB and founder Sinclair Beecham.

In India, the brand will compete with Starbucks (SBUX.O), which has a joint venture with India’s Tata, and Costa Coffee, which is owned by Coca-Cola (KO.N).

Mukesh Ambani, one India’s richest men, runs Reliance, which has more than 2,000 supermarkets and grocery stores in India. Reliance also has partnerships with luxury brands, such as Burberry and Jimmy Choo.

“Reliance wants to look at retail in all its shapes and forms. Over time, they’ve realised partnerships are the way for business formats that may be difficult or slower to crack,” said Devangshu Dutta, head of retail consultancy firm Third Eyesight.

Source: reuters

Written By Mukherjee, ET Bureau

Top listed retail chains such as Aditya Birla Fashion & Retail, Avenue Supermarts and Tata-owned Trent are going to lead store additions through the next financial year, as they double down on expansion after the pandemic, company executives and analysts said.

As per a recent report by ICICI Securities, 16.7 million square feet of retail space would be added by eight large, listed retail chains between FY21 and FY24 as compared to 8 million square feet added in the preceding four years of FY18-21. These companies also include Titan, Bata, V-Mart, TCNS and Shoppers Stop.

The buoyed sentiment comes after the recovery of retailers to more than their pre-Covid levels in the last two quarters, and is also driven by pentup demand, strong sales despite increasing prices and expansion into small-tier towns, the report said. There has been an expansion of the market which is happening along with a consolidation, said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “Not all locations might turn out to be viable, but in every expansion cycle there are boom and bust. And the bust is not as big as the boom. Right now, we are in the expansion cycle,” he said.

Aditya Birla Fashion & Retail managing director Ashish Dikshit told analysts recently that the company would expand rapidly since plans were held up in the last two years due to the pandemic, with faster growth for fashion business, ethnic wear and inner wear. The company, which had raised ₹2,195 crore from GIC Singapore, intends to invest ₹600-800 crore for expansion in the next couple of years.

“…we continued to believe both in the long-term growth potential of the market and intrinsic strength of our brands and we feel now the time is to accelerate to catch up on what we have not done over the last 12 to 18 months and I would go back almost till the beginning of the Covid period from 18 to 24 months where some of our growth initiatives have held back,” said Dikshit.

As per the ICICI report, Avenue Supermarts would add 7.5 million sq ft during FY21-24 for the DMart stores as compared to 3.9 million sq ft added in FY18-21. Aditya Birla Fashion & Retail would add 3.1 million sq ft as compared to 1.2 million sq ft in preceding four years, while, among others, Trent would add 2.7 million sq ft (vs 1.5 million sq ft), Shoppers Stop would add 0.8 million sq ft (0.2 million sq ft) and Bata would add 0.7 million sq ft (0.2 million sq ft).

India’s largest retailer, Reliance Retail, too has accelerated expansion plans including taking its stores into new geographies, Gaurav Jain, head of strategy and business development told analysts recently.

Source: economictimes

Devika Singh, Moneycontrol

June 10, 2022

As the threat of a plastic straw ban looms, dairy products giant Amul has written to the Prime Minister’s Office, urging a delay of its implementation by up to one year.

Amul makes products such as flavoured milk, lassi and spiced butter milk that come in small cartons packed with plastic straws for on-the-go consumption.

The letter to the PMO, sent ahead of the proposed July 1 start of the ban on single-use plastic products, said the move may have a “negative impact” on farmers and milk consumption.

“We agree it is a positive step to reduce plastic usage,” R.S. Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns the Amul brand, told Moneycontrol.

“However, we have requested the government to delay the implementation by six months to a year so that we utilize this time to gradually shift from plastic straws to paper straws,” Sodhi said.

The government earlier this year issued a notification banning several single-use plastic products. The ban has the potential to affect the sales of beverages sold in small tetra packs.

Here’s a rundown on all the products that are proposed to be banned, why beverage makers are pushing for a delay in its implementation and how it will affect them.

What does the government notification say?

The Ministry of Environment, Forest and Climate Change released a notification in March banning single-use plastic items.

Such products include plastic plates, cups, glasses, forks, spoons, knives, straws, trays, swizzle sticks, wrapping or packing film, invitation cards, and cigarette packets and plastic or PVC banners of less than 100 microns from July 1.

Other products such as earbuds with plastic sticks, plastic sticks for balloons, plastic flags, wrappers for candy sticks and ice-cream sticks, and polystyrene (thermocol) for decoration also come under the ambit of the ban.

In February, the government had notified guidelines on the extended producer responsibility for plastic packaging under the Plastic Waste Management Amendment Rules, 2022.

“Directions have been issued to e-commerce companies, leading single-use plastic sellers/users, and plastic raw material manufacturers with respect to phasing out of identified single-use plastic items,” the notification said.

Why are beverage makers worried?

Non-alcoholic beverage makers like Amul; Parle Agro, maker of Frooti; and Dabur, which sells a range of fruit-based drinks under the Real brand, have a significant share of their revenue coming from low-unit packs priced at Rs 10.

These packs, which come with a plastic straw for consumers to drink the beverages, are meant for on-the-consumption and are mainly sold in rural areas. According to industry estimates, packaged consumer goods makers derive 25-40 percent of sales from low-unit packs priced at Rs 2-Rs 15.

The only replacement to the plastic straws available in the market are paper straws that are produced in a very limited quantity in India.

Plastic vs. paper

Sample this. According to the industry, about 6 billion packs of paper-based beverage cartons with integrated plastic straws are sold annually in the country.

The capacity to produce paper straws is only 1.3 million straws per day against a requirement of 6 million/day.

Paper straws are also an expensive alternative to plastic straws given their limited availability.

According to Schauna Chauhan, CEO of Parle Agro, although the company started importing paper straws to adhere to the new rules by the given deadline, it is not a sustainable solution.

“The percentage increase in the cost for importing PLA straws and paper straws goes up by 259 percent and 278 percent respectively. The economics just does not match up for a Rs.10 product,” she said.

While a plastic straw costs 10 paise and accounts for 1 percent of a Rs 10 beverage carton, a paper straw costs 40-45 paise and would account for 4-4.5 percent of the cost.

Besides paper straws, beverage makers have found another alternative in PLA straws that are made of corn starch and biodegradable.

In-house production of paper straws

Beverage companies are urging the government to delay the ban so that they can build adequate capacity for producing paper straws in the country.

Amul plans to import paper straw-making machines and start production in-house. Parle Agro, too, has similar plans.

“We have already begun work on developing many local MSMEs {micro, small and medium enterprises} to be able to cater to our volume of biodegradable straws,” said Chauhan of Parle Agro.

“A six-month extension will help straw manufacturers in India build adequate capacity to manufacture and supply biodegradable straws to beverage companies in India,” she said.

These companies source plastic straws from third-party manufacturers.

Potential impact of the ban

The ban, if it comes into effect on July 1, will disrupt the supply chain of beverages sold in small tetra packs such as Frooti, Appy Fizz, Real Fruit Juice, Amul Lassi and similar products.

The companies are also expected to incur heavy import and logistics costs as they import paper straws to replace plastic straws.

“The companies have to look at alternative solutions, which may increase the costs. It will be challenging for the companies to pass on the increase in cost to the consumer as it may dampen demand, especially given the fact that these products are priced at low price points to target a certain consumer cohort,” said Devangshu Dutta, CEO of retail consulting firm Third Eyesight.

To tackle the challenge, Amul plans to sell its products without straws until the company builds the capacity to produce paper straws in India.

“However, this impacts the on-the-go consumption of our products,” said Sodhi.

Sales in the hinterland

A majority of the sales of these low-unit packs come from rural India, and could hurt the earnings of packaged consumer goods makers. Parle Agro, for instance, derives about 50 percent of its sales from rural India.

“The increase in the product cost will lead to a fall in demand and affect sales significantly. The hasty ban will negatively impact the industry and overall businesses of numerous players in the FMCG and beverage segment.,” said Chauhan.

Experts say growth in the non-alcoholic beverages segment has been driven by tetra packs, and while plastic packaging and straws do have an adverse impact on the environment, the switchover is set to disrupt the industry in the short and medium terms.

(Published in Moneycontrol)

Written By Akanksha Nagar

Having acquired Patanjali Ayurved’s food retail business, the company has ambitious plans

While its edible oil business has been its mainstay, Ruchi Soya’s CEO Sanjeev Asthana is confident that the share of FMCG revenue could touch 20% this fiscal.

Ruchi Soya has its sights set on clocking `20,000 crore- `22,000 crore in revenue over the next five years from its FMCG business, after recently having acquired Patanjali Ayurved’s food retail business worth `690 crore. The Patanjali food portfolio comprises 21 major products, including top-selling items such as ghee, honey and juices, besides staples such as atta and spices.

To achieve its target, Ruchi Soya plans to launch a D2C (direct-to-consumer) channel in the next two months for its nutraceuticals business, with more categories to follow, while also increasing its investment on e-commerce and expanding its offline footprint. It is quite active across all key online marketplaces including Flipkart, Amazon and JioMart.

According to the latest Statista report, India’s FMCG market was valued at $110 billion in 2020, and by 2025, it is expected to touch $220 billion, as more brands adopt the D2C route. Several top FMCG makers, including Hindustan Unilever, Dabur and Emami, have launched D2C brands in the past two years.

Oiling other products

While its edible oil business has been its mainstay, Ruchi Soya’s CEO Sanjeev Asthana is confident that the share of FMCG revenue could touch 20% this fiscal. It is targeting `7000 crore in revenue from FMCG and `25,000 crore from commodity sales by the end of FY23. “Over the next five years, the revenue split between FMCG and commodities will be equal,” he says.

Furthermore, Ruchi Soya plans on consolidating and rationalising the Patanjali food portfolio, while simultaneously revamping some of its existing products. “The aim is to reposition the entire company towards being a food FMCG major,” says Asthana.

Following the acquisition, Ruchi Soya will be renamed Patanjali Foods (after regulatory approvals). Asthana says that brands such as Nutrela, Mahakosh, Ruchi Gold and Sunrich will continue to be marketed under their existing names, while all the businesses that are coming in from Patanjali will use the Patanjali brand in exchange for a brand licensing fee

evangshu Dutta, chief executive, Third Eyesight, says the company name change may work in its favour, since there is a large audience aligned with the image and values of Patanjali Group and its founder Baba Ramdev.

Casting a wide net

But not all is smooth-sailing. Alagu Balaraman, CEO, Augmented SCM, suggests for the company to scale up, it needs to build a robust traditional distribution network, since a bulk of sales still happens through these channels. “The cost of doing e-commerce delivery is significantly high,” he notes.

Ruchi Soya is working on those lines. Asthana says besides utilising Patanjali’s existing distribution muscle, it is expanding its offline retail footprint by adding 10,500 non-exclusive modern grocery stores and 4,500 exclusive ones every month.

Source: financialexpress