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December 31, 2024
Jasodhara Banerjee, Forbes India
31 December 2024
Once, there was alabaster. Then, there was porcelain. And now there is glass. And no, we are not talking about the different kinds material to make fine, delicate objet d’art, but the quality and texture of facial skin—smooth, flawless and luminescent—that humans aspire to.
While a Google search for the term ‘glass skin’ will churn out hundreds of results that describe not just what the term means—tracing it to Korean skin care routines and products—but also detail the meticulous steps, varying between five and 11, that will apparently make you look like your favourite K-pop singer or K-drama actor. Like all things K (read: Korean), be it television and OTT serials, or food and clothes, K-beauty seems to have taken the Indian market by storm. A search for ‘Korean brands’ on online platforms such as Nykaa and Tira Beauty brings up more than a thousand products, ranging from ₹75 for a facial sheet mask to ₹17,900 for 60 ml of face cream. Clearly, there is something for everybody.
Fuelling this surge has been a plethora of factors, including the rise of online marketplaces that have made Indian and foreign skin care and beauty products more accessible than before, the thriving ecosystem of influencers and content creators that has revolutionised the marketing of these products, and, of course, consumer demand for products that claim to have the goodness of natural ingredients backed by the surety of science. And, surprising as it may seem, the Covid-19 pandemic and accompanying lockdowns also seem to have played a role in this.
Case in point is Amorepacific Corporation, a Seoul-headquartered beauty and cosmetics company that operates in more than 50 countries, and has a portfolio of more than 30 brands, such as Sulwhasoo, Laneige, Mamonde, Etude House and Innisfree. It is one of the largest cosmetics companies, not just in South Korea, but in the world.
“We are the number one beauty and personal care brand in South Korea and were the first Korean corporation to enter India with direct management, with our own subsidiary,” says Paul Lee, managing director and country head, Amorepacific India. “We started our business in India with Innisfree, which uses natural ingredients from Jeju Island in South Korea. We started with Innisfree because India had a huge demand for brands with natural products. Then we introduced Laneige and Sulwhasoo, which fall in the luxury skin care segment, and these were followed by Etude, which is a makeup brand.”
Amorepacific entered India sometime in 2012, taking tentative steps in a fledgling market with minimal investments and a retail store in Delhi’s Khan market. “At that time, the awareness of K-beauty was very small, and our momentum of growth started with the popularity of dedicated ecommerce players like Nykaa. In the last seven years, our annual growth has been 50 percent, our current growth is 60 percent year-on-year,” says Lee.
A potent potion for growth
Although industry players and experts feel there are multiple factors behind this growth, the popularity of Korean cultural elements is a significant one. “Korean beauty and personal care brands have multiple enabling factors. The global expansion of Korean beauty and personal care products has been on the back of a cultural export wave like any other earlier in history; in this case through the growing popularity of K-pop and K-dramas,” says Devangshu Dutta, founder, Third Eyesight and co-founder, PVC Partners. “In India, these brands initially had an influence in the Northeastern states, where customers are usually ahead on the fashion curve and also find resonance with the look of these brands.” He adds that factors such as the increasing number of Indian tourists to East Asian countries, and the growing presence of Korean and Japanese expatriates within India have also supported the growing footprint of these brands.
A spokesperson for Tira Beauty, which was launched in April 2023, agrees with Dutta, and attributes the demand for K-beauty products to the exposure that consumers have to K-dramas and K-pop. However, she adds that a significant factor is rooted in the products themselves. “These are the innovations that these brands are bringing to the table,” she explains. “The kind of formulations they offer are very well-suited for the Indian consumer. The ingredients are very efficacy oriented, and deliver a lot of quality, thus resolving a lot of concerns that consumers in India have.”
For instance, skin hydration is a core need of consumers, and a lot of Korean skin care products focus on hyaluronic acid as an ingredient. “Consumers who have sensitive skin or inflammation as a key concern get to use ingredients like centella asiatica, that a lot of Korean products use,” she says.
The spokesperson adds that the texture of the products is also a factor behind their popularity in India: “A lot of Korean sunscreens are light weight, a lot of their essences are suited for the Indian skin and the Indian weather. Both these factors are contributing to the rise we are witnessing in the space of K-beauty.”
Lee of Amorepacific highlights the use of unique ingredients such as fermented beans, ginseng and green tea that were never used before by American or European companies. There are also many options for consumers to choose from, depending on what is best suited for them. For instance, there is a product line with green tea for consumers with sensitive skin, and the same products are available for those with dry skin. “There are three key metrics that we have seen among Indian consumers: One is the demand for premium quality, two is the demand for glass skin, and the third is reliability.”
Lee also attributes market factors that have been instrumental in making Korean products more accessible to Indian consumers. “There has been a lot of change before Covid, and after Covid. From the macro perspective, the number of internet users with access to low-cost data plans has increased. During the Covid-19 pandemic, the number of new people watching OTT platforms such as Netflix also surged. From the Netflix perspective, I think India is one of the top three countries, where the number of subscribers is concerned.”
According to the Korea Trade-Investment Promotion Agency, the beauty market in India saw substantial growth following the Covid-19 pandemic and is projected to expand by 10 percent annually from 2022 to 2027, more than twice the global average growth rate for the beauty sector. According to market analyst Mordor Intelligence, the K-beauty market in India is expected to grow annually by 9.4 percent from 2021 to 2026.
Lee highlights the popularity of Korean OTT series such as Squid Games in making Indians familiar with Korean culture, and YouTube videos making a lot of people aware of K-beauty. “When we started operating in India, there were hardly two or three brands operating here, but currently there are more than 60 Korean brands in India. The influence of TV and music content has made people familiar with Korean culture, which is similar to Indian culture in being family-centric,” he adds.
Content creator Scherezade Shroff Talwar says, “The Hallyu [Korean] wave during the pandemic has definitely contributed to, what I would say, an over-consumption of Korean culture and I definitely contribute to it as well. K-beauty products have been around in India for a while, but with the increasing popularity of K-dramas and K-pop, people are seeing more such content across multiple platforms. This has contributed to the rising number of Korean brands in India, and the use of their products.” She recalls how, in November, she was in South Korea with her K-drama club, and the members had lists of the products that they wanted to buy there because they are not available in India.
According to a September report by market research firm Mintel, social media analysis in India reveals that there have been 6.2 million posts in the last two years discussing K-drama, K-pop, and K-beauty trends, predominantly among the 19 to 24 age group. This continued popularity in K-pop throughout the APAC region influences consumers’ interest in Korean skin care and beauty products, the report adds.
Lee says that Korean beauty companies have also been prompt to react to the demands in the market. For instance, Innisfree introduces new products every three months, and they are based on consumer feedback through social media and actual stores. Given the demand from Indian consumers, Amorepacific has also formed a task force at its headquarters which is dedicated to reviewing and studying the Indian market, with plans bring in more brands and businesses.
Data shows, adds Lee, that the import of Korean skin care products into India is increasing by 63 percent every year, going up four times compared to 2020. Amorepacific’s own research shows that 53 percent of Indian beauty consumers have already tried Korean products. “Fifteen percent of the entire skin care products market is now dominated by Korean products,” he claims.
Although Amorepacific decided to close all 23 of its exclusive stores in India because of the losses suffered during the pandemic, it decided to partner instead with local channels such as Nykaa, Tira Beauty and SS Beauty, and its products are today available across 400 counters in 45 cities. “Although our company is seeing 60 percent growth every year now, our retail area is doubling every year,” says Lee. “Our aim is to be available in 500 counters within a year.”
The availability and accessibility of Korean skin care and beauty products have also coincided with the rise of marketing products through influencers and content creators. The spokesperson for Tira Beauty says that influencers have played a massive role in the popularity of Korean products. “One of the reasons why K-beauty products do well across markets is because Gen-Z consumers tend to follow a lot of these influencers,” she explains. For instance, Tira launched the Beauty of Joseon sunscreen, and it went out of stock very quickly. “We experienced this because there was a lot of awareness due to influencer activations, and there’s a certain amount of virality these products enjoy even before they are launched.” She also gives the example of the brand Tirtir, which was launched on Tira Beauty in India in November. “The brand rolled out samples to influencers in India in July, and that helped propel demand to a great extent.”
According to business consulting firm Grand View Research, celebrity influencers have been beneficial to marketers due to their global reach, which often transcends cultural boundaries. Hence, the top strategy used by Korean cosmetics brands is to sell their products to Korean celebrities. Storytelling using Korean celebrities as brand ambassadors, and streaming advertisements and video tutorials all over the social media platform are some of the major strategies adopted by K-beauty brands.
Grand View Research gives the example of the lip layering bar of Laniege, which has emerged as a convenient tool for those who want to get the trendy gradient lip look with just a single application. Celebrities such as actors Song Hye Kyo and Lee Sung Kyung have used the product, enhancing its appeal and desirability among consumers.
Celebrities from different parts of the world promote K-beauty products, and this fosters a cross-cultural appeal and encourages individuals from diverse backgrounds to explore and adopt these products in their skin care routines. Following this global trend, in India, young celebrities have been roped in to appeal to Gen-Z consumers. For instance, actor Palak Tiwari became the first Indian brand ambassador for Etude, while actor Wamiqa Gabbi became first Indian brand ambassador for Innisfree, and Sara Tendulkar, daughter of cricketing legend Sachin Tendulkar, is the brand ambassador for Laneige.
Dutta of Third Eyesight says, “Influencers certainly have played a role in building the buzz around K-beauty and have formed a relatively cost-effective means to spread the message in the past. However, in recent years with a growing number of social influencers, there is more clutter as well on the channels.”
India not in the big league, but demanding
Although the rise of K-beauty products in India has been significant, the country remains a far smaller market for these brands compared to markets such as the US, Europe and China. According to Grand View Research, the global K-beauty products market size was valued at $91.99 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 9.3 percent from 2023 to 2030.
The consulting firm says the Korean cosmetics industry grew steadily during the Covid-19 pandemic, owing to an increase in awareness of the numerous benefits offered by the products. Moreover, due to a rise in popularity among consumers, major K-beauty companies are taking initiatives such as R&D, product launches, mergers and acquisitions to retain shares in the market and respond to changes in the marketplace by introducing a range of items.
Grand View Research valued the US market, one of the largest for K-beauty products, at $20.2 billion in 2021 and expects it to grow at a CAGR of 8.8 percent between 2023 and 2030. Compared to this, Statista valued the India K-beauty market at $486 million in 2021, and expects it to grow to over $1.3 billion by 2032.
Lee of Amorepacific says the US remains the largest beauty market as a whole, followed by China, Japan, the UK, France and India. “One of the differentiating factors between the US and Indian consumers is that the premium market in India is very small, and it is still a mass-product driven market,” he says. “Secondly, ecommerce in India is still quite small. In South Korea and the US, ecommerce just in the beauty segment, is 30 to 40 percent, while in India it is 13 percent. India is traditionally an offline market.”
He adds that despite the growth, Indians remain sceptical about whether Korean products are suitable for Indian skins, and there is demand for products that are made only for Indians. “Localisation, therefore, has become important for the company. Although we conduct clinical trials in different geographies, we are starting to take more feedback from Indian consumers, and we are ready to develop products only for the Indian market. For instance, we have introduced the Innisfree kajal and the Innisfree hair massage oil, and have developed lip colours for the Indian market.”
Although the company did not divulge revenue figures, it is expecting to grow six times in the next six years in India, and plans to introduce at least five more brands within the next seven years in this market.
(Published in Forbes India)
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December 4, 2024
Sagar Malviya, Economic Times
4 December 2024
Demand for sportswear from running shoes to joggers and yoga mats slowed down for leading firms such as Puma, Adidas, Nike, Skechers and Asics, halting their sprint since the easing of the Covid-19 pandemic when they doubled their sales in two years.
Sportswear firms have reported 1-25% year-on-year increase for 2023-24, down from 35-85% increase for the previous financial year, according to the latest regulatory filings. While demand for fitness wear and sports equipment for disciplines other than cricket grew as people prioritised health with the onset of Covid-19, consumers cut back on discretionary spends across categories over the past six to eight quarters.
Experts said companies capitalised on the popularity of more casual styles in the wake of the pandemic, a trend that has subsided now although people are more health conscious than ever. A broader slowdown, especially in cities, hurt premium categories including sportswear, which are completely dominated by global players.
“Sportswear or footwear has a slower replacement cycle than apparel and lifestyle products. Also, there is a distinct slowdown as it all comes down to income growth versus inflation. So, a longer term potential still remains for the segment but there is a short-term consumption stress,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight.
With a population of 1.4 billion, India is among the fastest growing and largest international markets for footwear companies and over the years companies such as Under Armour, Asics and Skechers have expanded aggressively in the country.
Puma India managing director Karthik Balagopalan said the category has outpaced market growth with mid to high single digit growth rates even as subdued demand has lagged expectations.
“When it comes to health and fitness, consumers continue to spend on performance products and our sports-first strategy also leans towards that. Our ambition continues to grow at or be above market CAGR (compound annual growth rate) over the mid-term, and we think we are in a good place with our back-end infrastructure, our product portfolio and pipeline, BIS (Bureau of Indian Standards) readiness and our best-in-class team, who will continue to cement and retain our lead on competition,” he said.
In October, Foot Locker entered India through a long-term licensing agreement with Metro Brands, which will own and operate stores, while Nykaa Fashion will be its exclusive e-commerce partner.
However, there are challenges. In August this year, the government made it mandatory for footwear companies to obtain BIS certification for more than a dozen footwear products including sports brands. This impacted sales even last year as BIS had not issued licences to several foreign brands whose products were manufactured outside India, which in turn, forced brands to cut down on supplies.
American footwear firm Skechers said in its last earnings call that it had been growing exceptionally well in India for several years but there was a bit of an anomaly in part because of some of the regulatory changes that it had not yet fully responded to.
“We continue to work closely with both our India team and regulators to further advance our local sourcing strategy. We are seeing positive trends and remain optimistic about the progress in this important market. We see tremendous opportunity, not only in our lifestyle business, but also in performance,” Skechers chief operating officer David Weinberg told analysts.
(Published in Economic Times)
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May 6, 2024
Sesa Sen, NDTV Profit
6 May 2024
Starbucks Corp., the world’s largest coffee chain, posted its slowest sales growth in India since the pandemic. The coffee giant is struggling to bring in as much business as it has in the past as consumers reduce their visits even as it prepares for ambitious store expansion in a tea-drinking nation.
The India unit formed in partnership with the Tata Group clocked net sales of Rs 1,218 crore, a growth of 12%, during the year ended March 2024, according to Tata Consumer Products Ltd.’s latest investor presentation.
The Seattle-based retailer experienced a compounded annual growth rate of 21.89% between FY17 and FY23 in the world’s most populous nation. The only exception to this trend was in FY21, when sales plunged by 33% as shops were forced to shut down due to the impact of Covid-19.
“Tata Starbucks had a subdued quarter given the overall trends that we’re seeing in the QSR [quick service restaurants] business,” said Sunil D’Souza, managing director and chief executive officer at Tata Consumer Products.
He, however, indicated that March was an improvement over February, and April was even better than March. “So, we see a better trend right now, and we remain focused on the larger India opportunity.”
Tata Starbucks Pvt. Ltd. took 11 years to scale its operations to a revenue of over Rs 1,000 crore. Although the joint venture turned positive at the EBITDA level for the fiscal year 2023, it continues to be loss-making. In the year ending March 2023, Tata Starbucks posted a net loss of Rs 25 crore on a turnover of Rs 1,087 crore, according to filings with the Registrar of Companies. The net profit figures for fiscal 2024 are not available yet.
The coffee chain has seen its popularity take a major hit over the last two quarters, ending in March and December, with a meagre 7% increase in sales during each period. This is a marked shift from its historical track record of double-digit growth, suggesting that consumers are now looking for more budget-friendly cafe experiences.
“Consumers have turned slightly more conservative with their spends, which is affecting both the frequency and of transactions,” according to Devangshu Dutta, head of retail consultancy Third Eyesight.
According to him, new store openings rather than an increase in sales at existing ones could drive growth.
The other reason is that the coffee market is more competitive today, with most local peers selling at price points lower than Starbucks, Dutta said.
Starbucks competes with Bengaluru-based Cafe Coffee Day and foreign entrant Barista, among others, in the country’s $400 million market. It also faces competition from private equity-backed Third Wave and Blue Tokai, which have opened about 200 stores between them in the last three years.
Since opening its first cafe in October 2012, Tata Starbucks’ store count has grown to 421, implying that on average, each outlet generated roughly Rs 3 crore in revenue from coffee, snacks, and merchandise sales in FY24.
The dwindling sales come at a time when the company plans to open 1,000 cafes in India. To meet the target, it seeks to open one new store every three days.
Starbucks added 29 net new stores between January and March, achieving a record of 95 stores opening in a year, according to the presentation.
The coffee chain had earlier said it plans to enter tier-2 and tier-3 cities in the country and increase the number of its drive-through, airport-based and 24-hour cafes. It also aims to double its headcount to 8,600.
To lure consumers back after a rough start to the year, the coffee giant is launching new products like a boba-inspired summer beverage.
“Over the past 11 years, the India market has grown to become one of Starbucks’ fastest-growing markets in the world,” Laxman Narasimhan, chief executive officer, Starbucks, said in a statement during his India visit earlier this year. “With a growing middle class, we are proud to help cultivate the evolving coffee culture while honouring its rich heritage.”
Starbucks faces challenges not only in India but also globally. A disastrous fourth quarter that saw a slowdown in store visits promoted Starbucks Corp. to lower its expectations for its full-year sales and profit. Its revenue for the January–March period dropped 2%, the first since the end of 2020.
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April 15, 2024
Sagar Malviya, Economic Times
Mumbai, 15 April 2024
Spanish fashion company Inditex said it will launch youth clothing brand Bershka and Zara Home in India this year.
“Bershka will open its first store in Mumbai Palladium, and Zara Home will open in Bangalore,” it said in its latest annual report.
Inditex had launched fast fashion brand Zara in 2010 and premium clothing brand Massimo Dutti eight years ago. Its new offering, Bershka, will pitch it directly against Reliance Retail’s Yousta, which too targets the younger consumer segment.
Being the world’s second most-populous country, India is an attractive market for apparel brands, especially with youngsters increasingly embracing Western-style clothing. Fast fashion brands such as Zara and H&M became runaway successes soon after they entered the country.
Experts said Bershka’s target consumer profile is mostly teens to mid-20s, slightly younger than that of Zara, which is pitched at 20-40-year-old fashion-driven customers.
“The product assortment is different, with a higher share of knits, fewer dresses and more casual overall compared to Zara, keeping in line with the lifestyles of the customer group. So in that sense it wouldn’t cannibalise Zara in any serious way, though some of the younger set among Zara buyers could migrate some of their purchases to Bershka,” said Devangshu Dutta, founder of retail consulting firm Third Eyesight. “The biggest question is, can they hit the price points that young Indian fashion consumers want as with domestic brands such as Zudio, Yousta and others, or will consumers overlook higher prices for the style mix and a European brand pull in significant numbers to make the brand viable.”
According to a recent report by Motilal Oswal, the ₹2.5 lakh crore value fashion segment accounts for 57% of the total apparel market and is one of the largest and fastest-growing segments. A substantial untapped opportunity beyond the metros and tier-1 cities, driven by better demographics, higher incomes and greater customer aspiration, has compelled several big players to enter a market that was previously dominated by regional and local operators.
Since its inception in 2016-17, Zudio has seen considerable expansion and reached nearly 400 standalone stores, outpacing most apparel brands primarily due to its competitively priced products with an average selling price of ₹300. Following the success of Zudio, a unit of the Tata Group’s Trent, the segment has seen the entry of national retailers in the affordable youth clothing segment such as Yousta by Reliance Retail, Style-Up by Aditya Birla Fashion and Retail and Shoppers Stop’s InTune.
(Published in Economic Times)
admin
February 21, 2024
The ability of fashion businesses to endure and thrive in the face of stiff competition and changing market dynamics is all about adapting to innovation, customer-centricity, and strategic planning. The correlation between high performing fashion business and product innovation is undeniable.
This panel discussion brings Design and Business Heads together to brainstorm on how fashion companies can devise strategies to drive innovation to remain competitive, meet evolving consumer expectations, and stay ahead of the race.
Moderator: Devangshu Dutta, Founder & Chief Executive, Third Eyesight
Panelists:
