Lifestyle retailer Shoppers Stop hopes to grow its beauty distribution business, Global SS Beauty, 4-5x in the next three to five years. Early success has given the retailer confidence in this newly launched subsidiary. Underscoring this, the company, on Monday (October 23), announced an investment of Rs 5 crore into this business, in addition to the Rs 25 crore it had invested in April.
Shoppers Stop launched Global SS Beauty late last year. At launch, the company told investors in a call that the long-term objective is to distribute international luxury brands — bridge luxury and premium brands — in India. It said at the time that the aim of this division is to contribute more than Rs 500 crore in the next couple of years and "add a significant profit to the bottom line".
This also ties into the larger strategic pillar of Beauty for Shoppers Stop,
a segment it has been aggressively growing in the past couple of quarters. Speaking to
CNBC-TV18, Biju Kassim, Customer Care Associate and CEO of Beauty, Shoppers Stop, said the distribution business complements the retailer's ambition of growing its beauty business, an area in which they see a huge opportunity.
"We see a lot of merit in continuing to invest in this category. Beauty contributes 15-16%, we want to take this to 25% over three years. All Shoppers Stop categories are growing, but beauty is growing more than the rest," he added.
Kassim said the idea occurred to them during the COVID-19 pandemic when the market saw significant disruption. "We decided at the time that it is important to own the entire value chain, from availability, procurement, etc. Moreover, moving into distribution would give you a long-term view, and allow you to invest a little bit ahead of time," he added.
As of the second quarter of this fiscal (Q2FY24), the beauty distribution business contributed Rs 23 crore in sales and achieved a positive EBITDA. It works with about 20 retailers with 292 retail doors. The company expects to clock Rs 175-200 crore in revenue this fiscal, which Kassim says it is on track to achieve.
While it started the business by launching eight brands from the L’Oréal International division, Clarins, and Earthi, the biggest launch for the company this quarter is the cosmetic brand NARS from the stable of global beauty major Shiseido.
Shoppers Stop signed this deal this March and is officially launching the brand in the country now, starting with two stores in Mumbai and Delhi. It is also introducing the brand in Sephora and Shoppers Stop's online and offline ecosystem. "We'll have three large format Shop-in-Shops in the Shopper Stop ecosystem, and 10 freestanding stores within the Sephora ecosystem," Kassim said.
He added Shoppers Stop wants to sign another two boutiques, "ideally one in Mumbai and one in Delhi". "The plan for Year One is to have 13-15 stores in three formats in the first year with a similar plan for Year Two. But India is a very progressive market, and new formats could also evolve. We will evaluate it together and take a call," Kassim added.
In addition, Global SS Beauty has also signed on brands like Armani Beauty, Prada Beauty, and Valentino Beauty, launches for which are underway. Kassim said the company has also signed TUMI fragrances and skincare brand FRE. "We are in talks with a couple of more brands, and will come back soon with news on that," he added.
While the focus will remain on high-end prestige brands, Kassim said they will be open to working with brands in the "masstige" segment as well down the line.
Kassim is now betting on the macroeconomic tailwinds for the beauty industry to boost this business. "Consumers are happy to spend, macroeconomic factors are positive. I think this is going to be a very powerful business going forward," he added.
(Edited by : Vijay Anand)
