The Indian Tata will open 20 “beauty tech” points of sale, in talks with foreign brands

  • Tata plans beauty sector expansion in latest retail gamble
  • Technological push of the eyes with skin analyzers, virtual trial in kiosks
  • Tata targets at least 20 stores next year
  • The company will face competition from Sephora, Nykaa

NEW DELHI, Nov 16 (Reuters) – India’s Tata Group plans to open at least 20 “beauty tech” stores where it will use virtual makeup kiosks and digital skin tests to entice young, affluent shoppers to buy high-end cosmetics range, according to a company document and someone familiar with its strategy.

The move pits Tata, whose interests range from cars to jewelry, against LVMH’s Sephora (LVMH.PA) and domestic rival Nykaa (FSNE.NS) for a share of the rapidly growing $16 billion beauty market and personal care in the second most populous country.

Tata is eyeing what it calls a “beauty lover” in India aged between 18 and 45 who likes to buy foreign brands such as MAC from Estee Lauder (EL.N) 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 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 for The Honest Company, Ellis Brooklyn and Gallinee did not respond to Reuters requests for comment.

The store’s opening plans, which are still under wraps, follow the recent launch of Tata’s beauty shopping app, called Tata CLiQ Palette. The company is already active in physical retail 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 the Tata CLiQ Palette brand, with 70% of the products inside being skincare and make-up, according to the Tata document. Inside stores, Tata plans to install technology allowing customers to virtually try on dozens of lipstick shades on screens and get digital skin tests to find out which products might suit them best, according to the document.

The technology isn’t new and is being used 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 street shops.

“Experiential retail is going to be very important in India as more and more customers will spend their free time in these stores,” said Pankaj Renjhen, co-CEO of Indian consultancy Anarock Retail. “In the premium segment – ​​where a customer is looking for things beyond price – experiential retail helps trigger impulse purchases and can attract them.”

Renjhen added, however, that “the product and brands must be exclusive and good – if they are not, she (the customer) will not return.”

MILLENNIUM DRIVE

As India’s economy grows and people return to stores after coronavirus lockdowns, Tata is looking to target relatively young and affluent customers who like to shop in a comfortable environment and are willing to pay list price for high-end international brands. Tata calls these customers ‘non-dealers’ in the document seen by Reuters, unlike most Indians who buy local brands of cheap lipsticks or skin creams from small mom-and-pop beauty shops. -pop where haggling for discounts is common.

The company targets buyers with an annual income of at least 600,000 rupees ($7,358), more than three times the average income of $2,000 a year for India’s 1.4 billion people. The new stores are expected to drive “sales across all channels as Beauty Tech’s flagship destination for Gen Z and 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 will grow an average of 7% per year. year over the next few years.

“The Indian beauty market is far from saturated,” said Devangshu Dutta, director of New Delhi-based retail consultancy Third Eyesight. “If you’re investing for the long term, with higher income profiles and changing lifestyles, there’s a long streak of growth ahead of you.”

Tata faces strong competition to take advantage of the projected growth. Sephora, present in India for ten years, has 26 outlets selling beauty and perfume brands. Reliance, run by billionaire Mukesh Ambani, has a long-term plan to open 400 beauty stores, the first of which could open in 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 backed by a Bollywood celebrity, has announced plans to open up to 300 stores, up from 124 currently. The 10-year-old company, which started out as an online-only retailer, caught the sector’s attention last year when its stock almost doubled after its Mumbai stock exchange listing, valuing the business at l 14 billion dollars.

OBSTACLES AHEAD

Tata’s first ‘beauty tech’ store is likely to open by March, with further expansion stretching over the next financial year starting in April, which could see it open up to 40 stores, according to the person familiar with the plan, which added that the company will start with big cities like New Delhi before considering smaller locations.

However, Tata is finding it difficult to persuade owners of high-end malls, where space is scarce, to take over a new beauty store where there are already existing ones, if they don’t have enough products. exclusives or some other differentiator 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 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 analyze a customer’s skin to reveal 25-30 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 booth with inserted lipsticks; when someone lifts one, a digital mirror screen on the front will automatically begin showing how the color shade will appear on the face, eliminating the need for repeated manual trials before a purchase.

Tata is also testing the use of so-called geofencing technology to enable its store staff to detect when a customer using their app enters, and to share purchase history and wishlists with staff to make better recommendations. , said the person familiar with the plans.

Reporting by Aditya Kalra in New Delhi Editing by Bill Rigby

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