Consumers still tend to pay to look and smell good, setting Shoppers Stop’s beauty category apart from its apparel business, which is grappling with declining demand from inflation-weary shoppers. .
“We are at an inflection point as beauty spending is now more stable,” said Biju Kasim, CEO of Beauty. He cited factors such as a growing middle class, consumers’ growing desire to indulge in luxury brands, and easy availability of brands through multiple channels as key reasons driving growth.
“Consumers have a lot of choice and they want more,” Kassim says.
Driven by demand, the K Raheja Corp.-owned department store chain is planning to expand its offline stores and will add 15 large-format stores in the beauty sector this year. Currently, the retailer operates 13 of his SS Beauty stores. The company plans to add 70 beauty stores between fiscal 2024 and fiscal 2026.
Shoppers Stop’s beauty division grew 10% in the quarter ended December, achieving record quarterly sales of Rs 262 million. This growth rate exceeded a 7% increase in revenue and a 6% decrease in revenue for the company’s private brands, which contribute 19% to the apparel business.
“Post-Diwali, we saw a seesaw situation,” company executives told analysts on a post-earnings conference call. “Winter was delayed this year. Temperatures were significantly higher than usual, which affected sales of our winter wear. There has been a recovery after Christmas, but it is still inconsistent. There are also green shoots. However, overall, apparel growth continues to slow.
However, the same is not true for the company’s beauty business, which accounts for 18% of sales. “The beauty sector is seeing a steady reassessment of its share of wallet, which is why we have seen solid growth for four quarters…and this trend will continue,” Kassim said, adding that premium It added that its products and Premium Plus products are popular. In terms of demand, sales are outpacing demand.
The luxury segment currently contributes 25-30% of sales, but Qasim expects it to contribute 45-50% in the future.
Qasim was in New Delhi to launch Nars Cosmetics’ first boutique store in the country. In March last year, Japan’s Shiseido Asia Pacific signed a sales partnership with Global SS Beauty Brands, a subsidiary of Shoppers Stop, and officially launched its makeup brand in the country.
“We will be very selective when it comes to offline distribution, but by being an omnichannel retailer we will ensure that we can reach the whole country,” Qasim said. The plan is to open four Nars boutiques and three to five shop-in-shops a year between Delhi and Mumbai.
Shoppers Stop already operates standalone beauty stores with brands like Mac, Bobbi Brown, Estée Lauder, Clinique, Jo Malone and Too Faced.
Kasim said Shoppers Stop’s beauty sales business also achieved record sales in the December quarter, turning the company into an EBITDA-level profit in its first year of business.
According to the company, “our global distribution business will experience disproportionate growth next year.” That’s because of the massive expansion. The business is expected to generate revenue of Rs 300 crore to Rs 400 crore.
“We expect growth in the fourth quarter to be similar to the third quarter,” Qasim said. “So far, the numbers are looking good. I think we can certainly achieve mid-single-digit growth.”