Personal care brands see wind in their sales

A number of new players emerged stronger through the pandemic latching on to a hybrid model of online and offline

Naini Thaker
Published: Mar 31, 2021 01:56:18 PM IST
Updated: Mar 31, 2021 04:04:48 PM IST

bombay shaving co bgShantanu Deshpande, founder, Bombay Shaving Company
Image: Amit Verma

During the peak of the lockdown, Shantanu Deshpande, founder, Bombay Shaving Company, realised the growing demand for women's shaving products during a conversation with his wife Sakshi. He recalls, “She told me, ‘It’s ridiculous that you run a shaving company, and there is nothing for me.’ That’s when it struck me that there was a potential gap in this market.”

Though few players do exist in this space, Deshpande believed there was space to grow. Six months ago, the team finally launched a line for women’s hair removal products—from a face razor to an aftershave lavender soothing gel. Today, the company has a 7 percent market share of women’s hair removal products.

The pandemic has been a blessing in disguise for a lot of companies like Bombay Shaving Co. “We got the chance to take a step back and revisit our existing strategies—stuff that you can easily ignore, like skill building of employees and rebranding if needed.”

During this period, a lot of other sectors such as hospitality and travel suffered, but many of the self and personal care brands managed to thrive. According to Statista, India’s beauty and personal care market, estimated at $25.9 billion in 2020, is projected to reach $32.7 billion by 2023, growing at a CAGR of 8.1 percent.

While the lockdown impacted both small and large players, those with an online focus found it easier to bounce back. Bombay Shaving Company is such an example. “It was a lot easier for us to compete with our offline-friendly competitors on a 5-inch screen as opposed to 2 million stores,” says the founder & CEO. Bombay Shaving Co is currently 3.5x bigger than what they were pre-Covid and at an annual recurring revenue (ARR) of Rs 100 crore. Besides online, offline, too, has contributed to such growth—accounting for 25 percent of their business, up from 20 percent—especially after January 2021.

The company that raised funding of Rs 45 crore from Reckitt Benckiser (RB), the British consumer goods giant, in January, is now expecting offline business to scale a lot faster. “Women’s shaving is mostly online, but men’s shaving sits completely offline and we are investing heavily in our offline expansion plans,” he adds.

Vegan skincare company Plum too confirms the trend: Plum has grown 2.5x post Covid, with its ARR increase from Rs 70 crore to Rs 200 crore ARR in a month or two. "The lockdown was the kind of disruption that we had never imagined in our wildest dreams. For close to 1.5 to 2 months, we had zero revenues yet fixed costs to pay,” recalls Shankar Prasad, the founder. It was only after August that the company saw a climb-up and growth phase. “Since then, we have been expanding our product portfolio as well, from 70 SKUs pre-Covid, to now 100+ SKUs. This has been a challenging process, but we plan to continue expanding deeper in the haircare and skincare categories," he adds. The plan for the coming year is also to develop international markets.

The future of the category, according to Prasad, will be a hybrid model—a mix of offline and online channels, with a revenue share of 65:35 between online and offline. “We started with 300 manned outlets, and we have 600+ outlets, at present. And from 120 towns, we are now present in 220,” he says.

Rohit Chawla, co-founder and CEO of Bare Anatomy, believes direct-to-customer (D2C) brands in the personal care sector were more agile to bounce back, unlike larger companies that were more retail-oriented. Moving online for those companies was a challenge, a space already crowded with new entrants. “While we have grown by 4x in terms of revenue as compared to pre-Covid figures, the online space is too crowded, which has also put pressure on sales,” he says.

During the pandemic, Bare Anatomy launched its skincare line and, going ahead, plans to continue to innovate with formulations or subscription models for its products. “We are focusing on our technology and our repeat users. Earlier our repeat rate was 20-25 percent, it has increased to 40-50 percent,” he adds.

Even before the pandemic, Delhi-based Arata had made a strategic decision to remain internet-first. “That decision saved us from a whole lot of pain when the pandemic hit. We continue to be internet-first and have gone deeper into adding new online channels as well as digging deeper into channels we were already selling through,” says Dhruv Bhasin, co-founder. Arata's sales have increased by 4x as compared to what they were selling in February 2020.

Apart from India, Bhasin and his co-founder Dhruv Madhok are working on listing and selling in the USA, the UK, the EU and the UAE as well. “During the pandemic,” says Madhok, “customers want to make informed decisions. We believe the demand for proven clean and safe personal care formulations will be strong and customers are going to want transparency in label disclosures.”

Besides skin and haircare brands, the pandemic has also pushed beauty and make-up brands to grow. In August 2020, beauty brand MyGlamm announced the acquisition of women-centric digital platform POPxo—which has 88 million women readers—to expand into the online content space.

The company, founded in 2017, started by launching a range of makeup products, and expanded its portfolio this year to move into skincare and personal care products. “The category itself did well globally and, second, people saw a recovery in direct-to-consumer channels almost immediately. This helped with our growth,” explains Darpan Sanghvi, director, MyGlamm.

MyGlamm, which has recently raised Rs 175 crore from Ascent Capital, Amazon and Wipro Consumer, is seeing close to 250,000 transactions every month. “What worked well for us,” says Sanghvi, “was our acquisition of POPxo [a digital platform for women] which helped us grow our digital reach and understand our consumers better.” Second, unlike most other players in the space, MyGlamm bet on its offline model by moving point of sales from 500 to 10,000 during the pandemic. “We started implementing this around June, and by October we had hit pre-Covid levels; by January we were at 200 percent of the pre-Covid level,” he adds.

At present, the company is clocking in Rs 210 crores in ARR—which has almost doubled from its pre-pandemic figure of Rs 130 crore—and by December 2021, their target is to hit Rs 600 crore. Tier 2 and tier 3 cities have seen growth as well: Pre-Covid, MyGlamm's had an equal share of revenue from Tier 1, and Tier 2 & 3 cities, now there is a clear shift with Tier 2 and 3 cities brining in 60 percent and Tier 1 bringing 40 percent of the revenue. “There was a time where 100 percent of our revenue was our marketing budget. Today, less than 5 percent of our revenues goes into marketing, yet we are acquiring 200,000 new customers a month," adds Sanghvi.

kama ayurveda vivek sahniVivek Sahni, CEO, Kama Ayurveda

Unlike some of the mainstream smaller players, the luxury beauty brands had a tough time making the shift from offline to online—for some it affected growth too.

For Kama Ayurveda, pre-pandemic 70 percent was offline and 30 percent online. However, Vivek Sahni, CEO, Kama Ayurveda, says, “Sixty percent of our total business continued to remain online, with the other 40 percent came in through our stores.” The company's online presence has grown by 140 percent, but the stores have seen a 20 percent reduction in growth since the pandemic.

A majority of communication moved online, directing customers to Kama Ayurveda's websites. The content on the brand's social media handles also pivoted away from product-centric communication. “We started posting about topics we believed would resonate better with consumers at such times. An example of this would be at-home yoga tutorials, live sessions, and four Spotify playlists under Calm with Kama,” says Sahni.

Social media became the go-to channel for brands to reach out to audiences. "Brands used social media channels to interact with customers and share DIY tips for haircare and skincare. In order to keep their brand on top of consumer’s mind, they would engage in live sessions with well-known celebrity artists through an online medium," says Rajat Wahi, partner, Deloitte India.

Online beauty consultations were introduced as a replacement for the in-store experience and they also set up a pan India IVR number for customers. The brand is currently looking to improve and intensify the customer facing experience, online as well as offline.

Like Kama Ayurveda, France-based luxury personal care brand L’Occitane was also offline-focussed until the pandemic. The brand had to innovate to continue being relevant during the pandemic. "At L’Occitane, it [the pandemic] has reiterated the company’s belief that though retail would always be important, digital is the way ahead. With the pandemic, the entire experience of visiting the store, consulting with the expert in-store came to a pause,” says Simi Dewan, country head (DGM) of L’Occitane India. L’Occitane India has now been focussing on building its online presence through platforms like Nykaa.

Dewan adds, “Digitally, with our WhatsApp chat service, people could seek advice from our experts to pick products basis their requirements. To elevate this further, we launched the one-on-one video consultation sessions with L’Occitane experts online.” Though the brand's focus moved to online, they are hoping to continue expanding their online and offline channels across India. Additionally, L’Occitane has launched 22 new products.

One of the key trends over the last year is that people are more conscious of what they buy and how much they buy. Dewan explains, “Product ingredients are being looked into and thought of much more than it was ever before; there is also a focus towards making more sustainable choices when consumers buy any product."

simi dewan locataineSimi Dewan, country head (DGM) of L’Occitane India
Image: Madhu Kapparath

Companies that made hair colour have recorded an almost 150 percent spike in their topline, while skin and haircare companies noticed a 50 percent increase. One of the trends in the space due to the lockdown, according to Manish Taneja, co-founder and CEO, Purplle.com, was the focus on a DIY-led surge in demand for skincare, hair care, and wellness products with increased emphasis on natural ingredients. “Despite a Covid year, as a platform, we have delivered over 90 percent GMV CAGR for the last 3 years and over 70 percent of our sales contribution is from non-metro regions,” says Taneja. Recently Purplle.com closed a $45 million funding deal from Verlinvest, Sequoia Capital India, Blume Ventures, and JSW Ventures.

According to experts, there is also an increased demand from conscious consumers for organic, clean beauty products. “There is growing awareness for local products at the right price-value equation. With consumers looking at alternatives, herbal and ayurvedic based products have gained acceptance. With green consumerism being practiced consciously by new age shoppers, there lies a great opportunity for natural skincare and haircare product companies in the years to come,” says Harsha Razdan, partner and head—consumer markets and internet business, KPMG in India.

Going forward the focus will have to be digital channels and innovation. “D2C, e-commerce such as brands’ websites, shoppable social-media platforms, and marketplaces will become more important. The use of artificial intelligence for testing, discovery and customization will be accelerated as safety and hygiene concerns disrupt product testing and in-person consultations," says Wahi of Deloitte.

Looking at the growing demand for personal care brands in May 2020, four young graduates—Navya Nanda, Ahilya Mehta, Mallika Sahney and Pragya Saboo—have launched Aara Health, an end-to-end products & services platform for women's health and wellness. “Our products are centred around preventative and proactive healthcare. We will be launching our range of vegetarian nutraceutical products in early April,” says Mehta. With Aara Health, the founders are hoping to create a community and build conversations around issues of women’s health. “Within the personal care space, when looking at the supplement/nutraceutical space in India, there is a gap in the prenatal and menopause market, with little to no companies focusing purely on women,” adds Nanda. The brand is looking at launching a line of supplements, nutraceuticals and functional foods specifically addressing the needs of Indian Women.

With brands like Aara Health entering the market every other day, is the market likely to hit saturation soon? Probably not. The Indian beauty industry, which stands at Rs 73,000 crore, is expected to reach Rs 1.11 trillion in four years, as per market researcher Euromonitor.

Prasad of Plum believes, "Of the 500 people online in India, 160 are shopping online and of this, only 40 percent or less are shopping for beauty online. This means only 10 percent people who are online in India have shopped for beauty online. Clearly, there is a lot of headroom that exists.” Chawla of Bare Anatomy agrees that it has never been easier to launch a brand, “but it has never been more difficult to scale it either”.

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