Size and Growth of India's Health and Beauty Industry Attracts Top Global Brands From Sephora to TBS.

The world’s largest premium beauty products retailer is entering the Indian retail market. Owned by the €20.3-billion (Rs 1.33-lakh-crore) Louis Vuitton Moet Hennessy (LVMH), the world’s leading luxury goods group, Sephora is a trailblazer, with 1250-plus retail stores in 25 countries. Although LVMH’s financial reports do not give stand-alone figures for Sephora, expert estimates suggest that the French firm has worldwide revenues of between €4.3 billion and €5 billion (Rs 28,260 crore and Rs32,860 crore). Sephora.com is also regarded as the world’s top beauty e-commerce platform.

The €12.3-billion (Rs 80,836 crore) AS Watson Group (part of the Hong Kong-based €32.5 billion - or Rs2.13-lakh-crore — Hutchinson Whampoa Group) is the world’s largest health-and-beauty (H&B) retailer with over 10,000 stores in 33 markets worldwide. It is among the top three in 25 of them. It is also the largest H&B retailer in Asia, with 2600-plus H&B stores and 900-plus pharmacies in ten Asian markets. (Well, H&B is a term for skincare, beauty, grooming, wellness and other personal care products but excluding prescription medicines)

Another global biggie, The Body Shop (TBS), addressed India's Health Care Franchise through a franchisee in 2006. With sales of about €800 million (Rs 5,258 crore) from 2660-plus stores in 60 countries, TBS is part of the €20-billion (Rs 1.3- lakh-crore) L’Oreal (the world’s largest beauty company). Today, TBS has 80 operating stores in 28 Indian cities and has a target of opening 150 stores by 2014.

So what has prompted Sephora to enter India even without foreign direct investment (FDI) being permitted in multi-brand retail? Undoubtedly, it has to be the size of the Indian H&B market and the pace at which it is growing.

The Indian H&B market (products and services combined) was estimated to be worth almost Rs1.73 trillion (€26.6 billion) in 2011. It represents 3.7% of India’s private consumption expenditure of Rs46.7 trillion. The US market was estimated to be €78 billion (Rs 5.12 lakh crore) last year. On a per capita basis, consumption of H&B products and services in India is 8.5% of that in the US, while our per capita income is 7.5% of the US.

With an annual growth rate of almost 16%, the Indian H&B market will be worth Rs3.57 trillion (€54.9 billion) in five years. The organised sector accounts for Rs134 billion or just below 8% of the business. This is the very reason that many global research agencies such as Euromonitor and Mintel have gone horribly wrong in estimating the size of the Indian market. They haven’t taken into account facts like slum-dwellers in Greater Mumbai consuming Rs7.9 billion worth of H&B products alone.

The rich contribute about Rs320 billion (18.5% of the market) and the upper middle class about Rs414 billion (23.9% of the market). The middle class constitutes the largest chunk of the market at almost 35%. Consumption by men accounts for about 32% of the total market, or about Rs554 billion (€28.5 billion).

So what exactly are Indians spending on? It’s not just kajal (kohl paste) anymore! About Rs259 billion (15% of the market) is spent on smelling good, making fragrances (including deodorants) the single largest sub-category. Globally, fragrances account for 15.5% of the total market, so the Indian market for fragrances has caught on.In this segment, the richest 24.3% of Indians consume 98.4% of the products. Around 35% of fragrances sold in India (by value) are either fake or smuggled. Quite a large percentage also comprises products bought while traveling abroad.

Beauty services like haircuts, pedicures, facials, waxing and other treatments delivered at salons alone (excluding treatments at spas) is the second largest sub category at Rs238 billion (13.8% of the total market). Another Rs222 billion (12.8% of the market) is spent on cleansing, including soaps, facial cleansers, shower gels, face scrubs, body scrubs. Colour cosmetics constitute about Rs208 billion, shaving (hardware and software) accounts for about Rs128 billion, shampoos about Rs116 billion, oral care about Rs113 billion, hair oils about Rs110 billion and hair colourants about Rs90 billion. No wonder you have salon beauty franchises opening across India.

Was the Indian H&B market always so big? It has grown 20-22% per annum in the last five years. So the market was only worth about Rs670 billion (€10.3 billion) in 2006, but it was still large enough to attract The Body Shop back then.

Source: DNA March 7, 2012, Amit Bagaria:  Chairman of Asipac, India’s leading mall development managers and retail research consultants, and founder of Men & Boys, Asia’s largest chain of retail stores for men’s skincare and grooming products.

Tags: Sephora, Sephora Franchise, Watson Group, Beauty Franchise, The Body shop franchise,TBS franchise, L'oreal Franchise, salon franchise,


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Worlds Finest Luxury Retail Brands Lined Up For India, In Anticipation Of Relaxed FDI Norms.

The coming months could see a slew of high-end global fashion brands entering the $4.6 billion (around R20,700 crore) Indian luxury market, through partnerships with domestic retailers like Reliance Brands, DLF Retail Brands and others.

According to industry sources, Italian luxury apparel player Emilo Pucci, designer handbag manufacturer Krizia (also from Italy) and American high street casual wear brand Brooks Brothers are likely to set up operations in India soon. They’re in talks with DLF and Reliance for inking joint-venture partnerships.

International brands are riding high on hopes of relaxed foreign direct investment (FDI) norms that could see a nod for increased foreign capital in single-brand retail and opening up of FDI in multi-brand retail.

Sources indicate that American luxury department store Bloomingdale’s, specialty store Neiman-Marcus and haute coutre brand Saks, will also enter the Indian luxury market that is growing at 15-17 per cent and is tipped to touch $14.7 billion by 2015.

DLF Retail and Reliance Brands have been most aggressive in tying up with upscale foreign brands, observe experts. Sharad Mehra, SVP, fashion & apparel, Technopak Advisors said, “DLF, with its abundant and upscale retail space, offers a great proposition to the prospective brand and Reliance has the scale and capital to grow these brands.”

Reliance Brands, which has a tie-up with high-end players like Diesel, Timberland, Paul & Shark, Quiksilver and Steve Madden, intends to rope in more international brands. Darshan Mehta, president & CEO, Reliance Brands said, “There are many fashion brands in the pipeline, both in menswear and womenswear.” However, he refused to name them owing to a non-disclosure agreement. Sources add that LVMH's Sephora, prominent beauty retailer and high-end women’s clothing brand Bon Chic Bon Genre (BCBG) from France are in talks with the company. Whether the partnership will be a JV or a license agreement couldn’t be confirmed.

Sources indicate that Swedish fashion retailer Hennes & Mauritz (H&M) is planning an India foray and has held talks with DLF Brands among others. However, an emailed questionnaire to DLF didn't elicit any response. The company, which has a franchise agreement with Italian high street fashion brand Alcott since 2008, is likely to convert that into a JV. DLF also has a collaboration with menswear brand Boggi Milano, that holds a 30% stake in the company.

Delhi-based Blue Clothing Company which operates a host of luxury brands in the fashion and home décor segments, introduced Turkish brands Damat, ADV and Tween to India earlier this year, and is also in talks with other foreign players.

Despite the heightened activity in the luxury space, retailers believe that high customs duty on goods and the dearth of luxury shopping destinations in India, act as deterrents to the growth. Mehta added, “Foreign brands are keen on entering the market but they're apprehensive about suitable locations. High-end brands refuse to set up stores in crowded streets or ubiquitous malls.”

Source: Financial Express.

Tags: Indian luxury market,luxury retail,Emilo Pucci, Krizia, Brooks Brothers,bloomingdale, neiman marcus,saks,diesel, timberland, paul and shark, quiksilver,steve madden,sephora, bon chic bon genre,

This Blog/Information/News Item/Press Release has been posted by Sparkleminds, A Franchise Consulting Company Based at India, Offering Complete Franchise Solutions Nationally and Internationally for more than a decade now.We help retail brands franchise and retail businesses expand to various geographies across the globe through our franchise development and franchise recruitment modules.If you are an entrepreneur seeking a international retail franchise we can help you evaluate and start a new franchise.Visit www.sparkleminds.com for more details on how you can either expand your existing business through franchising or start a new business.