Tata said to plan 20 ‘Beauty Tech’ stores with Virtual Makeup Kiosks, More
India’s Tata Group plans to open at least 20 “tech beauty” stores where it will use makeup kiosks and digital skin tests to entice young, affluent consumers to buy premium cosmetics, according to a company filing and a person familiar with its strategy. . .
The move pits Tata, whose interests range from automobiles to jewelry, against LVMH’s Sephora and domestic rival Nykaa for a share of the fast-growing $16 billion (about Rs. 1.3 lakh crore) personal care market in the world’s second most populous. the country.
Tata is targeting what it calls the “beauty fanatic” in India between the ages of 18 and 45 who like to buy foreign brands like MAC by Estee Lauder and Bobbi Brown, according to the document, which lists The Honest Company, Ellis Brooklyn, and Gallinee. as potential friends. Tata is in discussions with more than a dozen companies to offer special products in the new stores, according to a person familiar with the strategy, who did not specify specific brands.
Tata declined to comment on the 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.
Plans to open the store, which are still under wraps, follow the recent launch of Tata’s beauty shopping app, called Tata CLiQ Palette. The company is already in the brick-and-mortar retail business in India, where it has partnerships with global brands such as Zara and Starbucks.
The stores will have a bright red facade displaying the Tata CLiQ Palette logo, and 70 percent of the products inside are skincare and cosmetics, according to a Tata statement. Inside the stores, Tata plans to install technology that allows customers to try on dozens of lipstick shades virtually on screens and receive a digital skin test to determine which products would work best for them, according to the document.
This technology is not new and is being used by other beauty retailers around the world, but this foray into what industry experts call “experiential retailing” is still a new concept in Indian supermarkets and high street stores.
“Experience retail is going to be a big thing in India as more customers will spend their leisure time in such stores,” said Pankaj Renjhen, joint managing director at Anarock Retail consultancy India. “In the premium segment – where the customer is looking for things beyond the price – experiential selling helps trigger unexpected purchases and entice them.”
Renjhen added, however, that “the product and products must be special and good – if not, he (the customer) will not return.”
The Millennial Drive
As India’s economy grows, and people return to shopping after the coronavirus lockdown, Tata is looking to target younger and more affluent customers who like to shop in a comfortable environment and are willing to pay the sticker price for premium international brands. Tata calls such customers “non-bargainers” in a document seen by Reuters, unlike many Indians who buy low-priced local brands of lipsticks or skin creams at small mom-and-pop beauty shops where they often haggle for discounts.
The company targets consumers with an annual income of at least Rs. 6,00,000, which is three times the average salary of $2,000 (roughly Rs. 1,63,000) per year among India’s 1.4 billion citizens. The new stores should run “across-channel sales as the leading Beauty Tech destination for Gen Z & Millennials,” Tata’s text said.
India’s $16 billion (approx. Rs. 1.3 lakh crore) beauty and personal care market is much smaller than China’s $92 billion (approx. Rs. 7.5 lakh crore), but market research firm Euromonitor estimates that India’s will grow at an average of 7 percent per year over the next few years.
“The Indian beauty market is not saturated, far from it,” said Devangshu Dutta, head of New Delhi-based retail consultancy Third Eyesight. “If you’re investing for the long term, with higher income profiles and changing lifestyles in mind, there’s a long growth path ahead.”
Tata faces strong competition to capitalize on this growth opportunity. Sephora, which has been in India for ten years, has 26 stores selling beauty products and perfumes. Reliance, led by billionaire Mukesh Ambani, has a long-term plan to open 400 beauty shops, the first of which could open inside a Mumbai shopping mall next month, according to a person familiar with its plans. Reliance did not respond to a request for comment.
Indian beauty retailer Nykaa, which is backed by private equity firm TPG, asset manager Fidelity and endorsed by a Bollywood celebrity, said it plans to open up to 300 stores, up from 124 now. The 10-year-old company, which started as an online-only retailer, drew attention to the industry last year when its stock nearly doubled after listing on the Mumbai stock market, valuing the company at the time at $14 billion (approx. Rs. 1.14 lakh crore).
Obstacles Ahead
Tata’s first “beauty technology” store is likely to open in March, with further expansion in the next fiscal year starting in April that could see as many as 40 stores open, according to a person familiar with the plan, who added that the company will begin. and big cities like New Delhi before considering smaller areas.
However, Tata is struggling to persuade high-end mall owners, where space is scarce, to buy a new beauty store where it already exists, if it does not have enough special products or other differentiating factor to attract new customers and increase foot traffic for the mall as a whole, according to to another person who has direct knowledge of the negotiations.
Alongside the exclusive product launch, Tata is focusing on in-store technology, which a document seen by Reuters describes as a “big difference.”
One of the technology tools will be a device that Tata calls a “skin analyzer,” a device with a mirror that can read and analyze a customer’s skin to reveal 25 to 30 factors that can help in product selection. There will also be “virtual try-on” kiosks for eye and face makeup. Among them will be a round stand filled with lipsticks; as someone holds one up, the digital mirror screen on the front will automatically start showing how the color shade will appear on the face, eliminating the need to manually try again before buying.
Tata is also testing the use of a technology called geofencing to allow its store staff to see when a customer using its app checks in, and share purchase history and wish lists with staff to make better recommendations, a person familiar with the plans said.
© Thomson Reuters 2022
