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Explained | Why Tata Is Planning To Enter The Beauty Business It Exited 23 Years Ago

With forecasts predicting the local cosmetic market to blow up to $20 billion by 2025, the Tata Group eyes reclamation of a business it left decades ago.

Explained | Why Tata Is Planning To Enter The Beauty Business It Exited 23 Years Ago
Explained | Why Tata Is Planning To Enter The Beauty Business It Exited 23 Years Ago
outlookindia.com
2021-12-15T18:56:53+05:30

In 1998, the Tata Group left the cosmetic business by selling its popular brand Lakme to Unilever Plc. It was only in 2014 that the company entered the space again. Now, less than a decade later, the multinational conglomerate has said that beauty products will be a “key focus” for the brand.

Noel Tata, non-executive chairman of Trent, a Tata Group unit operating a chain of retail stores, recently said, “Extended product line and experimentation with formats for these products are in the offing as we see these as growth areas in retail.” Along with beauty products, the brand will also look at footwear and underwear.

Amid the recent beauty e-commerce boom, the astounding success of retailers like Nykaa and Purplle may have drawn the Tata Group’s attention back to the business it left over two decades ago.

A piece of the beauty e-commerce pie

According to data from Statista, India’s cosmetic industry was valued at $11.16 billion in 2017. Conversation media platform Bobble AI expects the industry to reach the $20-billion valuation by 2025. E-commerce, on the other hand, is estimated to touch the $120-billion mark by 2025.

While the beauty e-commerce space grew by 64 per cent, e-commerce, as a whole, witnessed a 77 per cent rise in 2021 as compared to last year. The transactions were at an all-time high in Tier-II cities like Guwahati, Lucknow, Kochi, Mysuru and Bhubaneswar with an 82 per cent increase this year as compared to last year, reported Bobble.

The pandemic has only accelerated the growth rate of the industry. Bobble AI found that during the 2021 festival season, beauty e-commerce platform Nykaa saw a 50% growth in active users while its counterpart Purplle recorded a 70% growth in active users.

The online-offline mix

The Tata Group is planning on selling its products through Westside, its flagship retail chain, or through standalone stores along with digital channels.

Nykaa, too, uses both offline and online channels for retailing. It currently has 41 physical stores across 20 cities and is planning to open 180 more in the next five years. Purplle, on the other hand, does not have any physical stores just yet.

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