Reliance Retail to Partner with Nykaa to Foray into The Cosmetics Industry

Reliance has grown to be India’s largest retailer delivering superior value to its suppliers, customers, and shareholders since the year of its inception 2006. A subsidiary of Reliance Industries Limited, Reliance Retail includes JustDial, Ajio, JIO stores, Reliance Fresh, Hamleys, Reliance Smart, and Reliance Trends among others. Being named as the second-largest retailer in the world by Deloitte, Reliance is now venturing into the cosmetics industry. In 2016, the company launched its first ever fashion portal AJIO in 2016 followed by the launch of JioMart, an e-grocery venture in 2019.

The company then started a line of acquisitions across various beauty segments. As stated by The Economic Times, the company’s next target is the online cosmetics and personal care products segment which consists of brands such as Nykaa and Purplle.

According to a report by Jefferies, the value of the online segment at 5-6 percent of the overall market, translated to $800 million in revenue. The Jefferies report also states that Nykaa, with revenue of $250 million in FY2020, garners more than 30 percent of the online market. The company currently has 15 million registered users, out of which 5 million are monthly active users (MAUs) and accomplishes over 1.5 million orders on a monthly basis. This makes the vertical marketplace the largest beauty and personal care retailer in India.

Reliance Retail is planning to launch an online as well as offline marketplace for beauty and personal care products. The company is also considering to sell international brands along with its own private labels on the platform.

Reliance Brands’ partnership with international brands such as Armani, Japan-based Muji, Canali, Burberry, and Hugo Boss will definitely come handy for the retail unit of the company during its cosmetics segment venture.

Nykaa also follows a similar model. The brand has launched many physical stores across the country. At present, there are 82 stores operating across over 30 cities in India. Nykaa Naturals, Nykaa Cosmetics are some of private labels of the company. These labels are tied up with celebrities like Katrina Kaif for the launch and promotion of the exclusive beauty brands. Nykaa is also responsible for bringing and introducing many popular Korean makeup brands in India.

As assumed by many industry experts, although Nykaa has already built a strong brand identity in online beauty and cosmetics industry, the entry of Reliance Retail will undoubtedly disrupt the journey of the brand.

According to Abneesh Roy, the executive vice president of Edelweiss Securities, “Reliance Retail’s foray into this market needs to be taken seriously, given their wider understanding of the retail ecosystem, financial muscle and also partnerships.” Further he added, “Reliance also will quickly learn from the incumbents and hence they need to be focused on efficiency and offering consumers a better experience to maintain their edge.”

However, Reliance Retail will have to face its own set of challenges to excel in the online beauty segment. The independent e-commerce analyst Satish Meena states, “Companies like Nykaa have built their presence via acing customer experience, and Reliance needs to focus on this too.” Meena also presumes that as the discounting strategy of Reliance might not work in this segment.

According to Research Dive, the global cosmetics market is predicted to surpass $457.8 billion by 2027, increasing from $375.5 billion in 2020. Whereas the cosmetics market in the Asia-Pacific region is expected to garner a revenue of $181.3 billion by 2027, owing to the rapid increase in use of cosmetic products such as sun screen, hair gel, facial creams, hair cosmetics, and wipes.

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Upama Goswami

Upama Goswami is a creative writer, editor, aspiring poet, and life-long learner of philosophy, literature, technology, and all things interesting. Her works have been published in various online publications. Upama is quite creative in her craft and can engage her audience with a compelling style of storytelling. She loves to paint, travel, exploring different niches of performing arts, watching movies, and learn new languages in her free time.