Ever since LVMH-owned Sephora partnered with Arvind Fashions Ltd to run the cosmetic and beauty retailer brand’s Indian operations in 2015, it has been on an expansion drive. It currently has 24 stores in the country and plans to drive up the number to 50 in the next few years – reaching out to tier II and tier III cities as well.
The luxury beauty industry in India is pegged at ₹2500 crores and has been growing at a CAGR of 18 per cent, according to Vivek Bali, CEO of Sephora India. As the pandemic paused its operations for nearly three months, he expects the business to slow down a little.
LuxeBook interviews Vivek Bali, a beauty industry veteran, on how the brand is adopting new safety measures and how the premium beauty market, at large, will fare post the lockdown.
How has the pandemic impacted Sephora India?
COVID-19 has impacted all the industries and we, too, are part of it. One of the main reasons is that all our stores are located in malls and as they have been closed, customers can’t access our stores. Almost until May end, even e-commerce was sporadically active because of the temporary ban on non-essential products.
Post mid-May, after the delivery of non-essential goods was allowed, we have had an overwhelming response. Customers who have been sitting at home and had consumed their products started placing orders.
What does the future of the premium beauty industry look like?
The industry is fairly entrenched as many consumers are buying now, and buying habits don’t really change, especially on the premium side of the business. The usage of products might change. Traditionally, face make-up has been very big. It will continue to be in demand, but as people are socializing less, it might be used less. We expect that eye products such as eyeliners, maskaras and eye shadows will do much better.
Similarly, in skincare, which is the second-largest category, usage will go up because people have been spending a lot of time at home and they have enough time for skincare regimes. Those who were not regularly following a regime may do so now. There is a focus on maintaining hygiene and frequent hand sanitation. Therefore, sales of hand and body lotions will pick up.
We firmly believe that those who are used to a certain skincare routine will continue with it. If I come out of a shower and I am in the habit of using a fragrance, I will use it. The usage could be marginally impacted because I am not socializing, but I wear my fragrance for myself even if I am at home.
About fragrances; one won’t buy it if they don’t smell it. This means that what people are currently buying are primarily replenishments for their existing products. They know what the shade looks like or fragrance smells like. When new products come in, then they will go to the stores.
People like to try beauty products before they purchase them. How will this happen henceforth, given the safety concerns?
Sephora is a pioneer in innovations. Our stores and, in turn, the malls in high-risk areas will not be open, but in orange and green zones where malls are opening up, our stores will also open. People can still come and try products in our stores. Testers will be on display. We will be very conscious about hygiene and cleanliness in our stores and handing consumers single-use applicators so that they can try a product. The testers will be santitised before and after use.
For creams and lotions, we will have single spatulas handy so that people can try them out before they buy. Fragrances are relatively much safer because they are inside a bottle and one does not touch the product directly. Our staff will spray the perfume on a blotter for the consumers.
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Are Sephora stores already open?
In whichever cities where malls are opening up, we are also preparing to open. There is a lot of cleaning and disinfecting happening at the stores at the moment.
Has e-commerce sales hiked? Will this continue even after stores open?
With stores being shut, e-commerce sales have increased by 50 per cent in May. Once stores open, offline and online sales will balance out. E-commerce is always a subset of store sales and is never bigger than store sales. In the current scenario, the percentage of online sales will go up.
When will in-store footfalls pick up?
Apart from shopping, people frequent malls because they want to go to restaurants and theatres. Food courts are opening up, but theatres are still closed. So, there could be fewer footfalls in the malls. We expect to see good footfalls by the end of the second quarter. Perhaps towards the end of August.
Will you amp up your digital communication?
That’s an evolving market. We are always in touch with our consumers wherever they are – if my consumer is on social media on YouTube, Instagram or WhatsApp or SMS – we are in touch with them everywhere. Now, we will change gears and be more aggressive on social media.
How will the pandemic impact Sephora India’s expansion plans?
We lost this whole quarter of April-May-June. The expansion plan might be delayed by six months. I think it is a matter of time. The company needs to get into action, mall construction activity has to start again… We will need to get things back on track and reactivate.
We are targeting urban centres and then tier 1 and 2 cities. Wherever malls are coming, and we feel is the right place, we will open a store. Our plans are in place for that. There will be a maximum six months delay. We have signed up with all the upcoming malls in various cities.
How will the pandemic impact sales in 2020?
We are fairly optimistic that the market will bounce back. But only time will tell the per cent of the recovery. Every month accounts for 8 or 9 per cent of sales, approximately. As we have lost 3.5 months, 29-30 per cent has already gone.
If the city is shut and the malls are shut. I can’t do anything about it. It is very difficult to make up for the lost period. As for the future, we are optimistic that people will buy.
How will the lockdown impact product launches?
New product launches will be delayed because the entire supply chain across the world is impacted. On the manufacturing side, factories around the world were closed. The products that are already approved for launch will now be made and get to Indian only after three or four months.
Second, there are some products that are ready and in the pipeline. Those products will come quicker.
Third, products need to be registered in India. This takes three to six months. Since the offices have been shut, whatever was supposed to be launched in June-July will be launched a quarter later.