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1、Photo by LUXASIAIndias massive untapped growth opportunity in luxury beauty Decoding market dynamics to create a winning strategy for long-term growth in 2025 and beyondExecutive summaryThat said,India is a challenging market to master,being a“land of many Indias”and much different from other Asian

2、countries due to its vast geography and large ethnic diversity.To succeed,brands will need to develop a variety of region-and even city-specific strategies rather than relying on a generic Asian or single-market strategy.Three strategic pillars need to be addressed:Product:customize the product port

3、folio by region and cities.Tailor the product portfolio to cater to Indias climate,the variety of complexions,and consumer preferences while leveraging an existing international portfolio without investing in dedicated R&D.For example,launch shades for brown complexions with neutral and warm underto

4、nes instead of cool undertones,and launch mini-SKUs to recruit consumers with better price accessibility.Marketing:create and execute a localized marketing strategy.Make a committed marketing effort for two to three years to unlock the full potential of international brands with limited consumer awa

5、reness in India.Forge partnerships with Instagram influencers,and capitalize on well-trained in-store beauty assistants exclusive to the brand(even in chain stores).Identify influencers that are appropriate for the brand,and leverage the digital mechanics on retailer platforms along with mainstream

6、channels such as YouTube.Partnership and distribution:choose the right partners to harness accurate market intelligence and access more channels.Adopt an omnichannel distribution strategy,and work with a local partner to leverage their online and offline footprint across the country.This will involv

7、e navigating operational complexities such as product registration,imports,and the supply chain along with unlocking value drivers,such as tapping into a nationwide sales team and training,deploying,and managing an army of dedicated beauty consultants in omnichannel chain-store environments.India of

8、fers an exciting and lucrative opportunity for global beauty brands to enter and establish themselves early in the luxury beauty space.1 Already a billion-dollar market in 2024,luxury beauty in India is expected to reach$1.6 billion by 2028 and$4.0 billion by 2035,growing at an expected CAGR of 14 p

9、ercentmaking it one of the fastest-growing markets in Asia and the rest of the world.The underpenetrated luxury beauty landscape in India presents an enormous opportunity for brands to capitalize on favorable socioeconomic factors,such as overall country development,GDP growth,a growing middle class

10、,and luxury-conscious consumers awareness,which is fueling a desire to trade up.In many ways,the 14 percent projected CAGR may be misleading as there can be a sharper inflection point and a growth spurt when developing economies cross the threshold of income levels where basic living needs are being

11、 met and discretionary spending surges.This is the near-vertical growth phase of an S-curve if we look at a 10-to 20-year view,the exact timing of which is nearly impossible to predict.India must not be overlooked on account of its smaller market for luxury beauty products.Instead,the immense market

12、 potential over the next decade is undeniable,and it is expected to follow the high-growth trajectory that China enjoyed over the past 15 years.Currently,Indias luxury beauty landscape is comprised of about 90 percent international brands and 10 percent local brands,even though many more internation

13、al brands have yet to enter the market.This is in stark contrast to mature luxury beauty markets such as Japan and South Korea,where homegrown luxury brands tend to constitute around 40 percent of the market.Top brands in the global beauty ecosystem are already betting on Indias vast consumer base,e

14、specially its rising younger aspirational digital-savvy consumers.The influx of international brands over the past few years is further evidence and a clarion call for brands to swiftly enter India to capture early-mover advantages.1 The luxury segment of the beauty market is categorized based on pr

15、icing of$15 or more for haircare(250 ml),$20 or more for skincare(50 ml)and color cosmetics(standard sizes),and$40 or more for fragrance(100 ml).This also includes the prestige segment.1Indias massive untapped growth opportunity in luxury beautyChina,one of the worlds largest beauty markets,is facin

16、g economic headwinds and dampened consumer spending on beauty.This has turned the eyes of global brands to seek out new pastures in its neighboring market:India.The countrys vast and increasingly well-informed consumer base,young aspirational population,and rising disposable income make it ripe for

17、explosive growth in luxury beauty.The market is expected to double to$1.6 billion over the next five years“The beauty market is experiencing rapid growth,fueled by increasing disposable incomes and a young population highly engaged in self-care.As India emerges as a global beauty hotspot,now is the

18、ideal time for prestige and luxury brands to enter the market and leverage the strong growth projected for the coming years.”Bhakti Modi,co-founder,Tira Beauty One of only two countries in the world with more than a billion people,India is expected to become one of the worlds fastest-growing luxury

19、beauty markets.Having just experienced a double-digit five-year CAGR of 12 percent per year to reach a market size of$0.8 billion in 2023,India is projected to accelerate at 14 percent per yeardoubling its market size to$1.6 billion by 2028 and reaching$4.0 billion by 2035(see figure 1 on page 3).In

20、 fact,India could easily see an even sharper growth trajectory,which is difficult to predict,as Chinas experience 15 years ago suggests.India is luxury beautys next gold rush2Indias massive untapped growth opportunity in luxury beautyIndia is on track for a growth surge in luxury beautyIndias luxury

21、 beauty journey indicates that the country is approaching an inflection point and is poised to follow the exponential growth path of other Asian economies(see figure 2 on page 4).An analysis of major Asian markets suggests that Indias luxury beauty market will follow an S-curve growth trajectory as

22、income levels rise.Unlike other major Asian markets,India is at the lower end of the S-curvewith enormous potential to catch up.Notably,mature markets in other countries are near saturation,characterized by low single-digit market growth and intense competition,prompting international beauty brands

23、to hunt for growth elsewhere.This has put India on the radar for market entry and expansion.“India is today where China was 1516 years ago.And it just went through a consumption boom in all categories,particularly the beauty and fashion segments,”Falguni Nayar,Nykaa founder and CEO,said in a 2024 in

24、terview.“So,we are very confident that it is going to be repeated in India.”Indias luxury beauty market is poised for high growth,mirroring the trajectory China was on when the country surpassed the$2,000 to$2,500 mark in per capita income,which triggered a surge in consumption.Countries at this poi

25、nt have a sizable and growing middle class that tends to trade up from mass and masstige segments to luxury products.This demographic group is primarily composed of people ages 15 to 45,who tend to be more aspirational spenders rather than savers.By 2030,these consumers are expected to make up nearl

26、y half of Indias population.3Indias massive untapped growth opportunity in luxury beauty0.80.51.6Source:Kearney and LUXASIA analysis201820232028fIndias luxury beauty market($billion)+14%+12%Figure 1Indias luxury beauty market is projected to double over the next five years4Indias massive untapped gr

27、owth opportunity in luxury beautySources:Oxford Economics,Euromonitor,interviews with industry leaders;Kearney and LUXASIA analysisLuxury beauty spend per capita($,2023)Figure 2The luxury beauty markets in other Asian countries indicate that India is poised for a growth surgeGDP per capita($)0102030

28、40506070809010011012013014080,00030,00020,00015,00010,0005,0000Mature or developed stageGolden period for growthIndonesiaIndiaJapanMalaysiaChinaPhilippinesSingaporeSouth KoreaThailandVietnamAbility to grow and accelerate market shareFast growth but with stiffer competition51015202505,00010,00015,000

29、20,00025,00030,000GDP per capita($,20072023)Luxury beauty spend per capita($)China(20072023)India(2023)1 Footnote regular slate 7pt on 8pt sed vel mi volutpat,gravida ipsum sit amet,bibendum turpis.Vivamus varius risus ac vehicula vulputate.2 Nam id felis arcu.Duis vehicula tincidunt turpis,quis vol

30、utpat nunc web address here.Nam vitae nulla faucibus,scelerisque nisi et,fringilla est.3 Vestibulum pulvinar nisi et lectus posuere,vitae euismod ligula pulvinar.Duis congue velit vel est aliquet,in aliquet diam pellentesque.Luxury beauty is only 4 percent of Indias overall beauty and personal care

31、marketIn contrast to many other Asian and Western markets,luxury beauty in India is still nascent with only about a 4 percent share of the overall beauty and personal care market,providing huge headroom for growth(see figure 3).This market share is far below its developing Asian peers,with Thailand,

32、Vietnam,and Malaysia standing in the range of 20 to 25 percent.The gap is more pronounced than in developed markets such as Canada,Japan,Singapore,South Korea,the United States,and the United Kingdom,which have a 35 to 50 percent share of the market.The low degree of penetration gives India a unique

33、 opportunity to scale by capitalizing on the rising affluence of its middle class and the increased demand from young aspirational spenders.Favorable demographics and luxury purchase trends point to a sustained period of growth“The number of luxury beauty consumers in India is expected to more than

34、double in eight years,from 15.5 million in 2022 to 33 million in 2030.”Former executive of LOral Luxe(India)5Indias massive untapped growth opportunity in luxury beautySources:Euromonitor;Kearney and LUXASIA analysisFigure 3Luxury beautys share of the beauty and personal care market is much lower in

35、 India than in other countriesLuxury beauty as%of the overall beauty and personal care market(overall market size in$billion,2023)Rest of AsiaEuropeAmericasMass and masstigeLuxuryIndia21757332977131221911119UnitedStatesCanadaUnitedKingdomGermanySingaporeSouthKoreaChinaJapanMalaysiaVietnamThailandPhi

36、lippinesIndonesia4%8%9%20%21%24%37%38%43%48%25%35%35%36%96%92%91%80%79%76%63%62%57%52%75%65%65%64%Affluence is expected to surge over the next five to 10 years with the number of high-income households projected to triple,leading to more demand for luxury beauty products(see figure 4).As such,spendi

37、ng is expected to increase across all categories.Over the past five to 10 years,the top luxury players have achieved double-digit growth rates in their respective segments in India,and they are expected to capitalize on their early-mover advantage to fuel their solid performance over the next five t

38、o 10 years(see figure 5 on page 7).Among these top luxury brands,Rolex has achieved a remarkable 34 percent annual revenue growth rate over the past four years,and Herms saw about 14 percent annual revenue growth rate from 2017 to 2022.The performance of these leading brands highlights Indias appeti

39、te for luxury brands and products.India faces cross-border infiltration of luxury beauty products from other markets,showing their strong demand even when brands are not officially present in IndiaIndia is seen as a viable clearance market for developed markets overstocked products,even those nearin

40、g obsolescence.These are primarily sold through unauthorized sellers on e-commerce sites at discounted prices and without printed expiration dates.Furthermore,because many of these brands are not officially in the market,consumers are unable to distinguish if the products are still fresh or have sta

41、rted to degrade.This has adversely impacted brand perception and the consumer experience.The silver lining is that the commercial viability of such clearance platforms implies a strong underlying demand for luxury beauty products,even for brands that are not officially in India.Notably,counterfeitin

42、g in luxury beauty is minimal,although it is a serious issue in mass and masstige segments.6Indias massive untapped growth opportunity in luxury beautySources:Price Report;Kearney and LUXASIA analysis201620222030fPopulation for households with medium and high annual incomes(million)Figure 4Indias hi

43、gh-income population is expected to triple between 2022 and 20303756169CAGR 20162022CAGR202220307%15%3494327154%7%Annual household income INR 30L($36,000+)Annual household income INR 530L($6,000$36,000)Sources:Euromonitor,EMIS;Kearney and LUXASIA analysisLuxury in India by category($million)Luxury c

44、ompanies in India have seen sustained growth over the past few years:20232028fGrowth%Figure 5Favorable luxury purchase trends in India indicate a sustained period of growthLuxury hotels and food serviceFine wines,champagne,and spiritsDesigner apparel and footwearPremium and luxury carsLuxury jewelry

45、Luxury leather goodsLuxury accessoriesLuxury beauty4891483,0295089243061,1328258132024,4037321,4694141,6811,5792014194%12%2%16%15%12%18%13%202328f11%6%8%8%10%6%8%14%20212330%9%21%7%10%9%10%9%COVID-19 recovery Mercedes-Benz India11%Revenue CAGR20182023Swarovski India 10%Revenue CAGR20172022HermsIndia

46、 14%Revenue CAGR20172022RolexIndia 34%Revenue CAGR201920237Indias massive untapped growth opportunity in luxury beautyIndustry overview and outlookSeventy percent of the luxury beauty market is offline,and 30 percent is online.Fragrance dominates the product category with a 43 percent share,but make

47、up is expected to be a close rival by 2028.Channel mixIn Indias luxury beauty market,offline stores hold a dominant position for first purchases where personalized customer service from retail assistants and product trials matter,especially for fragrances and makeup.Specialty stores,with beauty-focu

48、sed multi-brand retailers such as Sephora and Nykaa,contribute to 25 percent of the luxury beauty market.This is followed by boutiques or standalone brand stores,such as MAC,Forest Essentials,and Dior,with 20 percent of the market.The overall offline channel contributes to 70 percent of the luxury b

49、eauty market.At the same time,the entry of online beauty retailers such as Nykaa has enhanced accessibility to the market,attracting new customers who previously lacked trust and access to luxury beauty products,especially in tier 2 and tier 3 cities with a small offline footprint.The online channel

50、 has also helped improve consumer education and engagement,leading to higher brand awareness,enhanced overall brand experience,and more demand.The e-commerce channel contributes to about 30 percent of the overall market and is projected to grow at a CAGR of around 27 percent from 2023 to 2028(see fi

51、gure 6 on page 9).As a result,an omnichannel approach is expected to be the way forward for brands aiming to reach diverse customers with different channel preferences.Retailers are embracing omnichannel retailing to curate a comprehensive experience for consumers.8Indias massive untapped growth opp

52、ortunity in luxury beautyNykaa,a pioneer of online-first retail in India,has expanded with a large network of Nykaa Luxe and Nykaa On Trend stores.The company extended its network of beauty stores across formats from 77 in FY21 to 187 in FY24,positioning Nykaa as an omnichannel retailer,although onl

53、ine sales still make up a majority at 74 percent in FY23.Sephora,which was acquired by Reliance Retail from Arvind Fashions in 2023,is looking to expand its footprint and more than double its stores from its current network of 26 stores over the next three to four years,while also establishing a tru

54、e omnichannel presence in India by improving its online presence.Tira,Reliance Retails ambitious foray into omnichannel luxury beauty retail,is planning an aggressive footprint expansion to reach triple-digit stores in the next four to five years,alongside its online platform.This vibrant growth of

55、the beauty ecosystem is supported by the planned entry of Galeries Lafayette and the expansion of fashion and other retailers into the beauty sector,including SS Beauty,Tata CLiQ Luxury,and Myntra,alongside traditional department stores.Category mixFragrance is the largest luxury beauty category in

56、India with a 43 percent share,driven by impulse shopping,gifting,and the contributions of men(see figure 7 on page 10).That said,this composition is likely to evolve to show more contributions coming from color cosmetics and skincare.Skincare is projected to be the fastest-growing category,thanks to

57、 the growing availability of luxury skincare brands and increasing consumer education levels about skin health and skincare routines.Skincare has the potential to outstrip other categories in terms of growth.Although India has traditionally been a fragrance market and has seen several large internat

58、ional makeup brands in the past decade or so,skincare is still a relative white space.This extremely lucrative segment with high loyalty is likely to see a large number of entrants in the next one to three years,which is also likely to drive the sophistication of the Indian luxury beauty consumer.Co

59、lor cosmetics will also continue to experience robust growth,fueled by a burgeoning young working population with a growing share of women,which will inevitably increase their frequency and usage of makeup.Source:Kearney and LUXASIA analysisLuxury market channel mix($billion and%,2023)Figure 6E-comm

60、erce in India is projected to grow by about 27 percent from 2023 to 2028 CAGR 20232028Key players(non-exhaustive)Sephora,SS Beauty,Parcos,Nykaa,TiraMAC,Bobbi Brown,Forest Essentials,Clinique,Dior,ChanelShoppers Stop,LifestyleSalons,e.g.,Naturals,GeetanjaliNykaa,Myntra,Purplle,Sephora,Tira,Tata Cliq

61、Palette8%0.827%Specialtystores25%OflineOnlineBoutique andbrand stores20%Others10%E-commerce30%Departmentstores15%9Indias massive untapped growth opportunity in luxury beautyInternational brands dominate the market,with skincare and cosmetics brands more concentrated and fragrance heavily fragmentedI

62、ndias luxury beauty landscape is dominated by recognized international brands,with brands launched globally pre-2000(such as MAC and Krastase)dominating the market.Because of the unsaturated nature of Indias luxury beauty market,newer brands founded in the past 10 to 15 years(such as The Ordinary an

63、d Huda Beauty)are also able to consistently grow and gain market share.Indicative of a developing luxury beauty market,the presence of local luxury beauty brands is limited,with Forest Essentials and Kama Ayurveda being the only major brands in this space(see figure 8 on page 11).They have also carv

64、ed out a niche following for themselves with Ayurvedic or herbal formulations and do not directly compete with scientific formulations of luxury international brands.Source:Kearney and LUXASIA analysisLuxury market category mixFigure 7Fragrance is the largest category in Indias luxury beauty market1

65、1%7%22%9%20232028f$0.8 billion$1.6 billion10%28%43%19%8%32%33%27%CAGR201820239%24%18%9%CAGR20232028Hair careSkincare,including suncareColor cosmeticsFragrances10Indias massive untapped growth opportunity in luxury beautySources:interviews with industry leaders;Kearney and LUXASIA analysisFigure 8Ind

66、ias luxury beauty market is dominated by recognized international brands from Europe and Americas,though newer brands have emergedSource regionRecognized brands launched pre-2000Beauty as the core focusBeauty as an extended focusBeauty as Core FocusNewer brands launched in the 21st centuryIndiaFores

67、t EssentialsKama AyurvedaEuropeClarinsJo Malone LondonKrastaseLancmeGiorgio ArmaniDiorCaudalie Nina RicciPixi Eau Thermale AvnePaco RabanneMake Up For EverDavidoff GucciDolce&GabbanaMontblanc BurberryHugo BossGivenchyBvlgariVersaceHerms Jimmy Choo FerragamoCharlotte TilburyNorth AmericaMAC Cosmetics

68、Bobbi BrownClinique Este Lauder AvedaKiehlsBenefit CosmeticsElizabeth ArdenArtistryToo Faced CosmeticsCarolina HerreraCalvin KleinCoachFenty BeautyRare BeautyThe OrdinaryOLAPLEX Tom Ford Beauty MoroccanoilMilani CosmeticMorphe Rest of AsiaLANEIGEShiseido SulwhasooEtude HouseIssey MiyakeHuda BeautyBe

69、auty of JoseonInnisfreedear,KlairsCOSRXThank You FarmerBelifTONYMOLYShare of brands in the Indian marketShare of brands in established Asian markets:Japan,South Korea,and ChinaLuxury beautymarketLuxury beautymarketLocal brandsInternational brands93%7%60%40%11Indias massive untapped growth opportunit

70、y in luxury beautyOverall,these are strong indicators that Indias luxury beauty market is still far from maturity and has massive untapped potential that could bring major rewards to brands that can unlock the opportunity and establish themselves.Note:The haircare category was not evaluated for bran

71、d market shares beyond Krastase,which is expected to have a market share of about 25 percent in luxury haircare.Brands launched in 2023 or after,including Rare Beauty and Fenty Beauty,were not evaluated for top brands contribution.Sources:Euromonitor,EMIS,interviews with industry leaders;Kearney and

72、 LUXASIA analysisFigure 9The top 10 color cosmetics and skincare brands have captured more than 60 percent of Indias marketLuxury market by product category2023$0.8 billion$0.38billionTop brandsColor cosmetics and skincareHair care10%Color cosmetics28%Fragrances43%Skincare,including suncare19%Mac 18

73、%Forest Essentials 10%Clinique 6%The Ordinary 6%Huda Beauty 5%Este Lauder 5%Bobbi Brown 5%Kama Ayurveda 3%Charlotte Tilbury 3%Shiseido 2%Others 38%$0.36billionFragrancesDavidof 6%Calvin Klein 5%Bvlgari 4%Burberry 3%Tom Ford 3%Dior 2%Versace 1%Hugo Boss 1%Jo Malone London 1%Dolce&Gabbana 1%Others 71%

74、The brand landscape for color cosmetics and skincare is fairly consolidated,with the top 10 brands contributing a share of more than 60 percent(see figure 9).As these categories continue to experience rapid growth,more players will likely enter the market,creating a more competitive environment.All

75、brands that enter Indias luxury beauty market will have an opportunity to ride this wave of growth.However,in the fragrance market,fragmentation is more pronounced because of the presence of numerous early-mover brands,many of which were brought in by distributors and retailers.Niche fragrances are

76、expected to become more popular as the average Indian luxury beauty consumer becomes more sophisticated.12Indias massive untapped growth opportunity in luxury beautySeven structural trends are shaping Indias luxury beauty market The beauty market is evolving rapidly,making it one of the most dynamic

77、 consumer sectors in Indias economy.Informed consumers are embracing sophisticated beauty regimes.Theres a noticeable gender shift in fragrance purchases with a growing share of women.Rising affluence and aspirations are driving people to trade up for more luxury products.Seven trends are fueling ex

78、plosive growth in luxury beauty and defining the course of the market:1.The rise of the well-informed and discerning Indian beauty consumerIndian consumers are growing more conscious of beauty regimes,particularly skincare.They are seeking product recommendations by following influencers on Instagra

79、m and turning to YouTube for education and information on beauty,and this is expected to be a final step in a consumers purchase journey.A 2023 survey by Meta-GWI revealed that 47 percent of Indian consumers learn about beauty products through Instagram Reels,and 70 percent of beauty content viewers

80、 watch Indian influencers to make purchase decisions.This heavy reliance on Instagram is exacerbated by Indias TikTok ban.Many brands,including Benefit,Caudalie,Este Lauder,Farmacy,and Charlotte Tilbury,are partnering with local influencers to tap into Indias expanding influencer economy.The underly

81、ing driver is the increased Internet and mobile penetration,coupled with rising consumer literacy and enhanced education in India.Todays consumers are more internationally exposed and well-read,making them more discerning in their consumption.2.Consumers adopting sophisticated skincare routinesMore

82、Indians are adopting extended beauty regimens,adding products such as toner and sunscreen into their routines in addition to established products such as cleansers and moisturizers.Korean beauty brands are leading the way in advancing sophisticated skincare routines.In OctoberDecember 2023,the searc

83、h terms“Korean sunscreen”and“glass skin”surged 148 percent and 61 percent respectively from the previous quarter,according to Nykaas Q2 FY24 earnings call.Nykaa responded to this growing demand by launching a dedicated K-beauty section.At the same time,consumers are more informed about product ingre

84、dients and are looking for clean labels,“free from harsh ingredients”products,and active ingredients such as Vitamin C and hyaluronic acid.The skincare category has been smaller than fragrance and color cosmetics in India,but this is also supply driven and is expected to change with several new mark

85、et entrants in the next 12 to 36 monthsmaking this the fastest-growing category in the country.3.A gender focus shift in the fragrance marketHistorically,the fragrance market in India has been male-oriented,with about a 60 percent share five to 10 years ago.However,this is changing as fragrances are

86、 increasingly capturing the attention of female consumers.Popular female-centric fragrances that have gained traction include Chanel No.5,Dior Jadore,Marc Jacobs Daisy,YSL Libre,and Armani My Way.This rise in female-focused fragrances has led to the market being evenly split between male and female

87、fragrances.Even with this gender shift,a 50 percent share of males is significant given that mens contribution to other luxury beauty segments such as color cosmetics and skincare is low.The high contribution from men is one of the main reasons that fragrances have the largest share in Indias luxury

88、 beauty market with 43 percent.13Indias massive untapped growth opportunity in luxury beauty4.An accelerated trade-up toward luxuryHigher incomes,a larger digital influence,and a growing desire to showcase status in social settings,particularly among Gen Z and Millennials,are accelerating the tradin

89、g-up across beauty categories.Luxury beauty is growing twice as fast as mass beauty,and luxury makeup is expected to experience a high growth rate of 18 percent.To capitalize on the trend,luxury brands have introduced mini versions of their products,such as smaller lipsticks by MAC and smaller sizes

90、 of cologne by Jo Malone London,making them more accessible to price-sensitive consumers who are purchasing at the higher end of the masstige segment.5.The rise of celebrity-led beauty brands In recent years,celebrity brands such as Rare Beauty by Selena Gomez,Fenty Beauty by Rihanna,Hyphen by Kriti

91、 Sanon,and Anomaly Haircare by Priyanka Chopra have captured the attention of the Indian audience.Indian female celebrity Katrina Kaifs Kay Beauty is among the most successful beauty brands,with an annual revenue run-rate of$18 million within four years of launch.However,the jury is still out regard

92、ing whether this trend will continue or whether it will be successful.As Indian luxury beauty consumers become more sophisticated in their use of products and regimes,it is quite possible that the strength of international brands and product efficacy will play a bigger part in their purchasing choic

93、es.Having a celebrity as the face of the brand or as a brand ambassador is not necessarily the elixir for success.6.A rise in the use of technology for personalization and an improved customer experience More companies are using AI and augmented reality(AR)to power beauty tech tools,such as makeup t

94、rials and skin analyzer mirrors,to offer a personalized and immersive consumer experience.For example,the new Tata CLiQ Palette stores have AR-enabled technologies such as Palette Match Finder to personalize the customer experience.And in 2023,Reliance Retail launched Al-powered virtual try-on techn

95、ology called ModiFace on its beauty platform,Tira.However,the adoption of such technologies is at a nascent stage and is primarily aimed at building interest and awareness among online customers.The final trials and first-time purchases are still dominated by the offline ecosystem.7.Omnichannel pavi

96、ng the way for distributionAn offline retail presence has always been crucial for building brand awareness and enhancing the luxury beauty experience.It is also natural that first purchases for luxury beauty are dominated by offline since consumers typically want to try these products before buying

97、them.However,subsequent purchases are often made online.Moreover,online channels are fueling customer purchases in emerging tier 2 and tier 3 hotspots,especially if products are not readily available outside of tier 1 cities.Nykaa,which started off as an online platform and is the leader in luxury b

98、eauty retail online,has been investing heavily in physical stores,aiming for an optimum offlineonline mix.In addition,as discussed earlier,Sephora is looking to expand its footprint over the next three to four years while building its online share of the business.Reliances Tira wants to take both of

99、 these competitors head-on with a 100-store footprint in the next four to five years,combined with an online presence to create a seamless consumer journey.To win in this market,brands will need to have their own trainers and dedicated beauty consultants in stores and a robust pan-India sales team,c

100、oupled with a smart and well-executed digital and e-commerce strategy.To unlock the full potential of the Indian market,brands will also have to keep an eye out for opportunities such as SS Beauty,the entry of Galeries Lafayette,and other e-commerce channels such as Tata CLiQ Luxury.14Indias massive

101、 untapped growth opportunity in luxury beautyStrategy for successForward-thinking brands will address all three strategic pillars,customizing their strategies for the Indian market backed by strong local intelligence (see figure 10).ProductHave a strategy that caters to Indias unique customer prefer

102、ences rather than replicating an Asian strategy.“Local preferences and climate play key roles in which international products can be launched in India.”Neha Ramani,former VP at NykaaFigure 10Three strategic pillars can build success in Indias luxury beauty marketProductPartnershipand distributionMar

103、ketingSources:interviews with industry leaders;Kearney and LUXASIA analysis4*5112332Strategyfor success Customize the product portfolio by region and cities to cater to a“land of many Indias.”Invest in well-trained brand-exclusive beauty assistants.Partner with influencers on Instagram and YouTube.R

104、un customized regional campaigns.Implement an omnichannel distribution strategy.Partner with a strong local distributor for support in regulatory compliance,product selection,product pricing,and marketing.15Indias massive untapped growth opportunity in luxury beautyBecause preferences vary across pr

105、oduct categories,shades,fragrances,and other factors compared with Southeast Asia,a customized portfolio is necessary.Here are a few examples:Fragrances dominate the Indian market with a 43 percent share,which is higher than any Southeast Asian country and is evenly split between men and women.Fragr

106、ances that see high demand include citrus,woody,and musky scents,which differs from Southeast Asia,where people prefer more floral and lighter scents,and from the Middle East,where there is more demand for oud and frankincense.Skincare is underdeveloped at 28 percent compared with many Southeast Asi

107、a markets that see a market share of more than 50 percent.Brands can expand into the skincare category,which is projected to experience explosive growth at a 24 percent CAGR over the next five years,by focusing on trends such as active ingredients(for example,vitamin C and hyaluronic acid)and clean

108、labels.Within color cosmetics,imported brands often focus globally on formulations for fair and dark complexions.However,these do not tend to resonate well with consumers who have brown complexions.To attract Indian buyers,there is a need for neutral and warm undertones instead of cool undertones.In

109、dia has a hot climate,unlike several mature markets,so testing the suitability of packaging,formulations,and textures is important.For example,light non-comedogenic formulations are preferred in India,while warm textures such as balms or thick formulations are less likely to succeed.“In India,comple

110、xions change across regions.Brands need to know which shades to sell,or else theyll fail.”Vivek Bali,former CEO at Sephora IndiaIndia is not a homogenous market;the country is made up of a variety of races,people groups,languages,geographies,climates,and preferences,making it a“land of many Indias.”

111、Consumer traits and preferences change drastically across regions and cities.Brands will need to master these nuances and complexities,and brand strategies must be carefully customized for each region.For example,consumer preferences in top metros such as Delhi,Mumbai,and Bengaluru vary widely from

112、tier 2 and tier 3 cities.Even within metros and tier 1 cities,Bengaluru has more demand for sunscreen and masks because of its proximity to the equator and windy weather,which leads to drier skin types.Meanwhile,toners and cleansers are more popular in Chandigarh because of the high levels of pollut

113、ion.2 Brands will need to keep this in mind in their marketing approaches.For example,on the e-commerce platform Myntra,dAlbas sunscreen with a moisturizing formula is displayed more prominently for the dry environment of Delhi,while dAlbas sunscreen with skin complexion benefits is displayed more p

114、rominently to Chennai consumers.3 2 Bengaluru and Chandigarh examples are based on Tira website analysis in May 2024.3 The dAlba example is based on Myntra website analysis in April 2024.16Indias massive untapped growth opportunity in luxury beautyMarketingBrands with limited local awareness may nee

115、d to commit two to three years of investments to assess viability.Exclusive store assistants,Instagram influencers,and localized marketing campaigns play a pivotal role.Brand awareness plays a crucial role in determining success.Newer luxury and niche beauty brands with limited local awareness typic

116、ally require two to three years to evaluate their viability in Indian markets as well as to achieve sufficient popularity and scale to be profitable.In contrast,established and popular brands can achieve significant growth and be profitable within just three months.As social media consumption rises,

117、more consumers rely on platforms such as Instagram and YouTube for product information,reviews,and tutorials,while TikTok remains banned in India.Consequently,these channels are crucial for customer conversion.Considering Indias diverse demographics,it is essential to view this through a localized l

118、ens,including partnerships with micro-influencers for customized regional or seasonal campaigns,such as creating region-exclusive creative content or running specific promotions during important local festivals.Although influencers can play a crucial role,the importance of well-trained brand-exclusi

119、ve beauty assistants,whether owned by the brand or operated by partners,is still significant.These ambassadors can guide customers,providing personalized service and recommendations,and in doing so,they can play a pivotal role in pushing the consumer from the consideration stage to purchase.“Educati

120、on in categories such as skincare is very important,and brands need to impart education through on-the-ground trained beauty assistants.”Vivek Bali,former CEO at Sephora IndiaPartnership and distributionBrands that want to expand should adopt an omnichannel distribution strategy and establish a stro

121、ng local partnership to tap into local consumer knowledge.Consumer demand in India tends to be geographically fragmented,with the top 10 states contributing to about 75 percent of demand.However,for luxury beauty,distribution across 35 cities is needed to cover about 85 percent of the market(see fig

122、ure 11 on page 18).An omnichannel distribution strategy can ensure that their presence is not only in tier 1 cities through an offline footprint,but also in tier 2 and tier 3 cities via online distribution.Establishing an exclusive and robust partnership with a local player that has an extensive omn

123、ichannel network can give brands access to valuable local market insights and leverage the partners capabilities for scalable growth.For example,more than two decades ago,MAC Cosmetics entered India through a shop-in-shop format with Shoppers Stop.In todays dynamic and swiftly evolving retail enviro

124、nment,a single-format entry might not be ideal.What brands need is a partner that can be their one-stop contact point to the plethora of channels and knows what type of marketing and retail execution works in each channel and how to customize the channel strategy according to the“land of many Indias

125、.”“For success in India,it will be important to go with a local partner to benefit from local knowledge and do the right customization of both the product portfolio and marketing.”former executive,Este Lauder17Indias massive untapped growth opportunity in luxury beautyThese local partners understand

126、 the nuances of the market and can assist in the following areas:Regulatory compliance.They can offer support with product registration,ensuring adherence to local regulations in a timely manner as well as navigating complex tax structures.Product selection.They can help select relevant SKUs tailore

127、d for the various regions and cities of India,including product types,shades,textures,and sizes.Product pricing.Brands can benefit from local partners insights into competitive pricing strategies based on market dynamics and consumer preferences.Marketing.Local partners can enhance the marketing ret

128、urn on investment by leveraging the most relevant influencers and messaging as well as optimizing the cost of local omni-marketing execution.Local sales operations.They may a robust sales team broken down by region operating across all parts of the country and can offer effective support across chan

129、nels and a network of retailers.Training and beauty consultants.They can ensure best-in-class training and management of dedicated beauty consultants for the brands,which is a key differentiator in terms of boosting retail performance at a door level.One popular successful strategy is to partner wit

130、h a distributor,which allows brands to reach a wider customer base via multiple retailers since customer profiles are heterogenous across retailers.For example,Sephora has a mature consumer base and a strong offline presence,while Nykaa sees higher adoption among the younger generation with its stro

131、ng online presence.“Indian partners now have strong tech and capabilities to provide end-to-end support to brands.”Neha Ramani,former VP at NykaaFigure 11The demand for luxury beauty in India is fragmented Consumer expenditure by state(%,2023)Premium beauty sales from online channels by cities(2024,

132、%)Sources:interviews with industry leaders;Kearney and LUXASIA analysis45Top five statesNext top five statesNext top five statesOthersTotalTop15 citiesNext20 citiesOthersTotal60251530151010010018Indias massive untapped growth opportunity in luxury beautyConclusionIndias luxury beauty segment is pois

133、ed for explosive growth.All economic and demographic indicators are pointing toward a growing appetite for luxury well into the future.Now is the time for brands to strategize and enter the market with vigor,preempting any regrets that many brands have had for missing Chinas growth wave.Given that I

134、ndias luxury beauty market is still highly underpenetrated,brands that enter now can still capture an early-mover advantage.That said,the challenges and complexities of Indias diverse landscape means that there is no one-size-fits-all approach.Tailored strategies formulated for the numerous regions

135、and cities in this“land of many Indias”will be essential.Mastering the details and nuances of the three strategic pillarsproduct,marketing,and partnership and distributioncan set brands up for long-term success.Although initially challenging,the rewards will no doubt be worth the effort in the long

136、run.All economic and demographic indicators are pointing toward a growing appetite for luxury well into the future.19Indias massive untapped growth opportunity in luxury beautyKaran DhallPartner,Mumbai Shashank GoelPrincipal,Gurugram Siddharth PathakPartner,Singapore Gaurav AgarwalConsultant,Gurugra

137、m Satyaki BanerjeeGroup Chief Operating Officer,LUXASIA Jitha ThathachariGroup Head of Business Development and Strategy,LUXASIA Dr.Wolfgang BaierGroup CEO,LUXASIA Brynner JanantoHead of Communications and CEO Office,LUXASIA AuthorsThe authors wish to thank Neha Ramani,Praseed Changarath,Sejal Bhatn

138、agar,Tatiana Perim,Subhendu Roy,Fabian Lux,Gavin Meschnig,Rohil Shah,Priyanka Gupta,Ragini Malhotra,Leona Tan,and the Kearney marketing team for their valuable contributions to this report.20Indias massive untapped growth opportunity in luxury beautyAbout LUXASIALUXASIA is the leading beauty omnicha

139、nnel brand builder of Asia Pacific.Since 1986,it has successfully enabled market entry and brand growth for more than 100 luxury beauty brands,the likes of Albion,Aveda,Bvlgari,Calvin Klein,Creed,Diptyque,Hermes,La Prairie,Maison Francis Kurkdjian,Montblanc,Paco Rabanne,Salvatore Ferragamo,and SK-II

140、.LUXASIA has established joint ventures with LVMH Group,Revlon(for Elizabeth Arden),Puig,Shiseido,and Orveon(for Laura Mercier).The Groups integrated brand-building capabilities include luxury retail,online commerce,consumer marketing and analytics,and supply chain management.LUXASIA is powered by a

141、 diverse and dynamic#OneTeam of 2,700 talents across a growing footprint of 15 For more information,permission to reprint or translate this work,and all other correspondence,please email .A.T.Kearney Korea LLC is a separate and independent legal entity operating under the Kearney name in Korea.A.T.K

142、earney operates in India as A.T.Kearney Limited(Branch Office),a branch office of A.T.Kearney Limited,a company organized under the laws of England and Wales.2024,A.T.Kearney,Inc.All rights reserved.About KearneyKearney is a leading global management consulting firm.For nearly 100 years,we have been a trusted advisor to C-suites,government bodies,and nonprofit organizations.Our people make us who we are.Driven to be the difference between a big idea and making it happen,we work alongside our clients to regenerate their businesses to create a future that works for