Nykaa eyes growth in UK and beyond to take on global giants outside India

While the UK push will be across 13 stores and Space NK’s online platform, FSN faces the challenge of pushing its brand awareness in a very competitive cosmetics and skin care market

India’s largest beauty retailer FSN E-Commerce Ventures Ltd., which owns the Nykaa platform, is expanding overseas business operations in an attempt to take on global cosmetics giants outside of its home market.

The Mumbai-based company is launching Kay Beauty in the UK on Thursday with Ulta Beauty Inc.-owned Space NK, FSN’s Co-Founder and Executive Director Adwaita Nayar said in an interview. It’s part of an effort to grow the brand — developed in partnership with Bollywood actor Katrina Kaif in 2019 — beyond India, potentially including “the US, Middle East and certain markets in Asia,” she said.

While the UK push will be across 13 stores and Space NK’s online platform, FSN faces the challenge of pushing its brand awareness in a very competitive cosmetics and skin care market. FSN will also be tussling with stalwarts from L’Oreal SA to Estee Lauder Cos Inc. for shelf space in these UK stores.

Kay plans to sell a range of standard cosmetics suitable for a range of skin complexions, Nayar said. It’ll also retail specialty items such as kohl, an eyeliner-like product often used by South Asian women.

FSN, which had a blockbuster debut in 2021, has sought to establish a presence abroad by targeting the Middle East, partnering with United Arab Emirates-based Apparel Group and opening up a retail outlet last year in Dubai. The company has set up subsidiaries in Qatar and Oman as well.

Gen Z Buyers

Nykaa has grown rapidly in India as it had the first-mover advantage in the online beauty retail space. This segment has been boosted by rising purchasing power and a speedy social media adoption by Gen Z and millennial buyers.

The local beauty and personal care market is expected to grow to $34 billion by 2028 from $21 billion in 2023, according to a September report by Redseer Strategy Consultants and Nykaa.

FSN aims to to nearly triple its gross merchandise value — a measure of sales excluding expenses — for its in-house cosmetics brands by the year ending March 2030 to 60 billion rupees ($685 million), Nayar said.

Its in-house portfolio, which includes brands like Dot & Key and Nykaa Cosmetics besides Kay, racked up about 21 billion rupees of gross merchandise value in the financial year ended March 31.

Shares of the company are up almost 40% this year, outperforming India’s benchmark Nifty 50 Index’s near 4% gain.

“We’d like to strive for profitability margins that some of the world’s best have” of around mid-teens to early-twenties, she said, without sharing details of the current profit margins for in-house brands.

The retailer expects newer launches to drive sales over India’s upcoming festival season, which kicks off in September, Nayar said. It’s also building out its fashion vertical and is keen on expanding a line of in-house lingerie, she added.