‘Inflation will come and go’
In the current inflationary scenario, when most sectors are feeling an impact on their margins, and funding for new ventures has come down, Nykaa remains committed to the path of growing through investments. “Nykaa is very committed to India for the long term. Inflation, both from a demand and supply side, will come and go. Funding will come and go. But that should not take one away from the overall ambition. With that goal in mind, it's not possible to start and stop investments,” Nayar said. Rival brands like Mamaearth and Plum are increasing their prices due to the current inflationary environment. Many other direct-to-consumer (D2C) brands arealso grappling with supply-chain issues as costs are increasing. Further, many such brands are facing stagnating growth, customer-acquisition challenges and intense competition, combined with a sharp decline in funding, forcing companies to conserve cash.Beauty business remains profitable
Nayar said that the core beauty business of Nykaa remains profitable. The acquisitions and new ventures the company has invested in, will eventually, better the bottom line in subsequent years, he said. Apart from their flagship business of selling beauty and personal care products, the e-retailer has made investments in fashion arm Nykaa Fashion, launched in 2018, and Nykaa Men and eB2B platform Nykaa Superstore. Nykaa Fashion reported a 168 percent increase in GMV in the last fiscal year, while other new businesses, including Nykaa Men and Nyka Superstore, contributed 2.6 percent to the total value of goods sold by the company. Nayar said that the Indian beauty and personal care segment will benefit from the low penetration rate of beauty products in the country, as well as increased access to venture capital and distribution available to D2C brands in the country today. “All countries go through their online consumption life cycle. Today, anyone can start a brand. If you go back 20 years, it was only brands like Lakme, and large conglomerates like Hindustan Unilever that had the resources to build brands,” he said. Looking ahead, the company is optimistic towards the festive season, the months of October, November and December, after a muted wedding season last year.
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