The Body Shop Plans To Add 100 Outlets As Affluent Indians Return To Stores

The Body Shop International Ltd. plans to open 100 stores in India over the next three years as affluent Indians drive a rebound in footfalls at malls and brick-and-mortar outlets.

For the global cosmetics brand, India is currently the fourth largest market, and it has made a "stronger comeback" post Covid-19 pandemic compared to the rest of the world, Qas Qayyum, global head franchise managing director, told BQ Prime during his recent visit to the country.

"After two complicated years marked with pandemic and then high inflation, we are seeing Indian consumers become both demanding and savvy," he said. “Our products are in high demand not only in major cities but also among the growing affluent class in smaller towns. But we are not sufficiently present there…so that’s where we plan to enter.”

Return of buyers at The Body Shop outlets mirrors the divergence in consumption in Asia's third-largest economy.

Sales volumes of affordable consumer goods have declined as higher prices have deterred low-income buyers for several quarters now.

Consumption of premium cosmetics, however, is growing as affluent shoppers shrug off inflation concerns. And the likes of homegrown Tata Group to global brands such as MAC Cosmetics eye a bigger slice of the market that Motilal Oswal estimates to hit Rs 2 lakh crore by 2025.

The Body Shop aims to have 300 outlets and enter 50 new cities by 2025. The British skincare and cosmetics retailer, which entered India in 2006, now has about 200 stores in 65 cities. Skincare comprises nearly 40% of the business, while fragrance and make-up account for 10% each.

The stores that the retailer is opening today, however, are different.

Qayyum dubs the concept as "activist workshop" that it will offer experiences beyond browsing as customers can try on make-up or sniff different fragrances. The stores will help customers recycle their beauty product packaging as the company ups its sustainability game.

"We are on a mission to make returning and recycling your plastic bottles an essential part of life," said Qayyum, adding that the company will open 30 such sustainability-focused stores every year over the next 30 years.

"We are also in the process of changing the packaging across all our products and being certified as 100% vegan by 2023-end," he said.

The deeper focus on environmental and social justice, Qayyum said, would help The Body Shop stand out in the country's cluttered market.

Competition is rising as new entrants, including the new-age direct-to-consumer brands and the big names including the Tata Group and Reliance Retail, expanding rapidly. Shoppers Stop, which retails Estée Lauder, Bobbi Brown and Mac, also plans to add 15-20 standalone beauty outlets each year in the coming years, Chief Executive Officer Venu Nair had said in a post-earnings call.

In fact, Qayyum's trip to India comes when top executives from L'Oreal, Estee Lauder, and Coty Inc. also visited the country recently.

Brokerage Motilal Oswal expects growth in the beauty market to be driven by India’s ever-expanding e-commerce reach coupled with the propensity of youth to splurge on everything from food to fashion.

"India is strategically a very important market for us, and we look to double our business in India by the end of 2025 through retail expansion," Qayyum said.

When millions of consumers went online during Covid, it pointed towards the possible start of a permanent shift in consumer behaviour. But that, he said, is not the case as shoppers have returned to stores.

"We have recognised that consumer behaviour is changing," Qayyum said. "But they don't want to necessarily just shop online… they want to shop across multiple formats."

"We don’t expect our digital sales to be more than 30% [of our business]," he said, adding that "stores will remain the heart of our business."

After the pandemic, he said, shopping online and in stores became more closely linked.

The stores are now integral to fulfilling e-commerce orders as they serve as distribution hubs and convenient places to pick up and return online purchases, saving a lot of logistics costs, according to Qayyum.

The Body Shop is a premium beauty brand, unlike Hindustan Unilever, L'Oréal and Procter & Gamble. It's pushing products with premium ingredients that target specific problems. But it introduced entry-level packs across skincare, makeup and fragrance. "We are currently exploring lower pricing bands without compromising on the quality," said Qayyum.

"Even if our pricing is slightly on the upper-end ... we are seeing consumers willing to pay a little bit more for the quality of our products that actually work."