The launch of Tira, the omni-channel beauty platform from Reliance Retail Ltd., is expected to ratchet up competition in the beauty and personal care (BPC) market.
The first Tira location opened its doors in Mumbai last week. Jefferies India analysts who visited the location noted that at 4,300 square feet, Tira is a sizable size for a BPC specialty store. “Reliance also just previewed an extensive selection of products online, ranging from mass-market to premium options. Competition against Nykaa is undoubtedly escalating, so keep an eye on the situation, they added in a report on April 12.
Although the increasing competition is a new obstacle for Nykaa’s parent firm, FSN E-Commerce Ventures Ltd, it is still too early to tell how Tira will affect Nykaa’s market share in the near future. Now, Nykaa’s BPC division is doing well, and the business anticipates stronger growth in the March quarter (Q4FY23) compared to Q3.
As it stands, according to analysts at Elara Securities (India), Nykaa’s online platform operates better than Tira due to elements like variety in stock-keeping units, shorter lead times for deliveries, and an improved user experience on the app.
Although that is encouraging, sales often influence client purchases. Elara experts observe that Nykaa offers smaller discounts than Tira. In other words, this might bring in clients for Tira.
“Nykaa has built a niche for itself among the premium consumer base, which places a premium on things like user experience and timely product delivery. New brands are not likely to simply upset this, according to Elara Securities analyst Karan Taurani.
As Tira develops, it might eventually provide a better experience than Nykaa, which would have an impact on the latter’s market share.
The BPC category is experiencing more competition at a time when demand in Nykaa’s fashion segment is not increasing quickly enough. The segment has suffered from lower discretionary spending. In the nine months ending in December, this vertical accounted for around 26% of Nykaa’s gross sales value. In its Q4 statement, the company stated that it anticipated muted growth in the net sales value of the apparel industry.
Investors should keep an eye on Nykaa’s fashion division for any pleasant surprises in the upcoming Q4 earnings and monitor the changing competitive environment in the BPC market. As of now in 2023, Nykaa’s stock has decreased by 18%.