Nykaa to face competitive heat but its omni-channel experience maybe the game changer (2024)

Nykaa was able to increase its revenue by ₹1,300 crore in the fiscal year 2022.
ICICI Securities anticipates much higher competition for Nykaa in the time to come.
The brokerage recommends investors to hold on to the stock.

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Even though Falguni Nayar-led ecommerce titan Nykaa was able to grow its revenue by ₹1,300 crore in FY22, brokerage firm ICICI Securities believes that it is not the right time for retail investors to buy more shares. On the other hand, it isn’t a stock to get rid of either.

Nykaa’s top spot might be in danger

Nykaa’s revenues for the fourth quarter of FY22 were in line with analyst estimates. Yet, competition in the segment is likely to intensify over time.

“That said, competition will likely intensify from both vertical and horizontal peers. While we expect BPC [beauty and personal care] revenues to grow, we believe Nykaa’s journey could be different – it will have to go more mainstream to drive this growth (tougher decisions about brand stretch along the way),” ICICI Securities said in their latest report.

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Apart from traditional players like Amazon, Flipkart and Meesho that sell everything from clothes and cosmetics to groceries to items in the home category, Nykaa also competes with businesses like Purplle that work in the same domain as the company. Purplle is currently valued at over $700 million.

In the short term, the company also faces the risk of a bad consumer sentiment which can affect discretionary spending - that can impact demand.

Nykaa to face competitive heat but its omni-channel experience maybe the game changer (2)

‘Nykaa’s strengths can’t be replicated easily’

The long-term prospects for the company are good. ICICI Securities highlighted that Nykaa is currently functioning in a golden spot with three aspects working in its favour. First, it continues to be the largest beauty and personal care business in India. Second, it has a good profitability metric and prudent capital allocations. Three, it is omni-channel in a true sense.

“Its strength of content-driven and inventory-driven models in BPC will continue to be key differentiators – the former is a long-drawn journey and cannot be built by a new entrant just on the strength of capital,” the report added.

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Nykaa reported a revenue of ₹3,774 crore for FY22, representing an increase of about ₹1,300 crore. Its net profit, however, declined by ₹20 crore during the same time frame.

As per ICICI estimates, its revenues could touch a billion dollars in the next two years. In the same time frame, its profits might also grow proportionately, as per the report.

Nykaa to face competitive heat but its omni-channel experience maybe the game changer (3)

Nykaa to face competitive heat but its omni-channel experience maybe the game changer (2024)

FAQs

What is the omnichannel strategy of Nykaa? ›

Nykaa's omnichannel strategy extends beyond mere sales transactions to focus on delivering exceptional customer experiences at every touchpoint. From seamless navigation and personalized recommendations on its digital platforms to in-store beauty events.

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How can Nykaa improve? ›

E-commerce growth can lead Nykaa to earn massive revenue by opening different online stores and making huge sales. Social media users across the world are increasing. The three social media platforms, Instagram, Twitter, and Facebook, have shown the most significant number of rises in monthly active users.

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What is the future project of Nykaa? ›

The multi-brand beauty retailer Nykaa will expand its physical presence in India by opening around 180 new stores over the next five years across the country.

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What is an example of an omnichannel strategy? ›

One of the best examples of hyper-personalized omnichannel interactions with customers is Netflix's viewing experience. No matter which device you use, Netflix provides you with a totally seamless experience. The brand also leverages AI and ML to process customer data, suggesting customized content to every individual.

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What makes a good omnichannel strategy? ›

A successful omnichannel strategy requires a think-outside-the-box mindset on two fronts: An innovative business mindset that prioritizes customer engagement and value creation.

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What are the 3 C's of Nykaa? ›

With its focus on 3Cs – Content, Curation and Convenience, Nykaa has become the trusted platform for both customers as well as brands.

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What are the 4Ps of Nykaa? ›

Read how Nykaa aces the 4Ps of marketing mix - Product, Price, Promotion & Placement.

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What is the most successful Nykaa campaign? ›

Nykaa Beauty Box

The beauty box included various make-up products and offered a great deal to customers. Nykaa used this campaign to boost its branding and advertising, making its products more recognizable. The Nykaa Beauty Box marketing campaign was a significant success for the brand.

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What is the business strategy of Nykaa? ›

Placement. Nykaa's placement strategy is to sell its products through company-operated stores, licensed stores, ecommerce, supermarkets, and hypermarkets. With two store formats: Nykaa Luxe and Nykaa On-Trend, Nykaa serves both rich and middle-class customers.

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What is the omnichannel strategy in the fashion industry? ›

An omnichannel retail strategy seamlessly integrates different sales and communication channels that the customer uses to combine the strengths of each channel and deliver a customer experience that is convenient, consistent, cohesive and holistic.

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What is the omnichannel fulfillment strategy? ›

Omnichannel fulfillment is the process of picking, packing, and shipping orders that are sold across multiple stores, sales channels, and online marketplaces. This method requires data to sync from a variety of sources and technology that enables a single source of truth for inventory and orders.