Bye Nikaa Founded as an e-commerce platform, founder and CEO Falguni Nayar is a “big proponent” of physical retail and said there is demand from consumers.
“Over the past two years, Covid-19 has had a huge impact on physical retail. However, we believe that if you look at the math and statistics, e-commerce penetration is only 8%,” Nayar said. “Street Signs of Asia” CNBC on Thursday.
“A lot of beauty is sold offline and Nykaa has become such a big brand that we can’t ignore our offline channel as well as offline shoppers. There will be more focus on shops, but I think we will continue to be the dominant e-commerce. player.”
Nykaa, which sells cosmetics, personal care and fashion products, currently has 100 retail stores in India, the latest of which opened just last week. The company debuted in November with a valuation of nearly $14 billion, making it India’s first female-led unicorn listing.
However, in its latest quarterly report, the company reported a 58% drop in net income.
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Other new public Indian companies have come under pressure as their high-profile IPO halo fades and valuations come under scrutiny. Earlier this week, Reuters reported that India would be reviewing companies hoping for an IPO on valuation performance.
While these companies mostly had stellar debuts, many of them are now trading well below their IPO price, including Nykaa, Paytm, Zomato and CarTrade.
inflationary pressure
Nayar said tech company valuations will see “some adjustment” due to high global inflation and rising interest rates. For Nikaa, she said The latest round of coronavirus restrictions in major Chinese cities is likely to cause supply chain problems.
“I think that’s holding us back and sometimes we have to run additional promotions assuming there will be disruptions,” said Nayar, who founded the company in 2012.
While Nayar said the impact of rising commodity prices and inflation remains a key observer, she is confident of a “lipstick effect”.
“Makeup and beauty are those little luxuries that consumers don’t cut back on as drastically because, after all, the percentage of beauty spending in the country is only $12-$14 per capita,” she explained.
“We believe the beauty industry is undergoing an inherent structural change as Indian consumers want more cosmetics consumption,” she added.
Correction: This story has been updated to correct the spelling of Nykaa.