Nykaa's Quick Commerce Arm Gains Significant Traction
Nykaa Now, the rapid-delivery service from India's leading beauty and personal care retailer, is successfully expanding the company's market presence across the country's top seven urban centers. This strategic move is helping Nykaa capture a larger portion of the fragmented personal care market that has traditionally been divided between horizontal platforms and quick commerce specialists.
During the September-quarter earnings discussion on Friday, Anchit Nayar, who serves as Chief Executive Officer of Nykaa's beauty e-commerce division, informed analysts that the company's emphasis on speedy deliveries aims to enhance customer satisfaction while strengthening Nykaa's competitive position within the beauty industry.
Luxury Products Driving Quick Commerce Success
The growing popularity of Nykaa Now spans across all product price categories, including premium luxury items that customers can now receive within 30 minutes to 2 hours. This service has transformed how consumers access high-end beauty products while simultaneously establishing Nykaa as a comprehensive destination for personal care needs beyond just cosmetics.
"We are observing increased customer adoption of essential personal care products such as shampoos, conditioners, and body washes on our platform," Nayar explained. "This healthy growth pattern indicates that people are beginning to view Nykaa not merely as a beauty specialist but as a complete personal care provider."
Offline Expansion Supporting Delivery Network
The Mumbai-headquartered company is accelerating its physical retail expansion strategy in upcoming quarters, recognizing that brick-and-mortar locations serve as efficient hubs for fulfilling rapid deliveries. By the conclusion of the September quarter, Nykaa operated 265 physical stores across 90 Indian cities, having added 19 new stores and expanded into 8 additional cities during this period.
The total retail space occupied by Nykaa stores reached 275,000 square feet in the quarter, representing a substantial 37% annual increase. The quick-delivery service currently operates through 53 rapid stores specifically designed for hyperlocal fulfillment.
Nayar highlighted an unexpected advantage of their physical network: "Initially, we didn't anticipate that our retail stores could effectively function as hyperlocal delivery centers for luxury products in a cost-efficient manner. This realization prompted us to question why we shouldn't enable customers to access premium luxury items with exceptional delivery speed."
Strong Financial Performance Amid Strategic Shifts
Nykaa reported impressive financial results for the September quarter, with operating income climbing 25% year-over-year to reach ₹2,345 crore. The company's net profit surged to ₹32.98 crore, significantly higher than the ₹12.97 crore recorded during the same period last year.
The firm's total gross merchandise value (GMV) experienced 30% annual growth, reaching ₹4,744 crore for the three months ending September. A key trend driving Nykaa's growth strategy is premiumization, where premium brands now constitute two-thirds of the company's gross merchandise value in physical stores.
Revenue from Nykaa's core beauty business, which remains its primary growth engine, increased by 25% year-on-year to ₹2,131 crore. Segment profit rose to ₹95 crore from ₹76 crore in the corresponding quarter last year.
However, the company's increased focus on premiumization necessitated higher marketing expenditures, which reached 17.5% of net sales value (NSV) compared to 13.7% during the same quarter previous year. The company defended these investments, noting India's relatively low beauty consumption penetration compared to global standards.
Fashion Business Realignment
Nykaa has been strategically reorienting its fashion division in response to slower growth and broader macroeconomic pressures affecting consumer spending on apparel. The company has reduced fashion's emphasis within its overall GMV composition over recent months by closing some large-format physical stores and decreasing dependence on third-party distributors.
These measures helped the fashion segment achieve operating revenue of ₹200 crore during the quarter, a modest improvement from ₹166 crore in the year-ago period. The division's net loss narrowed considerably to ₹12 crore from ₹32 crore last year.
Adwaita Nayar, Chief Executive Officer of Nykaa Fashion, explained the strategic rationale: "We've implemented a concerted strategy to discontinue some non-Nykaa channels in fashion, specifically shutting down numerous GT-MT large-format stores and third-party distribution arrangements. We believe focusing on Nykaa as the primary channel, particularly for fashion, represents higher quality business."
Fashion currently represents 61% of Nykaa's house of brands, down from 69% during the same period last year, while the segment's GMV grew 37% to ₹1,180 crore.
