Beauty mart

The company wants to tap the huge opportunity in the beauty and wellness retail space.

Look good and feel better. That'll be easy to do once the Rs 2,000 crore Dabur India rolls out its 350 health and beauty stores. With a fairly large portfolio in the health and beauty segment and a wide range in the healthcare category, the FMCG major's foray into the retail space was almost a given.

Says Sunil Duggal, CEO, "There's a need for quality service and store environment in the health and beauty retail market in India today and no major player has entered this space so far. We're looking to tap the growth prospects in both the retail market and the health and beauty segment."

To appreciate why Duggal is hot on the segment, sample some numbers. According to retail consultancy Technopak Advisors, the health, beauty and well being market is estimated to be $ 24 billion a year, worldwide, which is more than the $21 billion apparel market.

The beauty care and cosmetics market alone is pegged at $ 4 billion. That the health and beauty segment comprises barely two per cent of modern retail, is reason enough for any company to eye the sector.

Asitava Sen, retail industry specialist at PriceWaterHouse Coopers, points out that the health and beauty segment comprises several sub segments.

While pure pharmacy has players like The Medicine Shoppe, 98.4 and Planet Health, there's the Body Shop, Forest Essentials and Biotique in personal care.

"Then there are the services like VLCC's slimming centres and the Kaya Skin Clinic. So, the market is fragmented as there's hardly anyone who caters to all three segments," Sen observes.

Besides, with health and beauty being important for big both with men and women, the timing would seem just right. "The basic instinct is to delay aging," says Technopak chairman Arvind Singhal. Even the margins in the business are pegged at 20 per cent plus.

Though these products are available in "kiranas" and super markets, Sen argues that retail chains can stock a wider portfolio and offer genuine products. "With economies of scale of, say, 100 stores, they should be able to offer better prices as well," he feels.

Technopak's Singhal asserts that the "category is interesting but says Dabur's Rs 140 crore venture might not be exciting unless it has a USP (unique selling proposition)." It has one, counters Duggal, saying that Dabur will create an international quality store environment and product range.

"The stores will be targeted at women and seek to create fun and a fashionably colourful environment that is not alienating to non-core customers, particularly men. Dabur will sell its own products but the idea is to have a portfolio of domestic and global brands," he adds.

The stores, to be set up in the metros and tier one cities, will range from 1,500 sq ft to 6,000 sq ft in size. "They will be in quality malls with strong traffic flow," says Duggal.

The company believes its Rs 140 crore investment in the venture will generate profits and a revenue exceeding Rs 1,000 crore by the fourth year. "We feel this amount would be enough to cover the initial costs. The business model doesn't envision purchase of real estate. Property will be leased or rented," he adds.

The product mix at the stores will cover pharmacy & OTC, personal care, baby care, cosmetics, general merchandise and confectionery. "There are no plans to include services in this format, and these stores will purely focus on health and beauty products," says Duggal.

Experts say the challenges in the category are more generic. Manpower and the space crunch will always be an issue. "This may hamper the company's expansion plans," says Sen.

Besides, there will be competition from big players like Reliance which is also entering the segment. His advice: marketing innovations such as corporate tie-ups.

"Since health and beauty maintenance is hot, companies could offer vouchers for health and beauty products or services to its employees." That's a tip Dabur may want to use.