Nykaa seeks alliance with Middle Eastern apparel group for Gulf foray

FSN International, the international subsidiary of the parent entity of omnichannel retailer Nykaa, has entered into a strategic alliance with the Middle Eastern Apparel Group to operate the Gulf Cooperation Council (GCC) region.

FSN subsidiary E-Commerce Ventures will own 55%, while the rest will be owned by the Apparel Group.

The company did not disclose the amount of the investment.

The group entity will set up multi-brand omnichannel beauty retail operations for Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) through one entity which will be integrated into the Abu Dhabi global market.

This is the first time that Nykaa has entered into such an alliance to establish itself in an international market.

It will be run by separate professional management under a new brand.

The brand’s e-commerce operations are expected to launch within the next six months to a year, Nykaa co-founder and chief executive Falguni Nayar said Thursday.

Nayar said the company decided to tap into the GCC region given its high per capita consumption of beauty products as well as strong economic growth.

“We are impressed with the market in terms of its consumption and penetration of beauty. Add to that that you had a very dynamic economy. We see this as a multi-year growth opportunity; I think the GCC countries are going to grow over 10 to 20 years and Nykaa wants to be part of it…” Nayar told a press conference.

Founded by Sima Ved in 1996, Apparel Group is one of the largest omnichannel retailers in the Middle East and is based in the United Arab Emirates.

It is home to over 75 lifestyle and beauty brands with over 2,000 stores in 14 countries.

“Since its inception in 1996, Apparel Group has focused on meeting the changing needs of its diverse customers through our presence in the GCC, India, South East Asia and Africa. This alliance is going to be a new chapter in our expansion journey as we look forward to leveraging each other’s strengths and delivering unique value propositions to our consumers in the GCC region,” Ved said in a statement. .

Nayar said the company will leverage its digital influencer marketing playbook, including potentially using Bollywood celebrities to attract customers from the region to the platform.

Saudi Arabia and the United Arab Emirates are two of the largest beauty and personal care markets in the region, at $17.1 billion and $6.6 billion, respectively, according to a report by RedSeer Consulting. from 2021 and are expected to grow at a CAGR of 7% and 9%, respectively, over the next three years.

Over the past 18 months, Nykaa has acquired five brands, including a minority stake in science-based beauty brand Earth Rhythm, a majority stake in beauty brand Dot & Key and nutricosmetics Nudge Wellness.

The company, which had a bumper public market listing in November last year, saw gross merchandise value (GMV) growth of 47% year-on-year to Rs 2,156 crore in the first quarter of fiscal 23. Of this, beauty and personal care orders grew by 40% year-on-year to Rs 81 lakh while fashion contributed 27% to consolidated GMV.

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