NEW DELHI — Sephora has a new partner in India.
“The agreement is up and running as of this morning,” Olivier Schaeffer, global chief operating officer of Sephora, told WWD on Friday, referring to the licensing deal with Arvind Lifestyle Brands, which will now spearhead the growth for the beauty retailer in India.
This is the third partnership for the LVMH-owned brand in India in as many years. The previous partner was DLF Brands. The new deal is in the form of a 10-year franchise agreement. “But we are shooting for a longer term,” Schaeffer said. The partnership will also extend into the e-commerce space, which is expected to see major growth in the coming years.
J. Suresh, managing director and chief executive officer of Arvind, appeared upbeat. “The addition of Sephora to Arvind’s bouquet of fashion brands further strengthens our position in the fashion and lifestyle segment,” he said. “Overall, the beauty and personal-care market is around 150 billion rupees, or $2.25 billion at current exchange. The premium market is 25 billion rupees, or $375 million, and growing at a compound rate of 25 percent. Given this large opportunity, we expect Sephora to reach a turnover of 5 billion rupees, or $75 million, in the next four years with 40 to 45 stores,” he observed. The partnership also marks the first foray for Arvind into the beauty market.
Arvind Lifestyle Brands is a subsidiary of textile major Arvind Ltd., which had a 2014-15 turnover of 52.24 billion rupees, or $784.4 million, of which approximately 30 percent is from brands and retail. The company has been on a roll with new launches the last few months — including Gap Inc. in May, and kids’ wear retailer The Children’s Place in August.
Arvind Brands also has a joint venture with the PVH Corp. for their Tommy Hilfiger and Calvin Klein brands in India and partnerships with Nautica, Izod, Aéropostale, Arrow, US Polo Association, Elle, Ed Hardy, Hanes, Cherokee and Geoffrey Beene, and has 12 of its own apparel brands on the market.
Industry analysts commented that this lack of beauty experience may perhaps have been the mistake the previous two times — partnerships with Genesis luxury and then DLF Brands, both of which have worked with many global apparel brands, but not within the beauty industry.
Asked if this was not an issue, Schaeffer said there has been learnings from the past.
“When a partnership doesn’t work, you cannot say this is the fault of only one party. There are always shared reasons. What we are interested in now is how we can move forward and build the brand in this great market like India, where there is a lot of potential.”
He said this would begin in the very short term by bringing the existing four stores — the three in Delhi and one in Pune — to the level of Sephora’s standards of quality customer experience.
“This will be our number-one priority and the teams are already working on that,” he said. “We will also bring some new brands into the existing.”
Suresh concurred. “Once we have done the setting right of these stores, we will begin the expansion. It could take three to four months, but it would be ideal if we could catch the party season by December,” he stressed.
Vispi Patel, group representative director India for Moët Hennessey Louis Vuitton, pointed out that the beauty retailer had already traversed a considerable journey in India, achieving a robust business.
“We have worked with a few challenges — and I don’t mean just partners, we have worked with getting the right retail spaces, there is a huge registration before importing the products.
And now with Arvind executives, who are experienced retailers and brand builders, “I see a great future,” he said.
“Out of all the basket of 60 LVMH brands, we have about 25 in the Indian market. Sephora probably has the best fit from a price point of view, from an aspirational point of view, for both men and women, there is a great growth story perspective,” Patel added.
Sephora has about 1,700 stores around the world and executives here expect to keep the sizes of the Indian stores in line with the global model. He said that store sizes in India would stay in the same range as the global model — in the 2,500- and 3,000-square-foot range.