Falguni Nayar, MD & CEO, Nykaa and Anchit Nayar, Executive Director & CEO-Beauty eCommerce at FSN E-Commerce Ventures Ltd, in conversation with ET NOW after a wildly successful Nykaa listing.
Did you really think you would see an IPO listing pop like this?
Falguni Nayar: No. It is fantastic to see this kind of overwhelming response at the time of the listing. The entire IPO journey has been very rewarding as we met lots of investors and saw validation of our business model in terms of them liking the story and the overwhelming participation in the IPO followed by a fantastic listing. I tend to be quite subdued and guarded but today I must admit that it is a fantastic day and I am really feeling happy today.
How conscious are you of the fact that you have shattered so many glass ceilings? You are a female investment banker, a leader one in the country. Now you are the first female founder and listed an unicorn on Dalal Street. How conscious are you of all of this?
Falguni Nayar: I do not like the gender bias but yes I am very conscious of the fact that we as women need to really want to be bold enough to dream and not be afraid to pursue our dreams and then appropriate rewards will follow. So I am just glad I did it and my only message to all the women out there is do not be afraid to dream. The spotlight of your life should be on you and that is very important.
When are we going to see the Nayak in Nykaa?
Anchit Nayar: So I think we have already launched the Nykaa man app and it is pretty much the same thing we do for woman on Nykaa.com, we are doing for men. Historically, men have been the ignored segment of the population when it comes to beauty and grooming. So we saw the opportunity there and we launched the app. It is called Nykaaman.com and it caters to all the grooming and lifestyle needs of Indian men. We are very excited. That is the Nayak equivalent of Nykaa.
You get the markets so well. You have seen a dream IPO. Sometime back, we saw that Zomato too entered the Rs 1 lakh crore market capitalisation on day one. However, that stock price has now plateaued. Compare that with maybe let us say DMart which is still considered to be a successful IPO. Any message to the shareholders? If they are going to stay invested, how will they continue to make money?
Falguni Nayar: This is a very early journey for e-commerce and e-commerce adoption in India and we think there is a huge runway ahead. Over the next few years, you will continue to see consumers consume more beauty and fashion and all lifestyle segments that we cater to. Many of them are choosing to buy it online through Nykaa’s omni channel. So whether they buy it online or offline, it does not matter but there is going to be a clear trend towards more and more online consumption through e-commerce,
At Nykaa we are very clear that we will continue to build for the long term. Customer acquisition is going to be an important target for us. Across all our platforms, we are going to continue to push for customer acquisition. As we say in Hindi, Nykaa
lambi race ki ghodi hai (is in for the long haul). So continue to bet on us for the long term and we will build from here. This is just the beginning of a journey. We cannot deliver anything overnight. Investors should be patient and be with us over a long term and we will continue to value their trust and commitment.
From our side there is commitment that we will work very hard to do the right thing with all the trust and all the capital that they have committed to us. We will make sure that we grow the company in the right way.
What should the investors be betting on, particularly the retail shareholders? Is it a big bet on fashion? That is what a lot of analysts are saying.
Falguni Nayar: Fashion is a very high growth business for us at the moment. We are growing both in beauty but exceptional growth in fashion has been experienced over the last couple of years. It is a new business for us, less than two-and-a-half-year-old and it has a long runway. It is a bigger market size. So, there is a clear desire to continue to build in fashion but even in beauty, the journey is in early stage. There is more to do and we want to be a house of brands. There is a whole bunch of brands that Nykaa owns and we will continue to build each of those going ahead.
We just recently acquired a brand called Dot & Key and that adds to our skincare offering.We will continue to build in many of the lifestyle segments because within fashion also, we have home category, kids and men. It is a holistic business model that we are building.
Anchit Nayar: We remain very committed to the multi-brand retail element on both the beauty and fashion side. That is where our scale comes from. So yes, of course, there is a focus on building these household brands but the sheer scale that you can achieve through servicing your brand partners — we work with over 2,000 brand partners both Indian and global — and our ability to partner with them and create value for them is also what is going to help us scale this business on both the beauty and fashion side.
How important is this going to be for Nykaa’s inorganic growth? Zomato’s hit upon that strategy. We are seeing a lot of unicorns do it. Are you going to bet big on inorganic growth?
If you look at our track record, we have always taken our role towards capital very responsibly and we have built a very capital efficient business. So we will look at inorganic and organic growth. We will look at and evaluate from time to time, but on the inorganic side, if you look at our track record, capital efficiency and doing the right thing for our shareholders always will come first. So the option remains. We see great entrepreneurs in India every day. We work with them on the beauty and the fashion side and there are definitely some great businesses out there and as I said, we will evaluate all tactically and see what is the right strategic fit for us as a company.
In the fashion segment, we suddenly started seeing so much consolidation –whether it is Ritu Kumar, Sabyasachi, Manish Malhotra. Is that something that you are also going to do? Are you going to be competing suddenly with Reliance and the Birla Group for that?
At the moment, we have a couple of brands that we have started in-house so they are more organic brands that are being built. In fashion, we have done a couple of inorganic acquisitions earlier, 20Dresses western wear brand that we had acquired couple of years ago and also Pipa Bella which is a jewellery brand that we acquired last year. We always remain open and the landscape is very wide in fashion. It is a very large market and there is a very wide scope for many brands that you can partner with either as a retail or acquire them with a new fold and bring them in as intrapreneurs. That is how we look at brand acquisition. Both models remain possible.
What changes from today for you and for the company?
Falguni Nayar: I think it is a very big responsibility and a little bit of a tight rope walking from near term performance versus building for the long term. The right thing for any company is to always build for the long term, keep the company’s growth momentum and resilience and strength for the long term; within that, we will be subjected to quarter on quarter performance and watchful eyes of all the analysts on what we are doing and what does that mean. It is going to be different for us compared to being a private company but we will learn to be good at that.
Anchit Nayar: One thing that will not change is our singular focus on customer delight and customer satisfaction. Everything we do at Nykaa, every decision we take is customer backwards. For us, that remains the focus of our business and all decisions are taken accordingly. Of course, the biggest change is our shareholder base is going from just a few hundred or less than hundred to three-four lakh shareholders.
Our family is expanding but we value our investors and our shareholders tremendously. It is always about doing the right thing for them. The biggest difference is that the Nykaa family is really growing sizably and we will continue to do so. Our responsibility to them is paramount and we are very humbled by the opportunity and we take this responsibility very seriously.