Online beauty brands find their feet in neighborhood stores

Bengaluru: Digital-first beauty brands are deepening their presence in India’s physical retail market as they look beyond e-commerce to reach consumers who still buy products from the neighbourhood store.

The shift is visible in the sales and distribution numbers of new-age companies such as Honasa Consumer, Nykaa and Plum Goodness. For these brands, offline retail offers a way to broaden their consumer base and help product discovery.

“Ultimately, if you want to reach new customers, they still need to be able to buy the product from general trade, modern trade or a nearby store. That is what is happening with a lot of digital brands,” Meena said.

Online channels account for only around 20-25% of India’s fast-growing beauty and personal care (BPC) sales, while quick commerce contributes an estimated 3-5%, according to Satish Meena, analyst at Datum Intelligence.

The rest of the market is largely served through various formats of offline retail, highlighting the opportunity for digital-first brands to expand beyond online channels.

India’s BPC market was valued at $23 billion in fiscal year 2025 (FY25) and is expected to reach $40 billion by 2030, growing at a 12% CAGR, according to estimates by Redseer Strategy Consultants.

Honasa, which owns Mamaearth, The Derma Co and Aqualogica, reported more than 40% year-on-year increase in general-trade secondary sales in the September quarter. Modern-trade offtake also grew over 40%, while average secondary sales per retailer rose more than 30%. Its reach expanded to around 3.2 lakh retail outlets.

Nykaa, which began as an online beauty retailer, is also seeing traction in physical retail. Its beauty retail business recorded like-for-like growth of more than 20% in the quarter, its strongest in six quarters. The company added 14 stores during the period, taking its network to 338 across 111 cities. Its B2B distribution arm, Superstore, expanded its retailer base by 27% to more than 500,000, it said in a stock-exchange filing.

For Plum Goodness, which started online in 2014 and entered offline retail in 2017, physical channels now account for around 25-30% of revenue. That share has remained broadly stable over the past few years even as the company has expanded both online and offline, said Shankar Prasad, founder and chief executive.

Plum is present in around 50,000 general-trade outlets and 8,000-9,000 modern-trade outlets. General trade, including cosmetics shops, neighbourhood stores, chemists and supermarkets, contributes the bulk of its offline business.

“We have 40,000-50,000 outlets now, and the universe that can take our kind of product is in the few lakhs. So there is a lot of headroom for us to grow within general trade,” he said.

Beyond e-commerce

Retailer acceptance has been driven by changing consumer preferences, including growing demand for premium products, greater transparency and wider choice, Prasad said.

“The neighbourhood retailers understand their consumers very well,” he said, adding that retailers have responded to these shifts by creating shelf space for newer brands.

To support offline sales, Plum largely relies on digital media to build consumer awareness, supplemented by local activations. It is also sharpening its focus on geography and customer segmentation, mapping its marketing efforts to areas where it has distribution and the ability to serve demand.

“We have to be a little more considerate about where and to whom the brand advertises offline, compared with e-commerce, where campaigns can reach consumers across a much wider geography,” Prasad said.

Measured expansion

The opportunity is not uniform across markets. Datum’s Meena expects tier-2 cities and smaller markets to offer stronger traction for digital-first beauty brands in general and modern trade. In larger cities, consumers familiar with a brand may prefer to reorder online, leaving physical stores to play a greater role in discovery and trial.

“In tier-1 cities, e-commerce is taking that load. If you know the brand, you will end up purchasing online,” he said. “Tier-2 and beyond is where you will see more traction.”

Meanwhile, the expansion is coinciding with improved profitability at both Honasa and Nykaa, though neither company has attributed the gains to offline growth alone. Honasa’s Ebitda margin rose to 12.7% in the September quarter from 8.9% a year earlier. Nykaa’s consolidated Ebitda margin increased to 8.7% from from 6.8% a year earlier. Both companies cited a combination of channel mix, operating leverage and other cost efficiencies.

For brands moving beyond their online-first base, the next phase will depend on matching distribution with local demand and building the capabilities to serve retailers reliably, according to Meena.

“What we don’t want to do is expand ahead of capabilities to service and ensure the demand holds up,” Plum’s Prasad said.