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Sephora and RIL cancel a retail agreement

NEW DELHI : Sephora and Reliance Retail Ltd have abandoned talks to form a retail partnership for the Indian market with the French multi-brand beauty products chain deciding to continue with its existing alliance with Arvind Fashions Ltd, said two people familiar with the matter.Mint first reported last September that Reliance Retail was in advanced talks to acquire the master franchise rights for Sephora, owned by luxury goods retailer LVMH Moët Hennessy Louis Vuitton, for the Indian market. This would have given Reliance, India’s biggest retailer, a bigger foothold in the fast-growing domestic market for premium beauty products.

“The deal has fallen through; Reliance is also creating its own beauty retail brand, so, how will they differentiate between the two brands,” one of the two persons said on the condition of anonymity.

The move comes as Reliance proceeds with opening its own multi-brand beauty format under the Tira brand, that will compete with the likes of Sephora, Nykaa and SS Beauty (Shopper’s Stop). The first store is expected to open at Jio World Drive Mall, Mumbai, and it will house both mass and mass-premium international as well as local brands.

Sephora sells premium beauty brands such as Too Faced, Mac, Clinique, Huda Beauty, Pixi and Estee Lauder.

To be sure, the Indian beauty and personal care (BPC) market is set to reach ₹2 trillion by 2025, according to 2021 report by Motilal Oswal Financial Services Ltd. Brands such as Hindustan Unilever-owned Lakme, Loreal’s Maybelline and Loreal Professional dominate the mass beauty market. Over the last few years, several premium international beauty brands have also set up base amid rising demand. When contacted, Shailesh Chaturvedi, managing director and CEO, Arvind Fashions said, “We don’t respond to market speculations.” Emails sent to Sephora and Reliance Retail remained unanswered.

The second person cited above said Reliance’s Tira brand of stores will open soon.

“Work on Reliance Retail’s new beauty format is going on quite actively,” the person said.

“Sephora won’t fit in; Tira will partner brands both at the mass market, bridge and premium end of the market…all can be done within their own format for which work is going on actively,” this person said.

Globally, Sephora has over 2,700 stores in 35 countries.

In India, Sephora has over 25 stores in 13 cities retailing over 90 brands across categories such as cosmetics, fragrances, skincare and hair care. Arvind Fashions has held Sephora’s rights for India since 2015. Arvind Fashions also sells brands such as USPA, Tommy Hilfiger, Flying Machine, Arrow, and Calvin Klein in India.

In fiscal 2022, Arvind Fashions posted consolidated net loss of ₹236.7 crore on consolidated revenue of ₹3056.04 crore.

In its September quarter earnings call, Chaturvedi said Sephora as a business has done “really well”. Asked about Sephora India’s change in ownership, Chaturvedi said at the time that Sephora is delivering one of the highest sales densities in a mall. “Ask any mall which is the best performing store in sales, Sephora will be right there. We have done a fairly good job when we took over the Sephora from other distributors, and it has been a core part of our business and we will continue to sort of engage with women consumers in its premium offline driven appeal. And that’s what Sephora’s role in ours strategy. It is a beauty brand for our portfolio,” he said.

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