The Rs 51,200 crore beauty and personal care (BPC) market is set to grow at a rate of six per cent over the next five years to touch Rs 64,000 crore, as Indians continue to spend sparsely on beauty and personal care products compared to the developed world, a new study showed. However, this growth will be in line with the growth of the country's economy, said the report, 'Demystifying the future of Beauty and Personal Care' launched by the Indian Beauty and Hygiene Association (IBHA), an apex body that represents the interests of the industry, in association with AT Kearney, a leading global management consulting firm.
As per the report, the market for beauty and personal care is moving towards premiumisation, or the switch towards more premium products, with the premium segment growing at 6.3 per cent. Also, there has been an accelerated growth in the rural market at 7.4 percent, which currently contributes to only one-third of the sales. Further, e-tail penetration in home products will double by 2021, while in the case of personal goods, it will see a four-fold growth. Within the personal care segment, the market for natural products is growing at 2.5 times the non-natural market.
A conference held concurrently with the launch of the report hosted three panel discussions on the upcoming trends of male grooming products, bridal specials, going natural, technology as a mediator, at-home services, e-commerce, personalisation (creating products for specific consumers) and segmentation of products, peer feedback and rise in consumer consumption of BPC products. The change in consumer sentiment, from "look good" to "feel good", is driving the industry towards innovation and personalisation.
Yet, as much as innovation is an opportunity, it is also a challenge. Himanshu Bajaj, partner at AT Kearney says, 'Innovation requires investments, it requires a different mindset. When you are a large player, you are focused and used to profitability and margins, it's difficult to invest." Previously, the big- slow company concept worked due to advantage of large scale production, but now with digital space coming in, great ideas with little investment are getting wings, driving the market. Growth in various categories of products from large firms is stagnant, and the growth is coming only from innovation, he adds.
On the other hand, personalisation is on the rise with concepts of co-creations, mobile applications, e-commerce, blogs and DIYs (do-it-yourself videos) in beauty products and service sector gaining popularity. Digitisation is another core component bringing in online retail, new media marketing, online advertising and 3D packaging.