Nykaa: Growth Challenges in India’s Retail Market

In August 2022, Falguni Nayar, the founder and chief executive officer of Nykaa—a Mumbai, India–based omnichannel beauty, personal care, and fashion retailer—confronted declining profitability and a stock price that had fallen 36 per cent since the company’s initial public offering in late 2021. As a woman entrepreneur who had launched her venture at the age of 49, Nayar’s attempt to emulate the French multinational retailer Sephora in the Indian market had had a strong start amid heady media coverage. However, the company had been expanding out of its core beauty and personal care market, where it was an early entrant, to the crowded and highly competitive fashion market, which impacted profitability. Nayar and her management team had to address two major issues: determining how to increase profitability and deciding whether or not to make a strong push to India’s Tier 2 and Tier 3 cities, where the competitive intensity was likely to be lower, but the demographics were unlike those in the country’s large metropolitan areas, where Nykaa was successful.

This case is suitable for both core undergraduate and MBA strategy courses. Since it involves issues such as strategy evaluation and growth outside of a core business, the case should ideally be positioned toward the middle of the course, after the concepts of competitive advantage and business-level strategy have been covered. After working through the case and assignment questions, students will be able to do the following:<br><br><ul><li>Describe the choices that entrepreneurs make in launching a business.</li><li>Apply strategic concepts in evaluating a firm at various stages of its existence.</li><li>Analyze the issues confronting a firm as it makes product-market choices.</li><li>Evaluate the growth choices that a firm faces, and make recommendations for its path forward.</li></ul>

• Platform strategy, online beauty product