Quick commerce continues to be our fastest growing channel: Varun Alagh

He discussed the company's Q1 performance, festival season plans, challenges and future plans

Honasa Consumer - the parent firm of D2C brands such as Mamaearth, The Derma Co, and BBlunt - on Friday reported a 62 per cent jump in its quarterly net profit on the back of increased sales and improving margins. In a telephonic interview Varun Alagh, Chairman and CEO, Honasa Consumer discussed with Aryaman Gupta the company’s Q1 performance, festival season plans, challenges, and future plans. Edited excerpts:

What is driving growth?

As we have been growing in scale over the last two or three quarters, we have seen the cost and operating expense efficiencies flowing in, which is visible in our gross margins. That's how we've been able to grow as well as improve our bottom lines. And that's the plan going forward. Year-on-year, our target is to not just grow faster than the industry, but also ensure that our bottom line grows faster than our top line.

We have had a very strong focus on measuring consumer interest, innovating in line with their needs, and providing products that they genuinely love. We also have a culture of frugality. We always question what we spend on, and what it generates in terms of returns. This database decision-making allows us to replicate what we know quarter-on-quarter.

Festival season is around the corner. How are you preparing?

Supply chain enhancement is something that we have been working on. Figuring out how to become closer to our customers by increasing our regional supply chain utilisation is very important to be able to capture the festive demand. So that's been an area that we are strongly working on. Apart from that, we are working on creating the right kind of marketing campaigns, and the right kind of innovations and launches.

We do not have any specific hiring target. However, we are on a continuous hiring drive, in line with our business growth. There has been a lot of focus on R&D, so a lot of hiring has happened in that segment. There has been active hiring in the offline sales function as well.

What are some of your expansion plans going forward?

Growing awareness for our brands is the number one priority. We'll continue to invest in brand building, and increasing our distribution, especially offline. Working with new channels like quick commerce is also an important part of our expansion plan. We will also continue with high-quality, on-trend, consumer innovation, which has always been a part of our growth strategy.

What kind of growth have you seen via quick commerce this quarter?

Quick commerce continues to be the fastest-growing channel for us. It is still growing almost five times faster than e-commerce, like last quarter.

 

Are you looking to get into any new categories?

Not at this point in time. We last entered into colour cosmetics with our brand Staze, and our objective will be first to build that out.

There has been a slowdown in urban consumption and a reduction in discretionary spending among consumers. Do you foresee any challenges in the near term?

These are cyclical, short-term challenges. The quarterly ups and downs are part and parcel of the business. Currently, our per capita consumption is even lower than Bangladesh on beauty and personal care (BPC). The country is going to see a revolution in BPC. Even in the medium term, we're seeing a very prosperous picture. And, our focus is on making sure we emerge as winners as this category scales up.