Kaya, the skin solutions arm of Mumbai-headquartered Marico Ltd, will launch smaller outlets in the fourth quarter of the current fiscal in a bid to dive penetration and cut costs. The move comes at a time when Kaya has been looking to break-even ten years after it was launched. While the business contributes about seven% to Marico's topline, it continues to be a drain on the company's bottomline incurring a loss of Rs 29.1 crore at PBIT level (that is, profit before interest and tax) in the last fiscal.
The gameplan, according to Kaya's chief executive officer Ajay Pahwa is to have a scalable model at half the cost incurred to set-up the regular outlets, which are called Kaya Skin Clinics. The latter, according to company executives, requires an investment of approximately Rs 80 lakh per outlet. The area of these outlets typically starts from 1,000 square feet onwards. The new smaller-format stores, called Kaya Skin Bars, will cost approximately Rs 35-40 lakh to set up per outlet, with the focus on offering more products than services, with the head-count capped at three per outlet as against the approximately eight to ten people that man the regular clinics. The area of these new stores will be under 500 square feet, Pahwa says, and will kick-off in cities such as Bangalore and Delhi, before moving to places such as Mumbai, Pune and Kolkata.
In five years, Pahwa says the endeavour is to have approximately 150-200 of these smaller-format stores - more than double the number that Kaya has seen in the last ten years. Currently, Kaya has a total of 107 clinics in India, the West Asia and the Far East including countries such as Singapore and Malaysia. Besides cutting losses, the newer smaller-format stores are expected to give a further boost to Kaya's topline, growing at over 30% per annum. The division closed the 2011-12 financial year with revenues of close to Rs 300 crore.
The market for premium skin care is pegged at Rs 600-700 crore in India, growing at over 20 to 25% per annum. Players from LÓreal, which promotes brands such as Kiehl's and Vichy to Body Shop, Clinique, owned by Estee Lauder and Dermalogica, promoted by the International Dermal Institute, are some of the operators in the space. Some of the home-grown players besides Kaya include VLCC, which in the last few years has stepped into premium skin care largely by offering its own range of products. Pahwa says that a combination of offering products as well as services sets Kaya apart from the other players, which are exclusively focused on offering products. "While the doctor-led services will not be available at the smaller outlets, a few key services will be there besides a wider range of products starting from Rs 300 going up to Rs 3,000," Pahwa said.
Approximately 54 different products addressing skin-related issues will be available at the smaller outlets. This is an addition of 18 products to Kaya's existing range available at its regular skin clinics.
