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Tag: KSA

  • Nykaa partners with Apparel Group to enter Gulf markets; sees it as a multi-year growth opportunity

    Nykaa partners with Apparel Group to enter Gulf markets; sees it as a multi-year growth opportunity

    Mumbai: Nykaa, the Indian fashion and cosmetics retailer, has tied up with the Middle East based fashion and lifestyle retail giant, Apparel Group. With this strategic alliance, the former aims to utilise the latter’s robust retail infrastructure network and deep market relationships to recreate its beauty retail platform and build distinctive Gulf Cooperation Council (GCC) focused beauty offerings in UAE, Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait and Bahrain.

    The joint venture will create an omnichannel, multi-retail brand for the Middle East with Nykaa holding a 55 per cent stake in the new entity and the remaining 45 per cent will be owned by Apparel Group.

    As per reports, Nykaa CEO Falguni Nayyar believes that the per capita consumption of beauty is very high in the GCC region, and the company views it as a multi-year growth opportunity.

    As per Elara Capital senior vice president – research analyst of media, consumer discretionary and internet Karan Taurani’s margins in the GCC market is far superior as compared to India (around 48-50 per cent gross margin). Nykaa’s gross merchandise value (GMV) contribution from private labels currently is 11.2 per cent, which can potentially lead to 10-15 per cent higher sales volume for this segment in the near term due to new market expansion, he points out.

    “As per our assessment, this joint venture will thereby have a positive impact of one-two per cent on growth rates for the overall beauty and personal care (BPC) segment; it may be margin dilutive initially due to investment in the overseas market (creating brand awareness) but will impact earnings positively, once they achieve scale,” says Taurani.

    Elara Capital has estimated 23.7 per cent revenue compound annual growth (CAGR) for the Nykaa BPC segment in the upcoming years, he adds.

    For the record, Nykaa has 112 retail stores in India (as of 30 June), catering to approximately 28,000 pin codes and offering over 4,500 brands across platforms. Apparel Group is a global fashion and lifestyle retail conglomerate headquartered in the United Arab Emirates (UAE). It is home to over 75 lifestyle and beauty brands with over 2,000 stores in 14 countries.

  • Online video to take lion’s share of video biz revenue in the Gulf by 2025: MPA

    Online video to take lion’s share of video biz revenue in the Gulf by 2025: MPA

    KOLKATA: As more people shift to alternative entertainment options, online video business is going to surpass pay-TV in next five-ten years worldwide. A report by Media Partners Asia (MPA) has projected that online video will account for the lion’s share of total video industry revenue by 2025, with both pay-TV and free TV in six Gulf Cooperation Council (GCC) countries. Within the region, the Kingdom of Saudi Arabia (KSA), and the United Arab Emirates (UAE) will continue to contribute over 70 per cent pay-TV and online video revenues in aggregate by 2025.

    According to MPA, the GCC video industry – comprising free TV, pay-TV and online video – will generate revenues of $1.6 billion in 2020, representing a 13 per cent year-on-year contraction with deep declines in TV advertising and subscription, only partially offset by the significant growth of online video. Covid2019 related macro issues have exacerbated headwinds across the TV sector. A rebound is expected in 2022 but the TV industry will face difficulties in the long term. Overall, GCC video industry revenues are forecast by MPA to increase to $2 billion by 2025, a CAGR of 5 per cent from 2020.

    MPA vice president Aravind Venugopal said: “The GCC’s vibrant and highly competitive video ecosystem has seen some significant changes in the past few years. Online video services continue to grow, driven by: low-cost pricing; telco partnerships, including hard bundles; and the availability of premium local and global content online, including increased investment into exclusive originals.”

    Even with telco partnerships, which help to broaden the customer funnel, the longer-term success of OTT platforms will rest on their ability to retain customers, manage subscriber acquisition costs (SAC) and increase lifetime value (LTV).

    “Over the next five years, the focus will move to the acquisition of high LTV subscribers via D2C. Market consolidation is also likely as the GCC region will be unable to support 15+ platforms with many competing in the same customer segments. New entrants into the market such as Disney+ Hotstar and HBO Max, could provide further impetus to industry growth, competitive intensity and consolidation,” he added.

    Venugopal also noted that the slow pace of innovation by pay-TV operators combined with high prices of subscription based video services, and the proliferation of broadband have contributed to the decline of pay-TV. IPTV has maintained subscriber growth, driven primarily by hard bundled triple-play services. However, as telcos re-examine their cost structures and investments in content and platforms, there remains an impending threat of the breaking of the hard bundle, which could further endanger pay-TV, he surmised.

    The report further states that within the GCC online video sector, three business models have emerged in recent years: freemium operators, led by MBC-owned Shahid, PCCW-owned Viu and Zee’s Weyyak; SVoD operators, led by Netflix, Amazon Prime Video, STARZPLAY, Jawwy TV, Watch iT and OSN Streaming; and AVoD operators, including YouTube and TikTok.

    Given the diverse demographics and large expat population in the region, several services targeted at specific language/ethnic groups have also launched in recent years. These include the Indian and South Asian segment, which are key audiences for Zee5, SonyLIV, Eros Now and YuppTV. As platforms seek to further expand their customer base and drive consumption, investment in Arabic originals has become a key battleground. While the Covid2019 pandemic and the economic-political crises in the region have impacted production activities, MPA has forecast that productions will return to normalcy by Q1 2021 as economies recover.

    In the telecoms sector, fixed broadband has been relatively insulated from economic woes given its utility-status in UAE and low penetration in KSA. However, mobile services, particularly prepaid, have experienced subscriber declines. The UAE and Qatar leads the region, both in terms of fibre connectivity and penetration with over 90 per cent of homes having access to fixed wired services via fibre. From a mobile perspective, the GCC is well connected, with a highly competitive environment (ex-UAE) keeping retail prices relatively affordable. Data consumption remains fairly high, driven primarily by video services. There remains further scope for growth, especially in markets with low fixed broadband penetration.