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Our Focus Is On Top 10% Of The Country’s Market, Says Vikas Gupta, Group CEO Of VLCC

VLCC's omni-channel approach is another differentiator because when you come to VLCC, it's not just about selling a commodity; it's about understanding your lifestyle, eating habits, allergies, and skin conditions. Our clinics offer thorough assessments using state-of-the-art machines.

India is one of the largest and fastest-growing markets for the beauty and wellness industry. There is a soaring demand for various products and services to meet the needs of the booming beauty industry. Vikas Gupta, the Group CEO of VLCC, shares profound insights into India’s beauty and industry dynamics in an exclusive interview with the Outlook Business.

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VLCC is one of the largest skincare brands in the country with over 30 years of history. From personalization trends to challenges in the Indian skincare industry, Gupta sheds light on VLCC's approach to staying ahead of the competition. He provides a unique perspective on bridging the urban-rural beauty divide and tackling issues like product duplication. This conversation with the VLCC Group CEO provides a comprehensive understanding of VLCC's strategies, innovations, and vision in an ever-evolving beauty and wellness landscape.

Q

The skincare services segment is largely dominated by the smaller or regional players. What is VLCC’s approach to gaining a high level of consumer trust, and what strategies contribute to its market recognition?

A

I believe brands take a generation to build and you cannot fast-track that process. VLCC is a brand with over 30 years of history and is immensely trusted among consumers and has earned that trust over the years.

Contrary to the idea of a trust deficit I believe there is a trust surplus. VLCC is not just a single clinic – it's a global company. The trust comes from the enduring legacy we've built.

Innovation is a key pillar for us. We constantly bring the latest technology, science, and equipment to Indian consumers. In the last quarter alone, nearly 30 per cent of our revenue came from services introduced in the last nine months which shows our commitment to staying ahead.

Secondly, our professionals including doctors, technicians, therapists, and nurses – all are extensively trained, retrained, and recertified at VLCC. We invest in skill upgrading and aptitude refreshers, setting us apart from others who might not prioritize such continuous improvement.

VLCC's omni-channel approach is another differentiator because when you come to VLCC, it's not just about selling a commodity; it's about understanding your lifestyle, eating habits, allergies, and skin conditions. Our clinics offer thorough assessments using state-of-the-art machines.

With over 500 services, we provide hyper-personalized solutions. This, along with a direct-to-consumer (D2C) model through beauty advisors and therapists, ensures a comprehensive approach to your needs.

Unfortunately, local players lack technology or they use outdated technology and often adopt services after they've become mainstream. On the other hand, VLCC continually moves forward, avoiding the pricing race to the bottom.

I believe VLCC's equity lies in delivering transformations, and results, and being at the forefront of industry advancements. Consumers trust us because we've consistently demonstrated our commitment to quality and innovation.

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Q

While the Indian cosmetics industry witnessing rapid growth, it faces several challenges such as low production value, product quality issues, and a lack of transparency. How can the Indian companies resolve these issues?

A

I think you're right. Traditionally, India has lagged behind Western and even some Eastern economies like Southeast Asia, Korea, Taiwan, and Japan. However, new trade channels, especially e-commerce, have sparked a lot of innovation in this space. Several new and local brands are emerging, aiming to surpass the standards set by mass-market players.

While there's been progress in the last few years, many smaller players lack scale and rely on third-party manufacturers and suppliers which lead to compromises in quality. This is where VLCC stands out. Our technical expertise from the services side, coupled with rich consumer insights, sets us apart. We directly engage with over 100,000 consumers annually, gaining intimate insights that any market research can't match.

With our in-house R&D team and more than 90 per cent of products manufactured in our own factory, we maintain end-to-end control. This unique position from consumer insights to product design, sourcing, manufacturing, and selling, helps VLCC to stand out in the skincare industry.

Another key factor for us is transparency. Whether in our clinics or through beauty advisors, we ensure our products come with detailed information – from usage guidelines to ingredients. Acquiring the digital-first brand Ustraa has further strengthened our capabilities, especially in e-commerce.

Looking ahead, we are set to introduce innovations and bring clinic products to a wider audience through e-commerce. The goal is to establish new benchmarks in quality, innovation, transparency, and consumer safety. This mission is particularly close to my heart.

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Q

The demand for beauty and wellness services is majorly based in urban areas and the overall demand in rural India is tepid. How are the beauty and wellness service providers dealing with this challenge?

A

I can provide insights into how VLCC navigates this urban-rural divide. Acknowledging that high-end services and products may not be universally applicable, my focus is primarily on the top 10 per cent of the country. This demographic is where the majority of my time and efforts are directed. Despite being a niche market, the penetration of our business in this top 10 per cent is currently minimal, possibly less than 1 per cent. This indicates substantial growth potential in this segment.

In rural areas where mass-market products dominate due to limited choices, there is a perceptible improvement in product benefits. Many of these products, although heavily advertised, fail to deliver tangible differences. This is where strong brands like VLCC stand out. For instance, the recent launch of our bridal facial kit has been a significant success, even reaching rural markets through wholesale channels.

I've personally witnessed the demand for such products in places like Lucknow and Banaras, where people line up to buy them from wholesalers. While catering to the rural market is essential, a significant portion of our focus and resources remains dedicated to serving the top 10 per cent. There's demand from the rural segment and people often transport these products from urban to rural areas.

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Q

The selling and manufacturing of duplicate products is a major challenge for the skincare industry. How does your company deal with this challenge?

A

We've indeed encountered instances of duplication and counterfeiting. To combat this, we've adopted a two-pronged approach. Firstly, the conventional method involves collaboration with law enforcement agencies through which regular checks, balances, and raids are conducted, with our legal team actively pursuing legal actions. This approach requires consistent efforts due to the prevailing poor consumer and retailer education on such matters.

The second and more innovative approach involves leveraging technology. In the coming months, every VLCC product will feature a unique QR code. This QR code will allow consumers to trace back the product's manufacturing details, including the factory, CNFA, distributor, and customer involved in the chain. This initiative requires substantial capital expenditure and involves partnering with a specialized company.

By implementing this QR code system, we aim to be at the forefront of tackling counterfeiting and ensuring product authenticity. This investment showcases our commitment to combating this issue, and we believe it will significantly benefit consumers by providing them with a quick and reliable method to verify product authenticity. The introduction of this technology is a testament to our conviction in addressing the problem head-on.

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Q

With the changing trends, and the demand for organic/chemical-free and customized beauty products and services, how does VLCC adapt to emerging trends, ensuring that its services and products remain relevant in a rapidly changing market?

A

It's fascinating how preferences are shifting towards a more personalized experience. In the realm of personalization, which I consider the predominant trend, there's an acknowledgment of individual uniqueness. Especially in the top end of the market people really want that level of sophistication and nuance matter. Over 80-85 per cent of our business operates directly, leveraging an omnichannel model that spans services, products, and direct-to-consumer interactions.

Our approach isn't just about selling products; it's about investing in technology. With a network of over 1000 beauty advisors, we strive to deliver unparalleled levels of customization and personalization. Our focus is on leveraging technology, for instance, we're working on an app that replicates the results of a big skin analyzer machine but on your phone with 90-95 per cent accuracy. Imagine walking into a store, and a beauty advisor uses their phone to analyze your skin accurately. We are making investments to make these personalized experiences available at more touchpoints.

On the topic of organic and chemical-free, we are committed to only using beneficial ingredients in our products for consumer safety. Only those components actively contributing to the product's efficacy are retained. It's not about quantity; our game is all about quality.

Q

What are your expectations for the next breakthrough in the beauty and transformation space, and how does VLCC position itself to achieve these milestones?

A

I believe we just touched upon it—the pivotal space of personalization. Considering my experience across global markets like Europe, Singapore, Indonesia, and Brazil, I've observed that India is still catching up in terms of individuals, especially women, finding the right products and services for their specific needs.

Our vision at VLCC is focused on helping individuals transform into their most beautiful and healthy selves. In India, there is a lack of awareness about the available tools that can effectively address concerns about one's skin, face, or body shape.

The mission of VLCC is to make people aware that safe, reliable, effective, and affordable solutions exist for those aspects they may not be satisfied with when they look in the mirror. Bridging this awareness gap and ensuring people understand the available transformative options is crucial.

India's catching up, and with the economy growing and more women working, we see a big opportunity. Making people aware and offering personalized services and products can lead to a lot of growth and value for VLCC in the future.

Q

Could you elaborate on VLCC's current and future expansion plans, both nationally and internationally? Are there any collaborations or acquisitions on the cards?

A

Recently, we acquired the Ustraa brand, marking our entry into the male grooming segment and enhancing our digital capabilities. This acquisition has broadened our scope across genders and provided valuable insights into digital targeting for younger, digitally savvy audiences.

Going forward, we remain open to inorganic expansions that align with our strategic goals. In the past six months, we've already opened 14 clinics, with a focus on testing and refining our approach. Expect a substantial increase in this number over the next 12 to 18 months, reflecting our commitment to both organic and inorganic growth for both our products and services business. We are dedicated to an accelerated expansion strategy during this period.

Q

The company has canceled its plans to list on the exchanges twice. When the company is likely to go public?

A

The short answer is, I don't have that information. However, it's important to note that our current strategy is clear and we possess ample resources in terms of capital, expertise, and talent.

At present, there isn't an inherent need to tap into the public markets. While there might be a desire in the future that decision will be made when the time is right. If and when we decide to go public, we'll communicate it transparently.

The skincare industry lacks major focused brands, and our focus is on delivering outstanding consumer value to create substantial business value. Rather than being driven by market trends, our emphasis is on building a strong foundation for long-term success.

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