Brands
Brands halt retail expansion; focus on online models
NEW DELHI: As the digital media started to pick up pace in India, retail brands like Pepperfry, Zivame, Nykaa, Lenskart, UrbanLadder, cropped up with entirely online business models. Slowly, they began to enter into the offline space to help customers engage with the brand in multiple ways and maintain recall factors. But with almost a 50 per cent drop in footfall and high rent rates, companies are unable to sustain. It’s not uncommon to hear of layoffs as well.
The reverse phenomenon is happening now. Offline retailers are going online as they see that’s where maximum sales will happen. Most of them have paused omnichannel expansion across India.
Furniture e-commerce brand Pepperfry had delayed its plans to launch new stores to mid-June due to the lockdown but has now resumed their offline expansion. The brand used to get 38 per cent from offline sales. As per media reports, fashion retail brand FabAlley is also dealing with the same issue. The brand has around 430 stores across India out of which only 200 are currently open. However, its online sales have picked up at a higher pace.
Even cosmetic brand Nykaa, which extensively forayed into offline stores, has also taken a blow due to the lockdown. According to reports, the brand believes online is the only option to bounce back.
Business strategist and angel investor Lloyd Mathias explains, “Shutting down brick n mortar stores will certainly impact business revenue in the short term. Categories which are overly dependent on physical stores such as spas and salons and luxury goods will take a big hit and some permanent loss of revenue.”
However, Brand-nomics MD Viren Razdan feels, “It depends on the digital maturity of the product category and within that, the role your brand has played up until now. Have you been a late entrant to the digital play or were you up ahead in the game? New categories would have teething issues such as jewellery shopping might not have the comfort of first-time digital shoppers.”
According to the Retailers Association of India (RAI) report, malls in India have registered negative growth and the street retail shops have also seen a decline.
The lower demand for offline shops in India is due to the touch-based factor and even brands like FabIndia have started a new category of ‘experimental zones’ for better engagement. Once the situation returns to normalcy, brands will prefer an offline medium again.
Independent communication and marketing consultant Karthik Srinivasan shares, “Offline behaviour in India is deep-rooted, and the fact that digital money and internet availability is not 100 per cent, an offline presence is a necessity. Offline is an experience-led medium. Most brands that go back to offline would probably start questioning what they are bringing in terms of the experience that cannot be mirrored online. And that difference is what will help them continue because if everything else can be done online, there is no need for the offline version.”
Mathias also feels that brick and mortar presence will remain relevant for consumers who want the look and feel of real shopping. “A large section of consumers will always like this option available to them. So, while the Covid2019 pandemic has been a set back to the offline stores – over time they will come back. However, for many this period has broken the stranglehold of brick and mortar with increased adoption of digital payment options and the sheer number of first-time online shoppers,” he asserted.
“India will always have markets with our country operating at varying levels of sophistication in technology adoption, so a phyigital reality will have room to play for some time to come,” Razdan shares.
Brands
Estée Lauder to shed 10,000 jobs as new boss bets on digital shift
The cosmetics giant raises its profit outlook but stays silent on a possible merger with Spain’s Puig, as job cuts deepen and a three-year sales slump weighs on the turnaround
NEW YORK: Stéphane de La Faverie is not done cutting. Estée Lauder announced on Friday that it plans to eliminate as many as 3,000 additional jobs, taking its total redundancy programme to as many as 10,000 roles, up from a previous target of 7,000 announced a year ago. The company, which owns La Mer, The Ordinary, Tom Ford, and Aveda, employs roughly 57,000 people worldwide. The mathematics of what is now being contemplated is stark.
The fresh round of cuts is expected to generate a further $200 million in savings, bringing the total annual savings from the programme to as much as $1.2 billion before taxes. That money, De La Faverie has made clear, will be ploughed back into the turnaround.
A CEO in a hurry
De La Faverie, who took the helm in January 2025, inherited a company that had endured three consecutive years of annual sales declines. His response has been to move fast and cut deep. A significant portion of the latest redundancies reflects his push to reduce headcount at US department stores, long a cornerstone of Estée Lauder’s distribution model but now a channel in structural decline. In their place, he is accelerating the shift toward faster-growing online platforms, including Amazon.com and TikTok Shop, a pivot that is reshaping not just where Estée Lauder sells but how it thinks about its customers.
The numbers are moving in the right direction
Despite the pain, there are signs the medicine is working. Estée Lauder raised its profit outlook for the remainder of the fiscal year, guiding for adjusted earnings per share in the range of $2.35 to $2.45, above analyst estimates and a notable step up from the $2.05 to $2.25 range it had guided for in February. Organic net sales growth is expected to come in at 3 per cent, the company said, at the high end of the range it set out in February.
The share price tells a mixed story. After De La Faverie took charge, the stock surged nearly 60 per cent, buoyed by investor optimism that a longtime company insider could finally arrest the decline. But 2026 has been rougher: the shares have fallen 27 per cent this year, weighed down by disappointing February results and the overhang of unresolved merger talks with Spanish beauty giant Puig Brands SA. The company gave no additional details about those discussions on Friday, leaving the market to guess.
Silence on Puig
The proposed tie-up with Puig remains the most consequential unknown hanging over Estée Lauder. A deal with the Barcelona-based group, which owns brands including Carolina Herrera and Rabanne, would reshape the global luxury beauty landscape. But with nothing new to say and a turnaround still very much in progress, De La Faverie is asking investors to trust the process.
Three years of sales declines, 10,000 job cuts, and a merger that may or may not happen. At Estée Lauder, the overhaul has barely started.
