Let’s have a BeautyTalk – Sephora, a disruptor in beauty retailing

Although consumers find beauty stores less and less attractive (less than 1 out of 4 French women go inside a selective beauty store), Sephora has never performed so well. Driving growth at luxury house LVMH, its parent company, it is the 1st cosmetics seller worldwide (Bloomberg Business) and the 10th best retail brand in Europe, after giants such as H&M, Ikea and Zara (Interbrand 2014). With over 15000 different products in 1780 locations and 29 countries, a strong e-commerce platform (mobile sales: +100% per year) and a successful app (21st on the App Store’s ranking of shopping apps – USA), Sephora has been a disruptor in selective beauty retailing, integrating online and offline.

While many retailers have difficulties with social media and digital in general, how has a retailer in a segment in struggle reached this position?

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A strong digital identity.

“Our penetration of digital to physical retail sales is double that of the prestige beauty industry” – Bridget Dolan, VP of Sephora Innovation Labs.

Meeting with success at first thanks to its network of stores, Sephora has moved over the years to make digital as important as the physical products. Through two major steps, it has changed its core identity.

The in-depth internal reorganization of the company: an essential move to take digital seriously.

One of the key drivers to Sephora’s digital success has certainly to be found in the organization of its marketing and digital departments. As early as 2007, and while most companies still struggle to do it today, Sephora has created a single position bringing together its CMO and its CDO. Although this has required a significant shift in their own structure and way of thinking, they have put in huge efforts to make marketing and digital go hand in hand, because that’s what the consumer expects from his brand experience. Contrary to many companies, it has also created an internal digital development team and brought web-development in-house. Thanks to this, they have strict power over their digital strategy and have been able to become a serious digital player.

A strong emphasis on digital innovation.

Being ahead of trends and technology has always been Sephora’s strong intention. As early as 1998, it launched its first website, being then one of the early players in e-commerce. It was also one of the first to develop a mobile site. In this same perspective, the group has launched the Sephora Innovation Lab, in San Francisco, last year. Getting closer from the tech scene to develop strategic alliances (quite like beauty giant L’Oréal), the innovation lab is working on how consumers will shop in five years from now. Projects such as augmented reality, pocket contour and Sephora Flash have been for instance developed.

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Key take-away: give your company the means to achieve its goals. If it wants to incorporate digital, empower your teams at every level and change the processes. Imbue the culture of digital and bring the core functions in-house.

Every customer is treated in a unique and hyper-personalized way.

 “We’re completely focused on making shopping more efficient, intelligent and fun for our clients.” Julie Bornstein, CMO and CDO of Sephora.

Sephora has developed its presence online and offline to be involved in every step of the consumer’s journey. It has taken action to personalize their customers’ experiences based on demographic and behavioral indicators. Because of the quality of services it has developed, it has managed to access personal data, people being less reluctant to grant permission as they directly benefit from it, through a well-adequate service. If the loyalty program, Beauty Insider, constitutes the beauty ID of the consumer, the Sephora To Go app is it’s everyday companion, providing him advice, coupons, reminders, historic of purchase, etc. In stores, the Ipads enable both the consumer and sales people, who can recommend suitable products with deeper relevance.

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Last in is the Sephora + Pantone Color IQ. Sephora counts more than 110 foundations colors, and it takes women about seven tries to find the right foundation. The Sephora + Pantone Color IQ identifies the perfect color for every skin and then recommends first a great foundation concealer and also complementary products such as lipsticks and more. This is a huge gain of time and relevance, which makes consumers want to stick to Sephora.

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Key take-away: Deep understanding of the consumers to bring them relevant digital innovation that will make them feel taken care of in a unique way.

A leader in social commerce.

Sephora has also quite early understood the power of social media. It has already developed the tools to be both very active online and have its consumers very active as well, a key strength as social commerce is on the rise.

Thanks to its platform BeautyTalk, members can ask questions to other members and experts, find tutorials videos and publish posts, advice, etc. They interact with peers who have the same interests as them. Members, depending on how many questions they will ask and answer, will get different status going from Scene Queen and Beauty Resident to Hall of Famer and more. beautytalk-300x217.pngThey gain social recognition and are in this way valued. The brand, involved in the platform as a moderator, has the key role of not moderating too much in order not to kill the community, which relies on trust and members’ motivation. The hierarchy between members triggers a kind of co-governance and members become actors of the brand, who can make the design, the architecture and the content of the platform evolve.

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If Facebook is a critical early-warning system for the company, Pinterest is its platform of choice and also the one that’s the most useful for its development. Pinterest followers spend 15 times more than Facebook fans, as “when you’re in the Pinterest mindset, you’re actually interested in acquiring items. » Julie Bornstein, CMO and CDO of Sephora. Sephora has since then embraces Pinterest power. On their website first, they have incorporated a “Pin” button. Second, they have created campaigns such as the Sephora Color Wash Competition. Users are encouraged to create a board titled Sephora Color Wash in the Hair & Beauty category and pin the competition page on their board as well as 5 images featuring their favorite color for a chance to win one of the ten $250 gift cards.

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> Key take-away: Encourage the consumer to get involved with the brand, especially at a time when the support of a network of online peers who indirectly assist marketing though their opinion on products and services matters so much. Mix of social and financial rewards to engage the consumer.

« The minute we stop looking for the next consumer touch point is the minute we become like those who said “mobile shopping will never exist”. » Julie Bornstein, CMO and CDO of Sephora.

8 comments

  1. Very interesting post. As someone who is easily overwhelmed by the experience of shopping in a Sephora retail store, I see great value in the digital innovations that the company has developed. I also think it is a good move that Sephora is placing a big emphasis on Pinterest as an online platform. When I am on Pinterest, there is nothing more frustrating than when you find a product you like but there is no link to take you to the purchasing page. It would be interesting to see what percent of their sales are driven by this platform.

  2. This was a really well thought out and researched post. Thanks for sharing all this information. I think one thing worth noting is that Sephora also has what many in the industry consider to be one of the best loyalty programs. The samples they include in many customers’ orders or allow customers to buy with points are provided by manufacturers. It’s sort of a “pay to play” kind of game. Manufacturers/brands provide the samples and in exchange get exposure to new potential customers. Sephora gets brand loyalty. It’s really interesting to see how innovative this company has become.

  3. As a Sephora consumer it has been very interesting for me to see the evolution of Sephora’s digital platforms. When I first started wearing make up I relied on the employees within the store to help me pick everything out and the entire experience took about an hour. Now within the store Sephora is much more efficient because of the Pantone Color IQ and people are more likely to go into the store knowing what they want based on information they found on the website or through the Sephora app; these changes make it easier for customers to be in and out and not feel like they need to dedicate an hour to shopping for make up.

  4. This was an excellent post! I’ve always thought Sephora was ahead of the curve for a retail company as one of their customers. They’ve carved out a nice little niche for themselves, and I see Sephora only expanding on the technology from, which will only aide their general expansion throughout the world.

  5. Great post! You clearly did your homework and uncovered the many ways Sephora implements technology into their business model. My favorite technique Seohora uses is the email it sends to the purchaser after they buy something. There’s a quick survey to fill out about the product you just bought in addition to recommendations for other products you may like. Like you mentioned, they aim to reach customers in a hyper-personalized way and I think they excel at this.

  6. Nice post! I’m a huge Sephora fan and have also been a huge fan of their marketing/ digital techniques. They are like the Amazon of the beauty industry. I am curious to see how a company like Birchbox will somewhat disrupt their business. As of recent, most of my new beauty finds have been through my Birchbox subscription versus Sephora – and some of the brands that they send out are not the main brands that Sephora carries. Therefore, I shop on Birchbox’s website quite often. I reserve my trips to Sephora for my basics and if I need a new color (so I can try on in the moment). With that said, I know that Sephora is launching (has launched?) a sample subscription like Birchbox, so perhaps I’ll be changing my tune in a few months.

  7. Wow, what a great post. Actually I learned that Target is starting to switch its digital strategy toward beauty (and baby and fashion) because they believe a high-touch digital strategy is different here and it’s a place they can beat Amazon. Great post!

  8. Great analysis of Sephora’s strengths in the digital space! As a lover of the Sephora brand, I have their website’s features to be really useful and innovative. I recently purchased a product off their website, and was intrigued by the simulation on their homepage (#trendingatSephora) that allows you to see the before and after of color correcting products on different types of skin tones. Buying products like makeup, which is often difficult to purchase without trial, is now easier with features like this. Like you mentioned, the Beauty Insider program is a great way to establish personal customer experiences and build each customer their own profile that recommends certain products. Their 2-day shipping yearly subscription is similar to Amazon’s, which could give this brand a major competitive advantage over other beauty suppliers since it helps to build brand loyalty. I am now interested in trying out the Sephora app (can’t believe I don’t have it already) and testing the features they offer in the mobile space! Really great post, Estelle!

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