Yahoo Finance Sephora, the World’s Largest Prestige Beauty Retailer, Takes a Global and Local Approach
Sephora is global, but its consumers are local. So how does the world’s leading prestige omnichannel beauty retailer successfully leverage that dichotomy?
Its triumvirate of pioneering female presidents — Artemis Patrick steering North America, Alia Gogi overseeing Asia and Sylvie Moreau in charge of Europe and Middle East — talked strategy with Jenny B. Fine, editor in chief of Beauty Inc and executive editor, beauty, at WWD.
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Collectively, the LVMH Moët Hennessy Louis Vuitton-owned retailer’s three executives oversee 52,000 employees and approximately 3,000 sales points in 34 markets.
In North America, Sephora is notching double-digit sales growth, with gains in both e-commerce and brick-and-mortar. Patrick called that “pretty amazing, considering the base that we were up against the last couple of years.”
The retailer expects to add locations in 100 additional Kohl’s stores this month and generate $2 billion in sales next year, when it should be in full Kohl’s distribution. She said that would unlock “incredible marketing opportunities.”
More men and families shop at Sephora in Kohl’s than at traditional Sephora stores. Kohl’s also does well engaging consumers during key shopping periods, such as Back to School, which is a plus for Sephora.
Meanwhile, it continues to invest in e-commerce through user-generated content and frictionless check-out, for instance.
“But the single biggest project that we’re about to embark on…is the complete revamp of every single store in our distribution network, across U.S. and Canada,” said Patrick, explaining they will have new fixtures and layouts.
The process will begin this fall and last at least five to seven years.
“This is not a Sephora design project; it is a merchandising-driven project,” Patrick said. “It’s very much: How does the consumer shop? How do they navigate? How are the products laid out?”
Internally this is called the perfect future footprint.
“It is the single biggest capital project that Sephora has globally ever taken on,” said Patrick, of the more than half-billion-dollar undertaking.
Gogi is seeing strong gains in her zone, too.
“For Asia, we’ve had really robust growth outside of China last year, especially in the Southeast Asian markets, in some cases growing up to [seven times] the market growth,” she said.
The retailer’s sales were up in China last year, although the country’s recovery is taking longer than expected
“What it is forcing all brands to do, including Sephora, is to be very laser-focused on our strategies,” said Gogi, explaining the retailer is doubling-down on its “differentiated portfolio strategy.”
Curation is key to this. Over the past two years, Sephora has staged in China well-received launches for the likes of Anastasia Beverly Hills, Hourglass and Tatcha. The Drunk Elephant and Fenty introductions are this month.
“The Chinese consumer genuinely appreciates localizing,” Gogi said.
Fenty, for instance, touts inclusivity, while speaking to Chinese skin-tone matching.
Meanwhile, Sephora is working with home-grown brands addressing Chinese consumers specifically.
Retail-wise, Sephora will launch its “Stores of the Future” in Shanghai and Singapore.
“These are testing labs to drive a lot of experiential retail,” Gogi said. “The reality is it’s not just for China — experiential retail is the future.”
Addressing the beauty brand community at large, she counseled: “Be patient. One of the things about China is when it does come back, you will need to be agile — that becomes even more important — and it will come back very fast.”
However, Gogi believes the next one to two years will remain challenging there.
In Europe and the Middle East, during the past two years, Sephora has been clocking more than 20 percent annual gains. There, Sephora is outperforming the market growth by two- to six-times, according to Moreau.
What has been crucial for Sephora’s disproportional gains has been the idea “that the store is our first media,” said Moreau, calling it the retailer’s “heart and soul.“
In Europe, Sephora has been renovating stores and opening stores — 15 last year, including the reopening of its iconic Champs-Élysées flagship.
To help beauty remain top-of-mind for and celebrated by consumers, Sephora leverages its facades and exteriors during key periods, such as Ramadan. It meets consumers where they are, like on beaches in summertime. A new store concept, called Sephora Playa, pops up in seaside towns, such as Málaga, Moreau said.
The retailer gives its consumers a mix of global and local experiences.
“You’ll see similarities weave through every single store around the world,” Patrick said. That includes implementing Sephora’s brand codes. Yet the stores are also specific to a place, in terms of how they’re laid out based on product category penetration.
Differentiation has always been paramount at Sephora from an overarching brand perspective, and brand exclusivity is important.
“It is very much part of our DNA,” Patrick said. “We say we’re in the kitchen — and really mean it. It’s not just the merchants, it is across the supply chain.
“The consumer is asking for that from us,” she added. “They’re looking for what’s hot, new and the trends. At the same time, it’s our job to make the brands we have already successful. In return, we do ask for differentiation.”
To make it easier for its almost 500 brands, Sephora has created global merchandising and marketing functions. But that’s not to say brands go international from day one. They need to be established and growing in their domestic market before expanding to other markets where Sephora is present.
“We don’t want you to grow too fast,” Patrick said. “Each brand is a snowflake. Each plan is bespoke to that brand.”
In terms of product categories, Gogi noted makeup is recovering faster than the market in China today.
“From an Asia perspective, and particularly in China, makeup is going to become very hot, and we’re excited to educate the market,” she said.
Body care is the burgeoning category in EME, according to Moreau, who aims for an overarching European plan for each activation.
On a global level, continuing to be a purpose-driven company is a key for Sephora.
“You need to be super authentic to who you are,” Patrick said.
She, Gogi and Moreau meet often, and noted a similar corporate culture worldwide.
“The culture is there everywhere, very genuinely shared,” Moreau said.
That’s despite Sephora’s values — like “lead with passion and heart,” and “don’t forget to dance” — not appearing on any corporate poster.
“But we live it every day,” Moreau said.
The three women understand the significance of their leadership. For Patrick, who assumed the role of president and chief executive officer on April 1, this marks a meaningful moment professionally and personally, since she arrived in America from Iran at a young age.
“I definitely know what it feels sometimes to not feel like you belong,” she said. “I do feel a great sense of responsibility to continue building a culture at Sephora in North America where everyone feels like they belong and that their voice matters.”
Ninety-six percent of Sephora employees are women.
“So it’s all about equal chances,” Moreau said. “Fifty-fifty doesn’t work for us. Eighty percent of our leadership overall are women, diverse, and that matters.”
“When we look at our leadership, we’re talking the talk,” Gogi added. “We’re excited about where we’re going.”
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