Sephora is global, but its consumers are local. So how does the world’s leading prestigious multi-channel beauty retailer successfully use this dilemma?
A triumvirate of pioneering female presidents (Artemis Patrick, who oversees North America, Alia Gogi, who oversees Asia, and Sylvie Moreau, who oversees Europe and the Middle East) includes Jenny B. Fine, editor-in-chief of Beauty Inc and beauty editor-in-chief of WWD. They talked about strategy with . .
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The three executives of the LVMH Moët Hennessy Louis Vuitton-owned retailer collectively oversee 52,000 employees and nearly 3,000 outlets in 34 markets.
In North America, Sephora is posting double-digit sales growth, with gains in both e-commerce and brick-and-mortar. Patrick called it “pretty surprising given the situation we’ve been facing over the last few years.”
The retailer expects to open space for 100 more Kohl’s stores this month and generate $2 billion in sales next year, on what would be a full Kohl’s distribution. He said this would unlock “incredible marketing opportunities.”
More men and families shop at Sephora at Kohl’s than at traditional Sephora stores. Kohl’s is also good at attracting consumers during key shopping periods like Back to School, which is a plus for Sephora.
Meanwhile, it continues to invest in e-commerce, for example through user-generated content and seamless checkout.
Explaining that they will have new equipment and layouts, Patrick said, “But the biggest project we are about to start is the complete renovation of each store in our distribution network in the USA and Canada.”
The process will begin this fall and last at least five to seven years.
“This is not a Sephora design project; This is a sales-oriented project,” Patrick said. “Very important: How does the consumer shop? How do they navigate? How are the products arranged?
Internally this is called the perfect future footprint.
“This is the largest capital project Sephora has ever undertaken globally,” Patrick said of the half-billion-dollar venture.
Gogi is also seeing strong gains in his region.
“We had really strong growth in Asia last year outside of China, particularly in the Southeast Asian markets. [seven times] “Market growth,” he said.
The retailer’s sales in China rose last year even as the country’s recovery took longer than expected
“What all brands, including Sephora, are forced to do is to be very focused on our strategies,” Gogi said, explaining that the retailer is doubling down on its “differentiated portfolio strategy.”
Curation is key to this. Over the past two years, Sephora has had well-received launches in China, including Anastasia Beverly Hills, Hourglass, and Tatcha. Drunk Elephant and Fenty launches this month.
“The Chinese consumer really appreciates localization,” Gogi said.
For example, Fenty talks about inclusivity when talking about Chinese skin tone matching.
Meanwhile, Sephora is working with domestic brands that specifically appeal to Chinese consumers.
In terms of retail, Sephora will open “Stores of the Future” in Shanghai and Singapore.
“These are testing labs that will spur a lot of experiential retail,” Gogi said. “The reality is that this doesn’t just apply to China; the future is in experiential retail.”
Addressing the beauty brand community at large, she offered this advice: “Be patient. One of the things about China is when it comes back, you’re going to have to be nimble; “This is becoming more important and will come back very quickly.”
But Gogi believes the next one to two years will be challenging there.
In Europe and the Middle East, Sephora has achieved annual gains of more than 20 percent over the past two years. According to Moreau, Sephora is outperforming market growth by two to six times.
Most important to Sephora’s disproportionate gains is the idea that “the store is our first media,” Moreau said, calling it the “heart and soul” of the retailer.
Sephora has been revamping stores in Europe, opening 15 stores last year, including the reopening of its iconic Champs-Élysées flagship.
Sephora strengthens its facades and exteriors during key periods like Ramadan to help beauty stay top of mind and be celebrated by consumers. It meets consumers where they are, just like at the beach in summer. Moreau said that a new store concept called Sephora Playa has emerged in coastal towns such as Malaga.
The retailer offers its consumers a mix of global and local experiences.
“You will see similarities in every store around the world,” Patrick said. This includes implementing Sephora’s brand codes. But stores are also location-specific in terms of how they are organized by product category penetration.
From a comprehensive brand perspective, differentiation has always been paramount at Sephora, and brand exclusivity is important.
“It’s very much part of our DNA,” Patrick said. “We say we are in the kitchen and we really mean it. This is not just with merchants, but throughout the supply chain.
“The consumer wants this from us,” he said. “They are looking for what is hot, what is new and what is trending. At the same time, it is our job to make the brands we already have successful. In return, we want differentiation.”
Sephora created global merchandising and marketing functions to facilitate the work of its nearly 500 brands. However, this does not mean that brands become international from day one. They need to establish and grow in their home market before expanding into other markets where Sephora is located.
“We don’t want you to grow too fast,” Patrick said. “Every brand is a snowflake. “Each plan is specific to that brand.”
In terms of product categories, Gogi noted that makeup is recovering faster than the Chinese market today.
“From an Asian perspective, makeup is going to be very hot, especially in China, and we’re excited to educate the market,” he said.
Body care is the emerging category in Central Eastern Europe, according to Moreau, who aims for a comprehensive European plan for each activation.
It is very important for Sephora to continue to be a purpose-driven company on a global level.
“You have to be extremely authentic to who you are,” Patrick said.
He, Gogi and Moreau meet frequently and have noticed a similar corporate culture around the world.
“Culture exists everywhere and is truly shared,” Moreau said.
This is despite Sephora’s values such as “leading with passion and heart” and “don’t forget to dance” not appearing on any corporate posters.
“But we live this every day,” Moreau said.
The three women understand the importance of their leadership. For Patrick, who assumes the role of president and chief executive officer on April 1, it marks a meaningful moment both professionally and personally, as he came to America from Iran at a young age.
“I definitely know what it feels like to not feel like you belong sometimes,” she said. “I feel a great sense of responsibility to continue to build a culture at Sephora in North America where everyone feels like they belong and 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 leaders overall are women and they are diverse, and that is important.”
“When we look at our leadership, we talk the talk,” Gogi added. “We’re excited about where we’re going.”
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