With 2,900 stores in 29 countries worldwide, and 100 new openings in 2015, Sephora is a leading global Beauty specialist retailer. Sephora’s spectacular international success is largely due to its capacity to lead the way in digital innovation, through its online shopping websites, but also its in-store digital initiatives and omni-channel approach.  To react to the e-commerce threat, Sephora not only developed its own e-commerce offer, but also re-imagined its stores’ experience, making them still as relevant as before.
Sephora’s most innovative stores concepts in Paris, San Francisco, and Chicago include features that brilliantly bring digital into the stores to enhance customers’ experience.
Sephora stores’ innovations
Teach customers how to use the products
In its new San Francisco store, Sephora has created stations called the “Beauty Workshop,” where up to 12 customers can sit down and watch video tutorials, practice with new products, take a class with a Sephora team member, and share content online.  To develop this concept, Sephora took inspiration from the success of make-up tutorial videos, which have grown massively popular on YouTube.
Another tool developed to help customers learn make-up techniques is Pocket Contour. This mobile feature is designed to help customers master the fast-growing beauty trend of face contouring. By uploading a photo of herself to the app, a customer will get a personalized analysis of her face-shape, step-by-step contouring advice and guidance on how to apply make-up for the contoured look she wants to achieve.
Sephora San Francisco’s Beauty Workshop (source: Chicago Business Journal)
Help customers find the perfect product
Sephora also uses technology to help its in-store shoppers chose the best products.  Shoppers can use the Pantone Color IQ handheld device to find an exact makeup match for their skin tones. A make-up artist will use the handheld device to assign a Color IQ number to the customer, and then provide precise lip, foundation, and concealer matches, along with products suggestions.
Pantone Color IQ handeld device (source: Sephora website)
Similarly, to help customers find their favorite perfume, Sephora created the Fragrance IQ service. The technology allows customers to test scent families by diffusing them in the air through a nozzle, and identify perfumes offered in store which match with their tastes. 
Enhance stores’ interactive experience
Sephora also plans to use beacons in-stores: shoppers can receive birthday alerts, loyalty program updates and be notified when new trainings are happening in-store. It also has tools to share content in social media and a mobile app that allows customers to scan products, look up product information, track their buying history and access customer reviews to help them with their decision-making 
Offer the widest product range but limiting in-store inventory
Sephora also uses digital to reduce its stores’ inventory, while continuing to offer its customers an increasingly large product range. For example, Sephora Flash store in Paris offers a selection of best-selling products available on-site, but also an extensive digital catalog of 14,000 items. Customers are provided with testers products, which they can then order via a screen, and receive them the next day. 
How to explain Sephora’s digital success?
Use digital to meet customers’ needs
What made Sephora’s new stores concepts so successful is that Sephora based its innovations on a deep understanding of customers’ wants and needs.  “It’s not digital for the sake of digital,” said Calvin McDonald, Sephora’s President and CEO. “It’s a combination of products, services and teachable moments that support our customers’ missions.” 
Developing and fostering innovation in-house
To foster its innovations and develop new ideas, Sephora created in San Francisco an Innovation Lab, where the Sephora team can “ideate, test, dream, experiment and learn.” The Lab team is responsible for sourcing, developing, evaluating, testing and eventually launching new offerings and technologies for both in-store and mobile shopping. 
Acquiring start-ups when needed
To keep ahead of competitors and help develop in-store products more rapidly, Sephora also uses acquisitions.  In 2013 for example, Sephora acquired Scentsa, a specialist in digital technologies that improve in-store shopping experience. Thanks to Scentsa, Sephora developed Skincare IQ and Fragrance IQ. “We have a relentless hunger for developing technologies and networking with emerging technology companies that might seem unexpected now, but could define the future of retail”, says Bridget Dolan, VP of Sephora Innovation Lab. 
In conclusion, Sephora is leading the way in terms of in-store digital innovation. To go even further, Sephora should also focus on customer data analysis to better understand and anticipate customers’ needs and behaviors. For example, L’Oréal Paris is partnering with Google and use Search insights to understand beauty trends and develop products and messaging to meet customers’ needs.  (778 words)
 LVMH 2015 Annual Report
 Hilari Milnes, “Sephora’s new retail stores will take cues from YouTube”, Digiday, November 19, 2015
 Darrell Rigby, Kris Miller, Josh Chernoff and Suzanne Tager, “Digital Darwinism: Winning with the best of digital and physical”, Bain Retail Holiday Newsletter #4, December 19, 2013
 “A visit to the Sephora Beauty TIP Workshop in San Francisco”, BW Confidential, December 17, 2015
 Jamila El Azhari, Dag Bennett, “Omni-channel customer experience: An investigation into the use of digital technology in physical stores and its impact on the consumer’s decision-making process”, XXIV AEDEM International Conference, September 2, 2015
 Michael Hinshaw, “A digital customer experience case study: Sephora’s supremacy”, CMO, May 28, 2013
 “Sephora in big omni-channel push: beacons, in-store augmented reality and more”, Chain Store Age, December 28, 2015
 Martin Hirt and Paul Willmott, “Strategic principles for competing in the digital age”, McKinsey Quaterly, May 2014
 “L’Oréal Paris Discovers the Beauty of Search for Building Brand Love”, Think with Google, June 2014