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Sephora: Bringing digital into brick & mortar stores

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E-commerce is not the only digital future for retail

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. [1] 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. [2] 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.

beauty-workshop

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. [3] 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

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. [4]

 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 [5]

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. [1]

 

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. [6] “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.” [2]

 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. [7]

 Acquiring start-ups when needed

To keep ahead of competitors and help develop in-store products more rapidly, Sephora also uses acquisitions. [8] 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. [7]

 

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. [9] (778 words)

 

Sources

[1] LVMH 2015 Annual Report

[2] Hilari Milnes, “Sephora’s new retail stores will take cues from YouTube”, Digiday, November 19, 2015

[3] 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

[4] “A visit to the Sephora Beauty TIP Workshop in San Francisco”, BW Confidential, December 17, 2015

[5] 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

[6] Michael Hinshaw, “A digital customer experience case study: Sephora’s supremacy”, CMO, May 28, 2013

[7] “Sephora in big omni-channel push: beacons, in-store augmented reality and more”, Chain Store Age, December 28, 2015

[8] Martin Hirt and Paul Willmott, “Strategic principles for competing in the digital age”, McKinsey Quaterly, May 2014

[9] “L’Oréal Paris Discovers the Beauty of Search for Building Brand Love”, Think with Google, June 2014

4 thoughts on “Sephora: Bringing digital into brick & mortar stores

  1. Sephora is one of the few brick-and-mortar companies that is truly incorporating digital into its business model. Cosmetics is the ideal industry to do so, because it’s one of the few products you usually need to try in person before buying. Besides the fact that you aren’t sure what shade of lipstick will go best with your skin tone and personality, there are also an overwhelming number of choices for whatever type of product you seek, and an inherent distrust of commission-driven salespersons. Usually digital technology to minimize the inconveniences of makeup shopping not only maintains the relevance of Sephora’s brick-and-mortar presence–it enhances it.

  2. Thanks for this great post!

    As shoppers today trend towards purchasing merchandise online instead of in-store, it has become increasingly important for brick and mortar retailers to incorporate digital technologies to enhance the in-store shopping experience. Given the importance of in-store tests for make-up wearers, Sephora, almost by default, has a competitive edge over retailers like Macy’s or Nordstrom when it comes to in-store foot traffic. As a frequent Sephora shopper, I think incorporating technologies like Color IQ and Pocket Contour makes a ton of sense. My only concern operationally is whether these technological investments in stores will truly yield an increase in sales. While great for initial product discovery, once a shopper discovers their preferred product, they can simply replenish products through online purchases. I would recommend Sephora consider incorporating POS technologies to allow for more efficient operations – for example quicker payment processing and inventory and staff management.

  3. Thanks for the great article! With these digital advances, Sephora has done a commendable job in keeping a unified, consistent customer experience through their website, apps, and brick-and-mortar store. With the GPS tracking of the app, every time I am close to a Sephora store, the app will notify me (and remind me of my beauty point balance), and I usually succumb to popping in!

    While a major draw of visiting a physical store is the informed and bespoke in-person customer service, I believe that Sephora has done a commendable job in translating this onto their website, through free samples, a generous shipping and returns policy, and their famous online-only value packs. Recently, Sephora has even branched into using “chat-bots”, allowing customers to further engage customers based on their individual interests. This is something that really sets Sephora ahead of the pack – other beauty chains like Ulta and department store beauty departments should look to emulate what Sephora is doing.


    Source: https://www.fastcompany.com/3064845/human-lessons-from-brands-using-chatbots

  4. Great insights into how Sephora is using technology and digital to improve the customer experience! It was fascinating to read how they are investing in ‘digital mirrors’ to help customers find the right product; I especially enjoyed reading how they are using technology to help customers find the right fragrances. I have personally felt sick after trying to find the perfect scent by smelling several different fragrances- even while using the coffee beans to ‘cleanse my pallet’.
    There has been an increase in social media trends helping customers find the right make-up as well. For example, Snapchat also has filters that apply face filters that could mimick what Sephora is doing in their digital stores. Is there a threat to Sephora’s business model as social media (e.g. YouTube, Instagram, Snapchat) is also vying to teach customers about what make-up is right for them?

    http://www.allure.com/story/loreal-snapchat-filter

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