The Economics of Luxury beauty brand Sephora

Cosmetic industry chronology can be abbreviated as BS and AS just like BC and AD i.e before Sephora and after Sephora . Until around 20 years ago,This is how the majority of Americans purchased premium cosmetics.

Unobstacled access to trying beauty products

A brand’s sales representative would be stationed behind the cosmetics counter and assist consumers in making a transaction .That all changed with Sephora. People are freely walking inside stores now. They can test anything they want. Nothing is behind the glass.

So, how did this French store come to dominate the worldwide personal care and beauty product sector, and what business methods contributed to its current position as the industry leader? .This is Sephora’s Economics. The cosmetics company now employs over 36,000 employees in over 2,700 outlets across 35 countries.These establishments stock over 250 different cosmetics brands.

The history of the Brand that captures it all

The Sephora we know today has its origins in a modest perfume boutique in Limoges, France, which opened in 1969. At the time, the perfume and cosmetics business was controlled by a service-based retail model in which employees often paid sales commissions. Instead, Sephora employed the aided self-service concept, which allows customers to test cosmetics in-store.

Then, in 1997, Sephora’s creator, Dominique Mandonnaud, sold the company to the major luxury retail behemoth, LVMH. One of the benefits of being owned by a multinational like as LVMH is that the firm can react swiftly to trends.

And, in fact, LVMH owns some of the products offered at Sephora stores. Fenty Beauty by Rihanna is one of the prominent brands owned by LVMH.Fenty, of course, has a large chunk.

Perks of self service for customer as well as luxury brand Sephora

You have a whole drawer where you can practically grab everything you want and experiment on lipsticks and eye cosmetics. You always appear like a completely different person when you leave.

Customers may still ask for assistance from a sales employee known as a beauty expert at Sephora. Because Sephora sales personnel are brand agnostic, you have a little more faith in them.

So they may advise you that although you should buy this brand of mascara, you should get a different brand of blush.

Sephora also defied convention in the way it showcased its merchandise. So the cosmetics are near to one other. A scent from the same brand would be on the fragrance aisle. +A skincare product from the same company would be in the skincare isle.

Sephora’s success is also due to its own product collection. The connection between a store and a brand has some friction.Sephora has a lot more influence in that partnership since it is such a popular shop for cosmetic manufacturers to sell their items in.

Other Brands dependence on Sephora

The difficulty for high-end cosmetics brands these days, they’re in a difficult situation.

They’ve grown increasingly reliant on Sephora for increased sales, but because LVMHalso manufactures cosmetics While there is some rivalry there, and new brands are continually being introduced.

Sephora has a dedicated consumer base in part because of its product exclusivity. Here are five Sephora items you should buy right now.So what you’ll commonly see on Instagram or TikTok are haul videos in which individuals display all of the things they got from Sephora and go through them one by one, commenting about them.

The three tier membership structure

Many loyal consumers are members of Sephora’s Beauty Insider programme, which has three levels and over 25 million members. The Beauty Insider is the lowest tier. VIB, or Very Important Beauty Insider, is the next level up, which requires customers to spend $350 in a calendar year to access.Customers can enter the top level, Rouge, by spending at least $1000 in a calendar year.

But the actual benefit of Sephora’s beauty rewards programme is that every time a consumer walks in, Sephora knows precisely what they bought.

And it is incredibly useful information for the corporation to understand who the client is, what they’re purchasing, and then be able to advertise to that customer in a more tailored way down the future.

 Despite the fact that the firm earns from exclusivity with its products, Sephora takes inclusion seriously when it comes to its customer base. Sephora has worked to become more inclusive by offering a bigger number of brands in their shops, making an effort to incorporate black owned companies, and then encouraging brands to broaden their product ranges and offer things that appeal to individuals from other racial groups, different ethnicities.

Inclusivity for profits

Sephora reintroduced Color IQ, a skin tone matching technology, in 2021.The firm provides consumers with assistance in picking the most natural items for their skin tone.

The firm established a collaboration with the department store giant Kohl’s in December 2020 to construct 850 shops within Kohl’s stores by 2023.

Sephora has recruited 200,000 new Beauty Insiders after adding 200 Kohl’s outlets this summer.

A Sephora representative told the Wall Street Journal, “We aim to be an undisputed worldwide leader in the luxury cosmetics industry and a purpose-driven company that offers a transforming opportunity for everyone we touch.”

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