Often referred to as a best-in-class digital marketer within the prestige beauty sector, Sephora has now established itself as a pioneer in digital retail in an age where traditional brick-and-mortar stores are fighting to survive against the new Warby Parker model. On account of its customer-centric innovation process and a seamless omni-channel retail model, Sephora is thriving and poised for future success.
Sephora’s competitors have created copycat mobile apps and technology to their detriment; quickly learning that the company’s ‘secret sauce’ is not in its technology but rather its ability to ensure complete alignment between the customer experience and the brand. One of the main issues women have with makeup application is color-matching their foundation to their individual skintone. To mitigate this issue, Sephora partnered with Pantone, a world-renowned authority on color systems and leading technology for the selection and accurate communication of color across a variety of industries. This collaboration resulted in Color IQ – after identifying every possible skin tone color globally, Sephora introduced a hand-held tool that identifies an in-store shopper’s exact skintone, provides the shopper with a ColorIQ number, and subsequently finds a precise match with makeup from Sephora’s stock. This tool captures a multitude of value for both Sephora and its customers; by providing this free service, Sephora entices consumers to come into their physical stores, creates a shopping stickiness through a curated experience from a constantly-updated product assortment. Additionally, the ColorIQ captures data on each of its profiled consumers, which creates a feedback loop that can be used not only for inventory management, but also for proprietary product development. For its consumers, Sephora solves an extremely challenging issue, particularly for women of color who often spend more on beauty but have less product options.
Another example of Sephora’s customer-centric innovation is its PocketContour mobile application. PocketContour is a cross-platform makeup artist application that shows shoppers how – and where- to apply “contour”, a popular method of makeup application that highlights or minimizes features of ones face. In light of the growing popularity of DIY make-up application videos on YouTube, this application solves for a growing consumer issue while cross-selling a multitude of Sephora’s products.
Seamless Omni-channel retailing
Another source of Sephora’s success is its ability to present consumers with a seamless shopping experience both online and offline. With over 4MM mobile app users, Sephora uses beacons to create a customized in-store shopping experience that includes bar code scanning, reviews, and personal purchase histories, for example. In addition to creating value for repeat customers within its installed base, brick-and-mortar stores include digital accents that allow new customers to connect to online retail, such as touchscreen tablets that provide quizzes for finding the best perfume as well as product reviews. For Sephora, these big bets in digital have certainly paid off. “Our penetration of digital to physical retail sales is double that of the prestige [beauty] industry,” said Bridget Dolan, vice president of Sephora’s Innovation Lab. Statistics show that their 600,000 registered Apple Passbook users “spend two times more annually and purchase twice as frequently as the average Sephora customer.”
To prove that digital innovation is at the core of its business, the company recently opened its own innovation lab, charged with the responsibility of not only developing new proprietary products but also for sourcing and testing new shopping technology to enhance the omnichannel experience. Feeding into this innovation is the brand’s own customers, who are more engaged with Sephora.com than any of its competitors. For example: Benefit’s “They’re Real” mascara garnered 9,612 product reviews at Sephora as of November 2014, compared with 4,300 at ULTA, 476 at Benefit’s own website, 126 at Macy’s, and 124 at Amazon.com, according to research from L2 Digital.
What can other retailers learn from this winning strategy? In a world where the issues du’jour are depressed consumer foot traffic and “Webrooming”, Sephora presents a perfect case study of how brick-and-mortar stores can leverage core competencies such as excellent customer service, and new skillsets within digital innovation, to stay relevant and enhance their business model.