The internet has significantly redefined the shopping experience and consumer’s expectations for service, pricing, products, and fulﬁllment, while customers seek seamless experiences across online, mobile, and physical sales channels. To meet these evolving expectations, brands must complement the physical in-store experience with new digital shopping tools , especially since online transactions are projected to reach 30% of total apparel sales and 40% of electronics sales by 2020 . By digitizing the store, there is opportunity for retailers to deliver shopping experiences aligned with the “digital reflexes of today’s connected consumers” .
The below chart shows how digital technologies have evolved within the retail and consumer industry :
One retailer taking advantage of these emerging digital trends is Sephora, a global beauty chain owned by LVMH which operates 1,900 locations worldwide . In 2012, the retailer took its U.S. digital operations to the next level with a new personalized web experience, mobile site, and iPhone app. iPad traffic to Sephora doubled in the first year, and Sephora’s apps had more than 2 million downloads . One specific tactic the retailer employed was its extensive search platform, including product tags from among 102 different dimensions – categories like age, ingredients, color, etc. – which allowed customers to narrow their search when shopping .
Sephora Innovation Lab
Inside Sephora’s San Francisco headquarters, the retailer’s 2015 Innovation Lab was built to test new technologies for implementation in stores, online and within the app, as an extension of its focus on teaching clients about products and techniques for use .
Certain initiatives that have come out of the innovation lab include:
Sephora Flash: This service is an Amazon Prime-like free, two-day shipping membership . For $10, customers get unlimited, free 2-day shipping, and no minimum purchases are required . This technological innovation is essentially Sephora’s answer to customers’ desire for customized fulfillment options.
Online: Online, shoppers can read product reviews, watch video tutorials and read articles about specific products . Further, Sephora has capitalized on the YouTube beauty tutorial obsession with more than 300,000 channel subscribers, trumping competitors like Ulta Beauty which has 12,000 . When watching Sephora’s YouTube channel, the inspired viewer then directs herself to the retailer’s site for purchasing, ultimately allowing Sephora to stay competitive in a sector that’s largely dominated by bloggers .
Augmented reality: Sephora’s latest application update included the new Sephora Virtual Artist feature, specifically designed using facial recognition software to allow customers to test lip products and make purchases directly in the application . With mobile users becoming more comfortable with facial recognition features, Sephora is hoping to leverage this method to drive sales by letting users see what products of interests will look like on their face .
In 2015, Sephora opened its most digitally enabled store yet in San Francisco, equipped with all the perks of online and mobile shopping and hands-on experimentation . The store features a Beauty Workshop station that can fit up to 12 customers at a time to give a makeup class taught by Sephora associates and supported by video tutorials . Also featured is a Beauty Board, where shoppers can browse user-generated content and find the products used in the photos in store, as well as filter the images to show customized products for a customer’s skin tone, type and color in real time .
Another innovation is Sephora’s first Sephora Flash retail shop in Paris, which connects the in-store experience with the countless brands available online . The store’s inventory is more limited; however, customers can use the massive touch-screens posted upon the walls and counters to browse and order any of the products from the Sephora website . Customers also receive a card which serves as their “virtual shopping basket” so that in store purchases can be combined with online purchases for payment at checkout . Sephora will look to expand this concept out to other cities where larger stores don’t have a presence .
Further in-store digital innovation is the debut of an augmented reality experience for smartphone-armed shoppers . Customers with Sephora’s mobile app can discover exclusive video content from brands whenever they hover over a physical display with their phone, including interviews with the brand founder, product reviews, tutorials and more— content that can only be viewed in stores which drives in-store traffic and provides the product knowledge to influence purchasing decisions .
A big opportunity for Sephora could be a play into the subscription box business, with a customized, specially curated selection of products and beauty tips/tutorials sent to customer doors. Sephora will have the advantage over competitors like Birchbox because of its scale and robust loyalty rewards program which would make getting traction for the program achievable.
How else can Sephora keep up with the next generation of shoppers?
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