Headquartered in the heart of San Francisco, Sephora has strategically positioned itself at the forefront of digital innovation within the retail industry, being first to market with technology that enhances every aspect of the customer experience. In an age where consumers demand and expect personalization, speed, and customization, retailers must continue to provide new and enhanced experiences to keep their customers engaged.
While digitization impacts many aspects of a retailer’s business model – from supply chain to point-of-sale – I believe that in order to remain relevant to the consumer and competitive in the industry, retailers must focus on the impact of digitization specifically with regards to customer service. Sephora recently achieved a “Genius” ranking from business intelligence digital benchmarking firm L2 for its efforts in this space. 
What is Sephora Doing?
Innovation in Customer Service
Enter Sephora Virtual Artist, an in-app experience allowing a client to virtually try on thousands of shades of lipstick, and hundreds of styles of fake eyelashes, taking the guesswork and friction out of the shopping experience. (See image 1). According to Bridget Dolan, Sephora’s VP of Innovation, the technology “has been an unprecedented success” with clients “trying on over 70 million lip shades digitally” since the launch . This interactive tool not only allows trialability on a mobile device without having to enter a store, but also provides links to product pages and thus encourages commerce and social sharing . As mobile e-commerce surges to new heights, having grown 60% in 2015 to reach $120 billion, Sephora is enabling customers to preview purchases and virtually try on products in their own homes, in line at a movie theatre, or during their commute. 
Sephora has also launched “shopbots” which offer makeup tips, product reviews, and customer service answers. Sephora has some of the highest engagement rates on messaging app KiK, where chatbots “adapt to customers and effectively “learn,” allowing them to make suggestions based on purchase history and products best suited for specific customers.”  (See Image 2). Now more than ever brands are clamoring for engagement from consumers, wanting to interact with and provide guidance online. Brands, like Sephora, who are successful, build strong relationships with customers to ultimately capture cost savings and increase revenue.  A recent study by Twitter found that customers are willing to spend up to 20% more with a brand if it responds to their social media activities. 
(Img 1: Example of Virtual Artist App) (Img 2: Example of Chatbot App Kik)
Integrated Customer Experience
Sephora has revealed a new store concept which integrates digital and social elements within the store. Sephora CEO Calvin McDonald says Sephora “will focus on bringing together smart technology, hands-on teaching and customer beauty to create an innovative, intuitive and personalized store experience.”  (See image 3). The store also features a Digital Makeover Guide, which records the customer’s specific service received, provides customized product and application tips, and delivers the information directly to the client via e-mail. 
(Img 3: Example of new store design with Digital Makeover Guides)
The beauty retailer also has other interactive digital tools to personalize and provide service to the client in the store. Their Color IQ technology identifies the customer’s skin tone and makes recommendations on the proper shade of concealer and foundation. (See Image 4). Additionally, their Skincare IQ takes customers through an interactive quiz which then provides personalized skincare product recommendations (See Image 5). Finally, the retailer is using beacons and augmented reality to integrate the shopper from her mobile phone, into the store. (See Image 6).
(Img 4: Color IQ Technology) (Img 5: Skincare IQ Interactive tablet) (Img 6: Augmented Reality and Beacons)
What can Sephora do better?
Instagram recently began testing embedding shoppable links within customer posts – I believe Sephora should try to join the pilot as customers are extremely visual when it comes to beauty, and there is a huge sales and brand loyalty opportunity. (See Image 7)
(Img 7: Example of shoppable links in Instagram)
Data: The immense amount of data Sephora can collect on the client can lead to useful insights as well as personalization for the client. For example, Sephora e-mails are not particularly targeted – different clients do not get different product recommendations based on their history. Sephora could leverage their database and gain greater click through rates, conversion, and loyalty once e-mails are personalized.
Impact to Sephora
Sephora has fundamentally changed the way it interacts with and provides service to customers, continuously adapting their business and operating models with the new demands of the client. While the company is private and thus does not disclose such information, a quick search on LinkedIn shows that they are hiring and have hired a large number of data analysts, digital strategists, and product developers. They have clearly invested significant capital expenditures towards updating their stores to bring technology and thus a seamless omni-channel experience to better serve the client.
What do you think of Sephora’s efforts? Do you think they will remain competitive as digital continues to influence the beauty industry?
(787 Words without Sources)
 L2 think tank: Top 10 specialty retail brands in digital (2016). . Chatham: Newstex. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1806095715?accountid=11311
 Sephora virtual artist expands with new features for virtual lash try on and live tutorials. (2016, Jul 06). PR Newswire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1801884126?accountid=11311
 Smartphone shopping generates 70 cents of every $1 in mobile e-commerce. (2016, Oct 18). Business Wire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1829768958?accountid=11311
 Tech Crunch “How legacy brands and retailers can keep up with our tech driven world” https://techcrunch.com/2016/09/15/how-legacy-brands-and-retailers-can-keep-up-with-our-tech-driven-world/, Mona Bijoor, 9/15/16, accessed November 2016
 Lithium unveils the state of social engagement 2016. (2016, Oct 06). PR Newswire. Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1826116484?accountid=11311
 Retail brands set up shop on social media in time for holidays. (2016, Nov 07). PR Newswire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1836597428?accountid=11311
 Sephora Presents New Retail Concept at CEW Event’ 2016, Beauty Packaging, 21, 1, p.71, Business Source Complete, EBSCOhost, viewed 17 November 2016.
 Sephora opens its 400th store and brings its teach, inspire and play approach to chicago’s michigan avenue. (2016, Aug 26). PR Newswire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1814172312?accountid=11311
Image 1: Personal iphone
Image 2: Forbes: http://www.forbes.com/sites/rachelarthur/2016/03/30/sephora-launches-chatbot-on-messaging-app-kik/#1d46b465512c
Image 3: Sephora Presents New Retail Concept at CEW Event’ 2016, Beauty Packaging, 21, 1, p.71, Business Source Complete, EBSCOhost, viewed 17 November 2016.
Image 4: https://www.dexigner.com/news/25463
Image 5: http://www.pearltrees.com/crmsephora/item111968823
Image 6: http://www.chainstoreage.com/article/sephora-big-omnichannel-push-beacons-store-augmented-reality-and-more#
Image 7: Tech Crunch: https://techcrunch.com/2016/11/01/instagram-shoppable-photos/