How Sephora is changing the beauty rules
Sephora was for disposal 15 years ago. Today, it has become a growth engine for LVMH, accounting for more than 15% of Group sales. How did Sephora manage this shift? An exclusive survey on the beauty giant’s strategy.
Unprofitable in the 2000s, the Sephora beauty retailer has been growing steadily for several years, driven by a critical staff reorganisation, a shift of products (including private labels expansion) and a fierce globalisation. Whilst Sephora doesn’t reveal financial results, sources estimate that turnover reached €6 billion in 2015, with double-digit sales growth. According to Olivier Schaeffer, Global Chief Operations Officer at Sephora, “The U.S.A. is our largest market by sales (900 stores at the end of 2015), followed by France as the 2nd (320) and China as the 3rd (192). In late 2015, Sephora ran 2,100 stores in 30 countries. We opened 100 stores in 2015 and we will slightly accelerate that pace in 2016”.
Sephora operates fully owned stores in most countries, and franchised units in India and Indonesia, where international multibrand retailers are not allowed to have the full ownership. Another mode of development is the joint venture, similar to that in the Middle East. Sephora has been active in the Gulf since 2006 via a joint venture with Chalhoub Group, holding a majority stake (40 stores). The "corners" within department stores are also a way to pilot in countries. Following J.C.Penney (USA) and El Corte Ingles (Spain), Sephora will enter Switzerland this month with corners in Manor department stores.