4 Strategies that Catapulted Sephora at the Top of a $456 Billion Beauty Industry

‍Did you know that Sephora’s loyalty program has 34 Million Members, which is more than the population of Malaysia?

Before Sephora was founded by Dominique Mandonnaud in 1969 in Limoges, France.

Dominique Mandonnaud had a perfume shop, called Shop 8 where he established the concept of “try before you buy” to allow customers to test products before purchasing.

Pioneering the practice of trying products before buying them.

After growing his perfume store to 12 stores, he realized he could only go further through product diversification and that is when he decided to venture into beauty products, leading to the origin of Sephora.

Dominique Mandonnaud applied same “try before you buy” and change traditional makeup store that used be behind-the-counter. Making Sephora more customer-centric , where customers could freely touch, try, and explore products.

This led to his initial success in France and Sephora quickly became a loved brand across all of Europe.

5 Bold Moves Sephora Made to Transform Customer Habits​
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1. Traditional Retail Experience: Sephora’s self-service model was a departure from the traditional retail approach, which was dominated by department stores with sales assistants.
2. Market Trust: Gaining customer trust and recognition in a market with well-established competitors was a considerable hurdle.
3. Supply Management: Managing a diverse and extensive inventory posed logistical and supply chain challenges.
4. Market Penetration: Entering new markets, particularly international expansion, required substantial investment and risk.
5. Financial Constraints: Considering the high costs associated with stocking a wide range of products and establishing physical stores, Sephora faced a stiff challenge initially.

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How Sephora Used These 4 Unique Strategies to Dominate a $456 Billion Industry

1. Technological Innovation:
2. Early investment in an online shopping platform expanded their reach and increased their customer outreach.
3. Implementing digital tools like the ‘Virtual Artist’ app for virtual try-ons and beauty tutorials, enhancing customer engagement.
4. Created Personalized Customer Experience:
5. By Offering in-store beauty services and consultations, which were unique to each customer, that further enhanced their experience.
6. ntroducing self-service stores gave more ownership to customers in making their buying choices.
7. Exclusive Product:
8. They Collaborated with brands for exclusive product launches and Offered a wide range of Sephora’s own private labels.
9. This increased its product coverage as a huge step over its competitors.
10. Loyalty Programs:
11. Sephora’s biggest game-changer in the market has been its Loyalty program called Beauty Insider.

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5 Things That Sephora’s Beauty Insider Loyalty Program Amazing

1. Tiered Rewards System: The Program is structured with multiple tiers (Insider, VIB, and Rouge), that is based on members annual spending of the members. This encourages to spend more as they aspire to reach higher tiers to unlock more valuable rewards and perks.
2. Personalization: Sephora uses member data to offer personalized product recommendations and rewards, This personal touch makes customers feel valued.
3. Exclusive Benefits and Experiences: They go beyond typical discounts they also give early access to products, special birthday gifts, beauty classes, events and more.
4. Flexibility and Choice in Rewards: Program offers members to choose how they want to spend their reward points from variety of options, like product discounts, samples, and exclusive experiences and more.
5. Digital Integration: Sephora integrated the loyalty program across its online and physical stores and made it easy for member to earn and redeem points, check their tier status on the Sephora app or website.
6. Continuous Innovation: Sephora frequently evolves their program on its members feedback and changing market trends.

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From $96 Million in 1992, Sephora scaled to $10 billion in annual revenue in 2022

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In 2023, LVMH reported that selective retailing, the business unit that is parent to Sephora, posted a year-over-year revenue increase of 25%, to $19.4 billion.

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Sephora launched a new influencer program Sephora Sounds in August. This is the first-ever music collective to support and amplify underrepresented, emerging artists through Sephora’s social platforms.

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With Sephora Sounds, the company seeks to amplify and support diverse voices in the music artist community and continues to enable creator representation.

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This was soon followed by updates to its loyalty program in September and the return of the consumer-facing event Sephoria in September.

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