How Sephora Crafts the High-end Experience In China

Runway shows are certainly not exclusive to fashion companies; beauty brands, too, can have lines of front-row devotees. On March 21th, Sephora hosted the global beauty trend preview for the 2019 Spring/Summer season, which saw models stalk the runway in the vibrant themed-looks with punchy names: “island hopping,” “pink power,” or “unisex beauty.” Attendees could also try on the latest products before or after the show. It’s all about immediately engaging with consumers on what’s new, and what’s trendy. Sephora positions itself as the top multi-brand beauty retailer in China, and this runway show was part of their bigger strategy to reinforce this perception. Sephora is a poster child of LVMH – it continues to show strong growth in China despite the country's economic slowdown. This year marked Sephora’s 14th year in China, a market that is also the company's strongest growth engine. But those years haven't been without hurdles — the local competition against e-commerce giants like Tmall is fierce, as pointed out by investment bank Morgan Stanley. Sephora also faces direct competition in China, and has much less exclusivity of certain brands than it does in other global markets. Sephora has now expanded to 230 stores across 74 cities in China, and is sold via multiple online channels, such as sephora.cn, WeChat, Tmall, and JD.com. The brain behind the company's vast expansion is Sephora Asian president Benjamin Vuchot, who joined the group in 2017 and has 20 years of luxury experience in the Asian market. In this exclusive interview, Vuchot spoke about crafting the high-end experience for consumers in China, whether in-store AI and AR technology can trigger purchase behavior, and why he doesn’t see Tmall and JD.com as competitors. How does Sephora craft customer experience through different online and offline touch points? I think, first of all, it’s important to remember that Sephora was created out of a very disruptive spirit 50 years ago. If we fast-forward to Sephora in China today, I think that we can say we are really the truly and only omni-retailer for prestige beauty in China. By omni-retailer, I mean that not only we have an amazing network of 230 stores across 74 cities in China today, but we also have a very comprehensive multi-channel e-commerce strategy. And by multi-channel, I mean we have sephora.cn, which offers an amazing opportunity for customers to select to browse and to learn about beauty authorities, but we also drive traffic to our website with innovations like WeChat mini-program, which was launched in September. We were one of the first retailers to really go full speed into that. How do you handle the competition with Tmall and JD.com? I think that the Chinese prestige beauty market is a very complex one, the customer is constantly changing and the customer base is growing. So, we’re better off working and collaborating together and coexisting, rather than trying to fight and compete over the same. Because at the end of the day, I’m convinced that the customer doesn’t see the channels, the different channels. What she/he wants is a great experience to buy beauty. So our dream is to be at the center of this beauty community in China and want to be the most-loved beauty community in the world. Sephora opened its first concept store in Shanghai last September, which integrates AI and AR, do these technologies trigger purchase behaviors? Sephora qualifies itself as being very entrepreneurial — you have to try new things. And some of the things really work, some may not always have the desired impact, but overall all our initiatives are proving to be very successful, and generate a lot of interest and emotional attachment that we’re seeing as a cool retailer and very innovative retailer. And we also track the success of those things and we’re seeing a very strong increase of our O2O (offline-to-online) business, which I think has triggered from a lot of the initiatives that we have in stores. So that’s quite rewarding. Has Sephora felt any effects from the economic slowdown? I think that we are quite fortunate that we are evolving in the Chinese market where two things are in our favor. One of them is that the consumer is getting more sophisticated, and the beauty customer is attracted to more expensive or sophisticated brands, and that’s where we position ourselves. We are really in the prestige beauty world. So as this group of customer grows, she comes more to Sephora. So, we’re seeing an increase in traffic, and we’re seeing strong business growth in that. The second thing that we’re also witnessing in China is the explosion of e-commerce for prestige beauty. And by being disruptive and innovative with our native app, mini-programs, or the collaborations we have with other platforms, we’re also getting a bigger share of this consumer who shops online now for these products. Has the government’s tightened daigou regulations had an impact on your business? It’s very difficult to say. What we can say, for sure, is that we always treasured that Sephora is a trusted place to shop. Whether you shop online or offline, authenticity pricing and unbiased advice are the important part of our core values. So anything that can regulate shoppers to trust more established retailers and omni-retailers, I think, is favorable to people like Sephora. So, we don’t measure whether it has an impact. We’re committed to continuing offering authenticity and quality to all our touch points online and offline, and I think we will prevail. The interviews have been condensed and edited.

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How Sephora Crafts the High-end Experience In China