{"id":10736,"date":"2020-02-11T16:33:51","date_gmt":"2020-02-11T21:33:51","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/sephora-blurring-the-line-between-digital-and-physical\/"},"modified":"2020-02-11T16:53:41","modified_gmt":"2020-02-11T21:53:41","slug":"sephora-blurring-the-line-between-digital-and-physical","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/sephora-blurring-the-line-between-digital-and-physical\/","title":{"rendered":"Sephora \u2013 Blurring the line between Digital and Physical"},"content":{"rendered":"

Background<\/u><\/strong><\/p>\n

Sephora, a multi-national chain of personal care and beauty products has built an empower through digital innovation and come out as the winner in the cosmetics retail space. It’s commitment towards digital has not only made it successful in the beauty space but has set an example for all brands looking to transform through technology. Here, we explore some of the digital initiatives that the company has successfully executed and how they\u2019ve helped them create and capture value.<\/p>\n

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Sephora’s Innovation Lab<\/u><\/strong><\/p>\n

Sephora converted one of its warehouses into a lab space in 2015 which was previously used to design and test its store layouts. Today this lab is used to build and test digital solutions to enhance the shopping experience both in-store and online. The lab holds a complete model of a physical store which is used to try different ideas. Store associates provide feedback on technological experiments. While many companies have set up such i-labs, Sephora is unique in that it has maintained the physical store within the lab space to thoroughly test in-store experiences before roll-out. This helps Sephora manage it costs optimally and hence, capture value for itself through increased margins.<\/p>\n

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Sephora’s website evolution (Source: Connoir and Wayback Machine)<\/figcaption><\/figure>\n

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Source: The New York Times<\/figcaption><\/figure>\n

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Sephora has created value for its customers through its products and store experiences that solve customer pain points and increase the willingness to pay. Along with the launch of the Innovation Lab came multiple digital offerings from Sephora \u2013 1. Pocket Contour, a mobile-app feature that provided contouring tutorials based on the user\u2019s face shape 2. Using beacons (IoT location-broadcasting device) in stores to provide personalized notifications to users as they walked past certain events, sales, services, etc. 3. Sephora Flash, an Amazon prime equivalent for free and fast shipping.<\/p>\n

One of their most successful products is the Virtual Artist app released in 2016. Sephora identified a crucial customer pain-point in messy make-up trials in store and the apprehension of buying products online without the customer trying them on. Virtual Artist uses augmented reality for users to virtually try on makeup. Sephora partnered with ModiFace (augment reality tech provider for beauty) to create mobile and in-store versions. The company doubled-down on its AR investments by launching other products such as ColorIQ (to find foundation and concealers that match user skin-tone) and Skincare IQ (quiz to provide recommendations for user\u2019s specific skincare needs). Sephora was quick to identify skincare as a major growth category and through the launch of Skincare IQ, has generated sales that have surpassed makeup sales.<\/p>\n

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Source: The Verge<\/figcaption><\/figure>\n

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Omni-Channel Strategy and other initiatives<\/u><\/strong><\/p>\n

The leadership at the company is completely bought-in and driven by digital. Sephora took a big leap in digital retail by combining the in-store and online teams into omni-retail department. The company truly believes that it falls upon the retailer to make sure the transition between channels is as smooth as possible, reducing the effort for the customer. One example of how Sephora achieves it: Makeup artists add products used during in-store makeovers to the particular customer\u2019s profile for them to browse through and buy online. Also, makeup tried on the Virtual Artist app can be purchased online and located instore. With this omni-channel strategy, Sephora has been able to combine online and offline customer profiles, gain data around behavior and hence, provide personalized recommendations that increase its value proposition.<\/p>\n

Other digital initiatives that have helped drive the exponential growth at Sephora:<\/p>\n