LVMH-owned luxury makeup brand defies cost of living crisis with ‘open-sell’ format that shoppers seem to love.
With ropes to manage queues and a team of security guards stationed at the door, the vibe at Sephora in west London’s Westfield White City shopping mall is more nightclub than beauty hall.
But inside, rather than dancing and sipping drinks, women huddle around displays of eyeshadows, lipsticks and serums under signs promising the “next big thing” and “hot on social media”. Amid a cornucopia of 135 of the most sought-after cosmetics brands in the TikToksphere, two women are prostrate, towels over eyes, mid-facial at the “face glow” bar.
Selling cosmetics the Sephora way is an apparently winning formula even at a time when higher living costs are squeezing the disposable income of its predominantly female customer base. At its recent annual results, its owner, the French luxury goods empire LVMH, trumpeted the brand’s “exceptional performance” and “highly successful” return to the UK.
Although beloved of beauty gurus – Guardian beauty columnist Sali Hughes says it’s her favourite global beauty retailer – Sephora quit the UK in 2005, closing its handful of stores, after failing to make a dent in a cutthroat market.
Now it’s back, its 2023 return met with huge fanfare. It started with two London shops in the giant Westfield malls that bookend London, west and east, and a third is due in Manchester’s Trafford Centre in the spring. More shops will follow, says Sarah Boyd, the UK managing director.
“We could not have asked for a stronger return to the UK,” she says. “Our debut store, White City, has become a destination to visit.” It will continue to open stores throughout the UK, she adds, so that “everyone can easily visit their favourite beauty playground”.
Sephora is the “mothership of the modern-day beauty industry”, claims Greg Silverman, global director of brand economics at the marketing consultancy Interbrand. “It oozes luxury but with an affordable price tag.”
Last year, Sephora was the fastest-rising retailer in Interbrand’s annual Best Global Brands report. Interbrand, which assigns a dollar value to each brand based on factors such as financial performance and brand strength, said Sephora’s worth reached a brand value of $6.3bn (£5bn), up 15%. With more than 2,700 stores in 35 countries, the report said, it was a “force to be reckoned with in the retail space”.
As the mass department store closures in the UK in recent year, not least the loss of Debenhams, bring down the curtain on the old beauty hall model, young shoppers appear to like Sephora’s laid-back self-service model – what the industry calls “open-sell” – even if the prices are just as high. Research shows it poses a threat to rivals Boots and Superdrug.
Featuring loud music, beauty treatments and staff waving lip gloss wands, Sephora’s stores aim to be fun to visit. The beauty industry turns on a hunger for newness from consumers “who have 10 to 20 lipsticks they don’t necessarily use but they’ve just wanted to try”, says Sara Hudson, a partner the consulting firm McKinsey. “Multi-brand stores drive a lot of that discovery, so we often call it a candy shop for adults.”
Opening stores is a way of raising the brand’s profile and showcasing the latest brands, but market data shows the internet is now the most important beauty sales channel, ringing up £2bn of the £9.3bn Britons spent on themselves last year, according to McKinsey.
Ahead of its UK entry, Sephora bought the British beauty website Feelunique for £132m. It has since been subsumed into the Sephora website, which Boyd says is going from “strength to strength”.
In a world where browsing happens on phones rather than in beauty halls, Silverman says Sephora is better than rivals at engaging with customers online: “Their social media and customer service are so tightly integrated, it feels like the brand is part of a customer’s personal network rather than just a store.”
Analysts say Sephora’s work with up-and-coming brands and collaborations with high-profile influencers on Instagram, TikTok, and YouTube has helped the brand reach its target female audience of 24-36-year-olds. (Although the worrying flipside of this is that children as young as 10 are putting pressure on their parents to buy them expensive anti-ageing brands after seeing them on their social media feeds).
Another part of the appeal is that Sephora is giving UK shoppers access to brands, such as Tarte cosmetics and Skinfix, that could not previously be bought in Britain. This meant buying from abroad and paying shipping fees, explains Tash Van Boxel, analyst at GlobalData. Now shoppers can “bypass these added costs to access brands and products that are trending online”.
“This ensures appeal, particularly among younger shoppers.”
