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No analysis of beauty retail would be complete without taking a look at the success of Sephora. Founded in France in 1969 and acquired by luxury product group LVMH in 1997, Sephora is the leading retail beauty chain in Europe, with approximately 680 stores in 25 countries throughout Europe, Asia and the Middle East, as well as approximately 250 stores in North America.
Shopping at Sephora is meant to be a hands-on sensorial experience and a self-service approach to buying beauty products, and sampling is encouraged. With roughly 200 prestige brands, including a private label line, its enormous variety sets it apart from other retailers. And the open-flow environment allows for display of every product. The store also offers Sephora’s Beauty Studio, a new makeover destination with 10-minute express services. Sephora also began opening its store-within-a-store inside JCPenney in 2006. That original launch has turned into a U.S. phenomenon. Today, there are Sephora locations in about 155 JCPenney stores across the country. The stores are smaller than normal with a footprint of about 1,500-square feet, located in the center of the store and feature the signature Sephora look and approximately 50 beauty brands. JCPenney attempted to go more upscale with its own makeup sections in the past but failed to attract shoppers to the concept. The addition of Sephora has accomplished for the chain what it could not do on its own, offering an experience through a brand that is known within the beauty category. While the department store has halted its once aggressive new-store growth plan, JCPenney does have its sights set on adding 75 new Sephora shops, to total 230 by the end of 2010. The growth is part of the company’s aim to establish JCPenney as “America’s favorite shopping destination for great styles at compelling prices” with recent merchandise additions from design and style experts.
But that’s not all. Sephora also sells via catalog and online at Sephora.com. Issued several times a year, Sephora’s catalogs offer beauty tips and trends and showcase a variety of brands and products. Sephora.com was launched in the U.S. in 1999 and in Canada in 2003. The site is also Sephora’s largest North American store in terms of sales and selection of products and brands.
The brand exemplifies the importance of cross-channel marketing, utilizing social media to develop and test strategies that appeal to changing consumer behavior. Sephora has nearly 560,000 fans on Facebook—with specials, promos, events, videos and pages of photos posted by their followers, along with comments and reviews.
Combining the convenience of automation and the instant gratification of retail, ZoomSystems was founded in 2002 to provide consumers with so-called vending machines, the first of its kind to offer such a wide variety of high-end brands. ZoomSystems has established a network of automated retail stores, called ZoomShops, in high-traffic locations such as airports, shopping centers, supermarkets, and retail with brands such as iPod, Rosetta Stone and Proactiv. “ZoomShops are not high-end vending machines, but automated, self-service stores. ZoomShops are different because they give the consumer access to high-end brands, provide education and shopping information about the product, and are an extremely profitable sales channel. No vending machine can do what a ZoomShop can do. It is a different experience,” said ZoomSystems CEO Gower Smith.
ZoomShops automate all the capabilities of a retail channel, allowing brand and location partners to differentiate themselves with an enhanced consumer experience. Consumers purchase products through a touch screen user interface on each ZoomShop. Users are educated about high-end brand products through each store’s software program and video display. Shoppers can pay for purchases using a credit or debit card and the purchase of their choice is then delivered immediately by a robotic arm. Patented technology ensures that the card is not charged until the product has been delivered and received by the consumer. And although product returns were a concern initially, the company has made good on any defective products to build consumer trust. All ZoomShops are centrally networked and monitored and provide brands an efficient way to grow their revenue and profits, resulting in the highest sales-per-square-foot average in the retail environment. There are roughly 1,000 ZoomShops, primarily in the U.S. and Japan, and generated more than $120 million in total sales for the company’s retail partners in 2009—a year when the global retail sector experienced significant contraction and challenges.
“We are continuing to deliver results for our customers, even in this challenging economic environment,” said Smith. “The continued support from institutional investors is a testament to the strength of the ZoomSystems’ business.”
The company also recently announced a partnership with The Body Shop. In addition to traditional locations, The Body Shop-branded ZoomShops will also be featured at leading supermarket chains—including Kroger Marketplace, Stop & Shop, H-E-B and Jewel-Osco across the U.S. Representing a new retail vertical for ZoomSystems, these are the first grocery locations to take advantage of ZoomShops. “We are excited to offer consumers a convenient and hassle-free new channel to shop for the products offered by The Body Shop,” said Smith. “The Body Shop is an iconic natural beauty product brand that has a loyal and dedicated customer base, making it a terrific partner to launch in supermarket locations.”
Owned by L’Oréal, The Body Shop, with a focus on seeking out natural ingredients, has 2,400 stores in 61 countries, and is the second largest cosmetic franchise in the world. “Consumers will love The Body Shop ZoomShops for our naturally inspired products and the shopping convenience,” said Al Montalvo, director of new sales and emerging channels for The Body Shop. “More than ever, customers today want to access products on their own terms when and where they want to. For The Body Shop it is an opportunity to meet their expectations in an innovative way.”
For beauty brands, consumer loyalty has become a bit elusive. Brands need to ensure that they are meeting—or exceeding—expectations so that consumers continue to see the enhanced value brands deliver. And that “value” must extend beyond the product purchase. “Brands that connect with consumers throughout the research, purchase and use continuum can help guide customers to the best products for them, ensure that they know the best ways to use the products, and gain powerful feedback to continue to evolve their products to meet the evolving needs of their consumers,” said Kelly O’Neill, director of product marketing, ATG—a provider of personalized cross-channel commerce software and services. Brands that are good at doing this will deliver value well beyond product prices.
Consumers have fundamentally changed the way they live and shop. “We are quickly becoming a digital-centric world as consumers turn toward their laptops and cell phones to find information, connect with their friends and family, and access goods and services,” said O’Neill. In fact, a recent ATG survey shows that 48% of consumers typically use two channels—computers, mobile devices, brick-and-mortar stores, catalogs, customer service reps, etc.—to browse and research products, whereas another 24% say they use three channels.
Regardless of where or how the final purchase is made, consumers often start their research and browsing online. They turn to brand sites, social sites, bloggers and retailers to learn about new trends and products. And, when they find the must-have product, they want to buy the product wherever they may be at the time. Brands that offer consumers multiple paths to purchase—through their traditional retail partners, through new affiliates and partnerships, and directly through their own or distributor Web sites—will best meet the needs of this new “commerce anywhere” consumer.
German-based Lavera Naturkosmetik used the downturn in the economy to make its products available to a wider audience. Lavera is among the market leaders in Europe for natural skin care with 27% of market share in general health and beauty products and a 50% market share in sunscreen products. But the brand has its sights set on the American mass market. Best-sellers from Lavera skin care, makeup, hair care and sunscreen lines were launched through California CVS/pharmacy locations and cvs.com in 2009 and launched in Target stores nationwide in March 2010. The calendula-infused products are now available in 24,000 doors in 25 countries.“It is our goal at Lavera to make truly natural skin care and beauty products more accessible to customers,” said Ulrike Jacob, CEO, Lavera USA. “By exposing more consumers to natural products, Lavera expands on its goal of promoting health, radiant skin and overall well-being.”
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