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In its continuing push to maximize digital innovation in-store, Sephora Americas said Tuesday that it has acquired the technology platform Scentsa for an undisclosed amount.
This story first appeared in the August 7, 2013 issue of WWD. Subscribe Today.
Scentsa created the interactive technology that is a pivotal aspect of the beauty retailer’s digital efforts in its 330 freestanding stores in North America. Sephora bought the platform from Crescent House Publishing LLC, a multimedia company serving the retail industry.
The acquisition caps a five-year exclusive the Carlsbad, Calif.-based Crescent had with Sephora for Scentsa. Scentsa’s current employees will continue to run the technology as Sephora employees in San Francisco.
“For us, beauty is a category that lives in both a physical and digital world and it works best when it all works together in one ecosystem,” said Julie Bornstein, chief marketing and digital officer for Sephora. “Our decision to acquire this technology group is [born of] a realization that we’ve tried these things, they’ve worked really well and we can see that they’re helping the consumer experience and that they’re driving sales. We continue to be very focused on using technology in the most high-impact way while creating a seamless experience between stores and online. We plan to continue our focus there moving forward and we wanted that to be something that we owned and that we could keep proprietary.”
Bornstein and other Sephora executives declined to discuss numbers, but industry sources estimated that Sephora, a division of LVMH Moët Hennessy Louis Vuitton, does well over $2 billion in retail sales in North America yearly. Online is the retailer’s largest “door,” although Sephora declined to discuss what percentage of its business is done online.
The first initiative developed with Scentsa was Sephora’s Fragrance Finder, a touch screen in-store that allows customers to find detailed information on fragrances, view images, run videos or read product reviews. It was first put in stores in 2008, said Bornstein. Buoyed by the success of the Fragrance Finder, Sephora next introduced Color IQ, which uses a handheld tool to scan the user’s skin and spits out a list of matches from the foundations sold at Sephora.
Most recently, the retailer used the Scentsa technology — along with learnings from sephora.com — to create the Skincare IQ platform, an interactive wall-mounted system that helps customers choose appropriate skin care for their skin type and price range. All stockkeeping units are computerized and then further segmented via attributes. First tested last year, as of July it is in all freestanding Sephora doors, said Bornstein.
“The idea is that you go on a helpful journey to find what works best for you, then get a printout of products you’re interested in,” said Bornstein. “Consumers know this data’s out there and to have easy access to it is a real service.”
Sources noted that the average age of a Sephora customer is 28 — and of a generation that doesn’t remember life without computers or smartphones.
Bornstein declined to discuss future plans for the Scentsa technology, although she hinted that hair could be next, noting that it would be a fitting complement as the Digital IQ universe now covers fragrance, skin care and color cosmetics.
“What we want to do is build on [these learnings going forward],” said Bornstein. “We don’t want to overwhelm the consumer, but we really want to make it focused and effective and really solving a problem. As with all technology, it always needs to evolve. It’s a living, breathing thing. Once you let it sit by the wayside, it dies. For us, we see all of these things as continuing to evolve and making sure they stay relevant and whatever new ideas and experiences we can create, we will build on to them.”
Sephora has been forward-thinking in terms of technology in the beauty space since entering the U.S. in 1998. After launching e-commerce in 1999, the retailer followed it up with a robust social media presence, several generations of updated apps and a raft full of in-store selling tools. In 2010, it launched an iPhone app that has regularly been updated, most recently in July of this year.
“Digital has been in the DNA of Sephora from the start of its presence in the U.S.,” said Bornstein, “We’re always thinking about how we can make the shopping experience easier, better, more fun, more educational, and many ways technology can help in that experience, whether it’s at home or in store.”
One effort to do that really started tongues wagging. That was the September 2011 opening of the retailer’s Meatpacking District store in New York — without cash registers. Store associates have handheld devices which scan products and communicates whatever data is needed, including credit card authorization. A receipt is then generated and sent to one of several printers throughout the store.
Bornstein noted that the Meatpacking District store will remain free of cash registers going forward, and that Sephora has added mobile checkout as a supplementary option in its other stores. “Today we use mobile POS in all of our stores and we will continue to going forward,” she said. “It’s completely about customer convenience.”
The retailer focuses a great deal of energy on its social media and consumer-loyalty programs as well. “Social media, for us, is a way for women who love the beauty category and love to shop at Sephora to engage with us however they want,” said Bornstein. “It might be asking for beauty tips or talking about new products they love. Also, word of mouth is huge there; that’s what social media helps amplify. It just is a very logical channel for both us and our consumers.”
Bornstein noted that the retailer’s popular Beauty Insider program has recently been tweaked to add new levels of access based on calendar-year spend, with a $1,000-level spend now comprising the top tier. While membership in the program is complimentary, Insiders gain more perks and free samples as their spend levels rise. Revamps earlier this year now also allow all Insiders to access a list of past purchases, wish-list items and even samples they’ve tried in the past on all of Sephora’s digital platforms. “We’re definitely layering on some more excitement so we keep the Sephora consumer engaged and excited by it, and leverage it as a service to them,” said Bornstein. “We’ve also revamped our smartphone app so that it’s more Beauty Insider-centric,” she said.