SEPHORA COULD BE CLOSING IN GERMANY

Byline: Melissa Drier / With contributions from Jennifer Weil, Paris

BERLIN — Less than one week after announcing Sephora’s retreat from Japan, the company is said to be pulling out of Germany, where it has five stores.
LVMH Moet Hennessy Louis Vuitton, owner of the 400-plus-door perfumery chain, would not comment on the report that it is in the process of shutting down the stores.
But a source close to the company said that Sephora will be closing the stores located in Dusseldorf, Cologne, Essen and Osnabruck on Dec. 31, and in Frankfurt at the end of January. The source said 66 employees are affected by the closures and, while efforts are being made to place the workers in other industry positions, a severance package has been prepared.
Sephora is a minor player in the country’s market, which is lorded over by Douglas, with a 30 percent-plus market share and 428 domestic units. Number two is Muller Parfumerien, with 166 domestic stores; while the majority of Germany’s independent perfumeries are members of either the Parma-Aurel cooperative of 650 shops or the Intercos cooperative of 215 doors.
Sephora “started with a huge fanfare and wanted to open 100 stores in Germany,” said one industry executive. “They ended up with five.”
He continued that Sephora “misjudged the German market. It arrived with a concept that the German consumer found incomprehensible. Perfumery consumers are accustomed to trained personnel and to seeing their favorite brands in the forefront [rather than Sephora’s open-sell concept and products’ alphabetical merchandising by brand name]. Visually, it might have looked great. But faced with an alphabetical setup, the customers asked themselves, ‘What’s this supposed to be about?’ For them, there was no advantage.”
The announcement further feeds the frenzy surrounding Sephora, which is said to be on the block or even partially sold already. Industry sources have honed in on Germany, where Douglas is purportedly interested only in acquiring Sephora’s European stores. Some sources even say Douglas already has inked a deal for these, although the company will not comment on the talk.

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