Sephora poised for big growth
European beauty spend recently, specialist retailer Sephora is
fighting back with new lines and aggressive marketing for its
online service.
Sephora has turned the pressure on in an effort to compete with new private label lines and the rapid emergence of online shopping services from supermarket and hypermarket outlets. And according to Euromonitor International's Industry Watch team, Sephora looks well poised to bite back.
The past year saw both CVS and Walgreens expand their skin care offerings; while Costco and Asda launched colour cosmetics lines; and French mass retail giant Carrefour added a nine-product hair care range to its stores in Argentina, the team pointed out.
Likewise the rise of online shopping has also proved to be a growing success story for these larger retailers. In conjunction with this, the increasing focus on cosmetic and toiletry sales is now adding to the growth of sales, as items such as fragrance and make-up prove to be particularly popular with online shoppers.
In the face of this competition things have been tough for Sephora of late. An effort to trim the operation down and improve profitability resulted in store closures in Russia and a complete withdrawal from the high-value UK market earlier this year.
In June, Sephora launched its first e-tail store in France and will be looking to the new channel to showcase the store's private label offerings as well as the brands that it sells under exclusive agreement.
The Euromonitor team believes this will be a wise move. Its research finds that cosmetic and online sales of health and beauty is expected to grow in the coming years, with online e-tail giants Amazon and eBay set to become the hottest beauty e-tail outlets on the web. Indeed, eBay reported sales growth of 63 per cent last year for cosmetics and toiletries products.
Another step in the right direction is Sephora's augmented private label portfolio, LVMH is in a stronger position to reinforce Sephora's brand identity and this should help the store steal a slice of the online beauty market if it can establish brand loyalty and secure further exclusive sales agreements to entice consumers, Euromonitor says.
