Sephora: Driving High Sales Per Square Foot

I know the sales per square meter for Sephora is pretty high. Is it high in Italy too or is it different due to Italy market dynamics?

No, Sephora has an average sale per square meter that is high everywhere because of the concept. The concept was innovative with brands that you only find in Sephora. They have a lot of differentiators that allow Sephora to attract a lot of consumers. This is really the point. The point is, what are you able to do as a retailer to be more performant than your competitor? This is why Douglas still has a long way to go. They’re very strong with fragrances, they are not strong with makeup. The category that is driving the growth today is makeup and that is where Sephora is very strong. All the niche brands and cool brands on the makeup side today are completely being flagged by Sephora. The consumer knows, if I want to buy the coolest new brands, I need to go to Sephora, I’m not going to go to Douglas. Sephora has a high sale per square meter because they are an innovative retailer, because they have brands that nobody else carries, because they have new and trendy brands which drives brand awareness and sales per square foot across the market.

Roughly half the SKU’s in Sephora are exclusive and mostly own brand. Is Sephora’s procurement or merchandising strategy very different to Douglas’ or is it more a culture difference?

You have both things, you have a cultural difference, but mainly, Sephora have brands that nobody else has. All the cool brands being talked about by bloggers, beauty advisors, experts are all launched by Sephora. This is a real point of attraction that Sephora carries versus Douglas. This will be something that will make the difference at the end of the day. Douglas understood that they needed to come up with a different offer. They needed to come up with something innovative, if they wanted to conquer a younger customer base. This is a big problem. Douglas is not being able to talk with generations that will represent the customer bases tomorrow.

How would you go about this if you were working at Douglas?

You really need to make a very strong statement in terms of new store content. Even though they may change it, I don’t believe they are there yet. You need to be more innovative with the brands you are bringing into your stores. You have to come up with an innovative brand, new cool brands that are in style.

You mean internally integrate or procure new brands?

Both. You need to incubate new exclusive brands. You procure them, as well. Don’t forget that through LVMH, Sephora have one company called Kendo that doesn’t do anything else but incubate and procure new beauty brands for Sephora. This is a huge competitive advantage that Douglas doesn’t have. Douglas really need to change their approach and bring something really new into the party.