Sephora’s fusion of physical and digital experiences is setting the standard for retail

At a time when many retailers are suffering, in part, due to a deficit of innovation, Sephora is setting itself apart with a demonstrated willingness to experiment.

Sephora is certainly not the only beauty company to realize the value of technologies like augmented reality and artificial intelligence to enhance customer experiences. But it’s undoubtedly one of the leading companies putting those technologies to use, both in stores and online.

Today, Sephora customers can try on lipstick, lip gloss, eyeshadow and eyeliner virtually with a shop-able augmented reality app. They can find the lip, eyeshadow or cheek product that best suits them simply by uploading their portrait to an AI-based system. And they can sample fragrances in stores through touchscreens that emit scents.

For a long time, beauty consumers had limited retail options, The Washington Post’ Sarah Halzack argues. They could either shop at a drugstore or “go to a fancy department store counter and let a white-lab-coat-wearing specialist spend an hour dabbing their face with pricey anti-aging creams.”

These days, Sephora is offering a tantalizing alternative, and it’s paying off. The beauty chain, which is owned by the French luxury conglomerate LVMH, is now the top specialty beauty retailer in the world according to Euromonitor International, which tracks beauty sales.

At a time when many retailers are suffering, in part, due to a deficit of innovation, Sephora is clearly setting itself apart with a demonstrated willingness to experiment, which is why it was named Retailer of the Year at the World Retail Awards—which are sponsored by IBM and World Retail Congress—in Madrid.

Improve customer experience

A big part of Sephora’s success can be traced to the opening in 2015 of its Innovation Lab, a space in San Francisco’s Dogpatch neighborhood tasked with “sourcing, developing, evaluating, testing and eventually launching new offerings and technologies for shopping in the store and on-the-go.”

“Consumers are looking for retail stores to be creative spaces. They are looking for experiences,” Bridget Dolan, the Lab’s head, told Digiday. “Digital is a critical element in retail—however, it is not just for the sake of adding new, cool technology. Our intention is to help our clients.”

The fruit of the Lab’s labor is clearly on display in the array of interactive and experiential tools and services at Sephora’s largest North American store, an 11,380 square foot behemoth offering more than 13,300 products, which opened last year in New York City’s Herald Square.

At the store’s Beauty Workshop, customers can attend group classes and tutorials, experiment with Sephora’s AR app on iPads, and gather inspiration from a large shop-able digital screen showcasing user-generated content. The store also features a Moisture Meter, a digital tool that measures the amount of moisture in a customer’s skin to aid in the selection of products, and a Beauty Studio featuring touchscreens for foundation, lip and concealer shade matching.

Some retailers become so big they lose some of their connection to consumers along the way. But Sephora seems laser-focused on retaining that relationship even as it continues to grow. This summer, just after opening its largest North American store, it launched its smallest shop in the U.S., a 2,000-square-foot concept store called Sephora Studio specifically designed to foster personalized connections between customers and beauty advisors.

As Sephora looks toward the future, it’s counting on that level of individualized, expert attention—both in stores and online—to keep customers hooked.

“In today’s retail environment where very little is constant and clients’ expectations are ever-evolving, one thing has remained true for Sephora: there is no better way to create meaningful connections with clients than through personalized experiences and a customized approach to beauty,” said Sephora Americas CEO Calvin McDonald.

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