Sephora Leads Digital Strategy in Beauty with Advanced Technology

By Laura Myers

September 4, 2018

AI, AR, Artificial Intelligence, Augemented Reality, Beacons, Beauty Retail, Digital Experience, Digital Strategy, Digital Transformation, Engagement, Engagement Strategy, Facial Analysis, gartner, Product Recommendations, technology, Visualization Technology

It’s somewhat hard to believe that in a consumer market as tactile and hands-on as the beauty industry, a brand like Sephora could lean on an innovative use of technology and powerfully seamless digital experience to grow their success and become a benchmark for not only other cosmetic brands but any brand who wants to level-up their digital transformation. 

As a reflection of this, Sephora was recently named the Top Specialty Retail Brand in Digital in the comprehensive Gartner L2 Digital IQ Index and, while some might say it is the brand’s proximity to the digitally creative minds surrounding their headquarters in San Francisco, California that has made the difference, it could also be the way in which they leverage technology in an almost dual-rail engagement strategy to influence both purchase and pure delight. 

Sephora's Innovation Lab

In his own comments on the report, Scott Galloway, Professor of Marketing at NYU Stern School of Business and Founder of L2 (which was acquired by Gartner in early 2017) notes: “The Index leader achieves its Genius status thanks to steady innovation in mobile. ‘Sephora to Go’ app ranks among the top 25 offerings in the App Store’s Shopping category, integrating tools such as ‘Virtual Lipstick Assistant’ as well as notifications and the brand’s reward program. Those interactive tools not only let users play with new makeup trends and techniques, but also encourage commerce and social sharing: links to product pages are provided throughout the process, and users are invited to share their digital transformations on social media.”

Many brands in a variety of markets could take notes from Sephora’s overall digital strategy, even just in how they integrate the online/offline experience to such a degree that they’re steadfastly pushing at the edges of what modern retail can be. One reason for this could be the creation of their Innovation Lab which opened in 2015. This converted warehouse exists solely as a facility with the focus to both predict and create the future of retail for Sephora. Within the lab, the team can brainstorm, develop and test a wide range of digital experiences designed to inform and enhance shopping across web and mobile. To support testing within their brick-and-mortar experience, the Innovation Lab also houses a full-scale Sephora store complete with store-front display models. Holding a space for innovation isn’t unique to Sephora however having a tangible place to thoroughly test in-store experiences before they ever reach the customers might be. 

AI and AR Technology

Sephora isn’t the first brand to offer ‘digital try-ons’ when it comes to beauty products but they are the first to get it right, down to an individual experience. Modiface, the facial analysis and visualization technology firm that works with various beauty brands has been in partnership with Sephora for nearly a decade to bring Sephora’s AI and AR strategies to life to address some of the biggest hurdles in the online sale of cosmetics: “The problem of product discovery has been a substantial problem, which can be addressed partially with augmented reality based try-on,” says Parham Aarabi, CEO of Modiface. “However, using AI to actually match shades and recommend products before trying is a key step. We have been working on this for almost 5 years now, but we felt that the technology was finally accurate enough for large-scale deployment.”

The difficulty in question is of course bridging the gap between the consumer seeing a product and envisioning it on themselves. Sephora’s Visual Artist allows customers to upload a photo of themselves through a mobile app which then gives the technology the opportunity to recognize the most compatible shades for the individual and then through the use of AI can give product recommendations from Sephora’s expansive inventory. It also provides a visual representation of how certain products will look on the customer to give them a closer approximation of fit before they buy it.  

Along these same lines, Sephora also has an exclusive technology called Color iQ, which “scans the surface of your skin and assigns it a Color iQ number, which reveals scientifically precise foundation matches.” Customers can then keep this number on hand to ensure they are always going to get their best individual shade recommendations from Sephora’s line of products. 

Beacons in Mobile Strategy

Sephora also knows we live in a time where our mobile devices are never far, if they ever leave our hands at all so they found a way to use this to their commerce advantage. Through the Sephora To Go app Galloway highlights above, in-store customers can scan any product to enhance their own shopping experience by accessing online reviews and ratings of products. Beacons are also active in-store for customers who opt-in to the technology to help them navigate the shelves upon shelves of products. Bridget Dolan, VP of Sephora’s Innovation Lab states: 

“We focused our Beacons messages on being truly relevant and useful for customers in-store, giving them a customized, personal shopping experience. When a shopper comes into Sephora, she will be prompted to switch her app to ‘Store Mode,’ allowing her easy access to all of the features she needs while shopping, like the ability to scan products for ratings and reviews, look up past purchases, view her wish list, and pull up her scannable loyalty card and saved gift cards, saving her an additional step at check-out.

It also rewards pre-shop efforts by popping up the items she’s left in her cart that are available in this store. And lastly, it lets her know about all of the perks available to her in store, like free mini makeover services and a free gift during her birthday month.” 

Beauty Retail is Thriving

Technology isn’t the only reason brands from other markets should take a page from the book of modern beauty retail. They have not only wholeheartedly embraced digital transformation, they have remained resilient in light of a turbulent retail market of the past few years. 

Prestige beauty saw $17.7 billion in sales for their sector of the beauty industry in 2017, up 6% from the previous year. Skincare grew by 9% and accounted for 45% of the industry’s total gains, makeup showed a 6% jump in sales and fragrance rounding out the sector’s growth with an increase of 4%, all product categories Sephora retails online and in-store.  

What I am sure helps Sephora’s bottom line beyond technology is their savvy understanding of the interpersonal store experience. Given the highly personalized and connected manner of Sephora’s online experience, in-store sales associates offer more autonomy to shoppers than other brands, letting them explore more on their own and becoming available when customers need more assistance. This mitigates the hard-sell tactics previously synonymous with the prestige beauty industry to take a modern approach. Sephora likely understood previous sales models contributed to levels of intimidation for consumers in approaching counters or individual sales associates for purchase.  

Ending Notes

Having worked for a global cosmetics brand while I was making my way through college, the nature of the business as a marriage of art and commerce was a prominent understanding in how to sell products and how to engage consumers in building a loyal relationship with the brand. Back then it was more about the front-line artists themselves informing and educating while selling a product, but now we’re seeing YouTube & Instagram influencers, artificial intelligence and augmented reality replacing sales associates. 

It seems the digital strategy for Sephora is built around a sense of engagement that fuels both commerce and delight by making the technology highly profitable, but fun for customers to use. There's no way a customer is going to try on 30 sets of eyelashes in a visit, or 50 shades of lipstick of every color just to see what it looks like on their face but, when it’s easy to do with augmented reality and there is an artificial intelligence engine suggesting colors based on knowledge of skin tone and product preference, the entire experience becomes more valuable for both the brand and the consumer. 

Laura Myers

A digital business, marketing and social media enthusiast, Laura thrives on asking unique, insightful questions to ignite conversation. At an event or remotely, she enjoys any opportunity to connect with like-minded people in the industry.