- Given the current economic climate I'm interested to see how Sephora fares during the recession. The "lipstick indicator" theory says that consumers will indulge in small luxuries in recessionary times. But does that theory hold water when the lipsticks in question cost $30+?
- CVS is planning to open a chain of 500 high-end stores called Beauty 360 adjacent to their drugstores over the next few years. How can Sephora utilize technology to help combat this new entrant? Their online storefront will likely be key.
- Currently Sephora doesn't really have any Web 2.0 content on their site. Only within the past few months did they even add the ability for customers to rate and review items, which Amazon has had for years. There are many beauty blogs and messageboards on the Web and I don't think Sephora is leveraging that fervent online community as it should.
Tuesday, February 24, 2009
Memo to the CEO of Sephora
I thought Sephora would be an interesting company to focus on for several reasons:
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I can't say that I know too much about Sephora, except for the facts that I can't spend more than 5 minutes in that store before the fumes get me dizzy.
ReplyDeleteI do know they are owned by LVMH, so would be interesting to see the relationship between the two managements. How much wiggle room does the managament team have to invest and innovate, or are they puppets to the corp office? Also, it may be tough to compete against a CVS when your parent company's strategy is focused on high-end retail, and who may no longer want to be associated with a brand that is forced to compete on price.
LV has a division that focuses only on Perfume and Cosmetics and they are semi-autonomous, they also do not own 100% of most of these companies.
ReplyDeleteOn another note, one interesting feature of cosmetics is the extremely low cost to produce.
It may cost pennies to make the $30 dollar lipstick that you are talking about, so margins are extremely generous, so it may not be necessary to engage in a price war, since almost the entire price is profit, and it may be more profitable to lose sales than to lower the price.
Looking at ways for technology to capitalize off of these low costs may be extremely interesting, since sephora has a great deal room to implement ideas without adding a great deal to per until cost.