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THE ULTIMATE GUIDE TO SELLING AT SEPHORA

SELLING AT SEPHORA

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THE ULTIMATE GUIDE TO SELLING AT SEPHORA

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Foreword: The Cutting Edge of BeautyA Closer Look at Sephora

Chapter 1: Pitching to Sephora Chapter 2: You’re In! Now What? Chapter 3: Speak Sephora’s Language Chapter 4: Sephora Exclusivity and Trends Chapter 5: Natural BeautyChapter 6: Sephora Line Reviews

Final Thoughts

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FOREWORDSEPHORA

the cutting edge of

Beauty

a closer look at

The beauty space is hotter than ever. Technology and social engagement are influencing trends and purchasing patterns, and shoppers are more empowered and savvier than ever before. At the intersection of all that is Sephora - the most respected and innovative specialty beauty retailer.

Sephora understands beauty and retail in a way that’s nothing short of brilliant. They’re constantly looking at what consumers want, what works and what doesn’t, and how technology can delight customers and keep them coming back.

Sephora is also one of the most fascinating retailers, with a complex operating system, internal language, and fiercely competitive shelf space.

By the NumbersSephora operates approximately 2,300 stores in 33 countries worldwide, with an expanding base of over 430 stores across the Americas. The sheer number of new and exciting products on Sephora shelves can be overwhelming.

Owned by LVMH Moët Hennessy Louis Vuitton SE, Sephora favors LVMH brands (including names like Make Up For Ever, Benefit, Givenchy, and Dior) and also has a growing line of their own private label products.

For example, an assessment by The Wall Street Journal found that in the makeup area of a Sephora store, LVMH’s beauty brands can occupy nearly half of the shelf space, even though they have only 15 beauty brands compared with over 200 the retailer typically carries. (Source)

Sephora ConsumerThe prototypical Sephora customer is a savvy millennial. They’re informed by influencers on the latest trends in beauty, love to experiment and try new looks and brands, and use tech throughout their buying cycle.

They love to test new products and prefer to be left alone to ‘play’ in the store. Sephora provides the autonomy and product selection they crave. They find Sephora appealing, stylish, trendy and fun, and trust that this retailer carries only brands and products that work.

Sephora’s CompetitorsSephora faces its stiffest competition from Ulta Beauty, a cosmetics retailer that sells high-end and drugstore-brand cosmetics. Sephora is different in that it carries a selection of emerging brands, and uses tech to engage custom-ers before, during, and after purchase.

As you’ll learn throughout the eBook, Sephora is really good at building emerging brands. Ulta is not. If you go to Ulta as an unknown brand, it’s very difficult to survive.

“It is easy to kill time at Sephora, play around with things and then spend more money than I should. I am experimenting a lot, trying to figure out what I like.”

- Rebecca Pahle

“l don’t associate department stores with makeup. At Sephora they ignore me, which I like. I don’t like the hard sell.”

— Rebecca Pahle, a Sephora customer who visits the two Sephora stores near her Time Square office twice a month. (Source)

Selling at Sephora can mean prestige, worldwide awareness and a promising future for a beauty brand. Getting into Sephora and remaining on shelf is no easy feat, though. In this eBook we’ll be diving deep into the world of Sephora. We’ll equip you with strategies and tips on how to get, stay, and succeed in this beauty giant.

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If you’re already on Sephora shelves, feel free to skip ahead to Chapter 2 where we’ll talk about how to succeed at Sephora.

SEPHORApitching to1

Here’s how the Sephora website instructs brands on pitching products:

Potential Sephora Brands:If you are interested in submitting new brands or products for review, please include:

• Contact information• Press (if available)• Retail and wholesale price lists• Current and future distribution strategies• Product samples submitted in their approved retail

product packaging

The Merchandising Department will review your materials and if interested, a member of the team will reach out to you. We welcome your interest in working with us as we build innovative, worldwide retail concepts.

Sounds easy enough, right? Wrong.Pitching your brand to the world’s most popular beauty retailer requires preparation, attention to detail, and creativity. In speaking with consultants who help brands land in Sephora, as well as clients who are on Sephora shelves, the advice was: be on trend, have great packaging, and highlight your differentiating positioning, the traction of your brand on social and on your own e-commerce, and press coverage.

Know the Competitive LandscapeSince your brand is going to be sharing shelf space with Sephora’s current offerings, you’ll need to understand the competitive landscape in your category, which brands are you up against and what advantages you offer over their products.

Walk the aisles and scope out competitor packaging and POS displays. You should also spend some time surfing Sephora.com to see how other brands are positioned and priced. And don’t think this is just a one and done exercise. Sephora adds new brands on a quarterly schedule, so it’s important to continually reassess which brands are being added and how to best compete.

Having completed your research, you’ll have a better handle on why you’re unique and what makes your brand stand out, and articulate why Sephora must carry your brand.

Public RelationsYour public relations activities should be in full swing by the time you make your pitch. How many beauty magazines and blogs have written about your brand?

Allure, in particular, has a lot of pull with Sephora, with their Best of Beauty winners featured prominently on shelf and online.

Start off small with local/independent blogs and influencers, and as your brand picks up traction you’ll be well on your way to big-name press coverage.

“It ultimately comes down to a fantastic product with a unique point of difference, story and good people behind it.”

— Cassandre Cowman, Former Merchant at Sephora

“Our Merchandising team is constantly building brands, starting trends, and developing entirely new product categories. These experts roll up their sleeves and advise our brands on the best way to bring our clients what they crave—and what they will be craving soon. Our product pipeline is so robust and exciting that many of the items that will be most in-demand in our stores next year don’t even exist yet. And our merchants don’t stop at selection—they bring the assortment to life through breakthrough curation and storytelling across our stores and digital properties.”

— Sephora Merchant

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Social MediaAlready having traction and engagement on social media and with beauty press will make your brand more desirable when you pitch. Instagram is the platform Sephora pays most attention to, so make sure your likes and follows measure up. Consumers go to Instagram for beauty inspiration and to learn how to apply the makeup that’s trending. Instagram’s visual way of displaying things creates a sense of urgency.

For example, Estée Lauder saw a huge follower jump after announcing a partnership with model Kendall Jenner on Instagram, the brand’s fastest-growing platform.

“We want to be where our consumers are, and our customers and beauty enthusiasts love Instagram because of its visual and easy-to-consume nature.”

- Estée Lauder spokesperson (Source).

Tell a Compelling StoryTelling a compelling story is imperative when pitching to Sephora. What was the pain point that spurred the idea for your product? Why did you decide to create it? How did you choose the colors and package design? Do the founders of your business have a unique angle or story for what inspired them?

To take it one step further and really set yourself apart, be sure to integrate data into your story. How is the category performing? What are the trends? What are your online sales and projections? The last thing that the buying team wants is to sense any doubt - know your numbers and deliver your story confidently.

Remember, Sephora merchants are faced with numerous different brands and categories. When a brand doesn’t come prepared with hard data, the merchant’s intuition has to take over. Numbers win over intuition every time, and allow you to present a balanced and logical case for your brand.

“Sephora wants to make sure that you have the ability to support the launch and stay in business. They want to see a robust product pipeline, enough funding to ‘play the game’, and a well planned marketing strategy.”

—Kelly Kovack,Founder and CEO at BeautyMatter.com

“Increasingly, brands are responding by unleashing newness at warp speed, solidifying relationships with social media stars, ambushing trends and quickening the pace of their marketing efforts. With social media inflaming desire for products, it’s a kill-or-be-killed environment in the beauty business, and the kills can be immediate and very, very big.” (Source).

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NOW WHAT?you’re in!2

”So many people put so much importance on getting the meeting and getting in store, without realizing that those might be two of the easiest things! The tough work really starts once you’re in Sephora.”

—Kelly Kovack, Founder and CEO at BeautyMatter.com

When Sephora takes a chance on a new product, it’s widely understood that there’s a 6-12 month window where they test performance and keep a close eye on the new brand. In other words, you’ll get through at least one line review with Sephora before they make a decision on whether to keep your brand on shelf.

That being said, Sephora is a very supportive partner. For the startup brands Sephora works with, executives will brainstorm on product development, help with social media promotion, and offer a roadmap for how to go from small to big based on a template the retailer has been successfully using for years.

“WE WORK VERY CLOSELY WITH THESE BRANDS. THAT IS THE MODEL OF SEPHORA.”

—PRIYA VENKATESH, SEPHORA’S VICE PRESIDENT OF MERCHANDISING FOR SKINCARE AND HAIRCARE (Source)

Consumer ReviewsStanding out on Sephora shelves can be a challenge, given the sheer amount and variety of products on display. Consumer claims on packaging and point-of-sale materials in-store, as well as claims on ads on Sephora.com, and great product reviews make a huge difference in whether a brand gets noticed by a Sephora shopper.

88% of Sephora shoppers find positive consumer claims on beauty products to be important to them, 94% want to see “honest feedback from women like me” and 94% believe that looking at product reviews before making purchasing decisions is important. (Source)

A recent poll also found that the number of people who would rather reach for their smartphones for a quick check on a product’s reputation or price comparison rather than ask the salesperson has reached 58 percent.

Eventing and Field SalesEventing is key in beauty retail, and especially at Sephora. If you walk into a Sephora on a Saturday afternoon, you will usually notice some kind of sampling or education program going on, drawing in crowds. For example, here’s a recent event listed on the Sephora website:

“Join Too Faced on Lipstick Day for a fun lip look. In a one-on-one lip touch-up, a brand artist will apply the new, high-shine Melted Latex Lipstick or another flattering shade from the popular Melted line. Take home a deluxe sample of Melted Liquified Long Wear Lipstick for a pop of color any time.”

— Sephora Store Events & Beauty Lessons Page

If you have an innovative idea for an event to drive trial of your product, be sure to pitch it to your Sephora merchant.

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Promotions

“Of course when it comes to promotions, Sephora is going to cater to LVMH brands. It’s a no brainer. The whole idea that there would be a level playing field is a little absurd, but if you look at it from a 360 perspective, the marketing is not that heavily weighted towards LVMH brands.”

—Kelly Kovack, Founder and CEO at BeautyMatter.comm

Each Sephora category has internal goals on sales dollars and units for promotions, and merchants need to have confidence that the thresholds will be met or exceeded in order to select your product. How do you gain that confidence? By bringing data and a compelling story to the table that is relevant to the promotion and merchant. The information you present needs to outline your projections and the expected performance of your product(s).

Remember, price discounts aren’t the only option. Consumers (and merchants) get fatigued with the same boring “$X.00” off promotions. If it makes sense in your category, explore options like gift with purchase, buy one get one, etc. There are a number of different ways to create value that are more exciting than just simple dollar off discounting.

Overall, you have to understand which kind of promotions you can win at, and ensure you have the inventory to back them up.

Inventory LevelsNothing is worse than having a Sephora shopper come looking for your product, only to find the shelf empty. You should be using a sales reporting tool to track your POS sales versus on-hand inventory levels and schedule regular store visits by your field sales team, if you have one.

If you’re executing a sampling pro-gram, for example, remember that it usually takes anywhere from 3-6 months or longer to ensure that you’re ready to provide the quantities and training required to succeed.

Additionally, be prepared to present a strong contingency plan for any leftover inventory once your promo period ends.

Being able to confidently communi-cate this to the merchant not only se-cures more promotion spots, but also positions you for success with those promotions.

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SEPHORA’S LANGUAGEspeak3One of the most fascinating things about Sephora is the internal language they use. Think

Starbucks lingo for sizes, but elevated to the fabulous, glittery world of Sephora.

For starters, every Sephora has three worlds (departments): fragrance, skincare, and color cosmetics, with cast members (staff) hired, trained, and certified to be experts in one of them. The following are examples of vocabulary used by Sephora and the corresponding words and meanings used by other retailers. This vocabulary is used throughout the retailer at all times.

It’s crucial that you familiarize yourself with this vocabulary, and make sure to use it in all meetings you have with Sephora. If you do not, it shows that you’re out of touch and treating them like any other retailer. This extra effort will set you apart and position you as a trusted brand who understands the intricate world of Sephora.

At Sephora, They SayAnimation

Assortment/Planogram Back Stage / Off Stage

BrandCast or Team

Central Distribution Center (CDC)Client Color

ConceptCostume

Director in Charge Field Support Center (FSC)

Internal SkincareLead

Loss PreventionMakeup Application/Consultation

MerchantOn Stage

Operations ConsultantProduct Consultant

Sephora BrandShared

Skincare Specialist

Stage Store Director

Others Might SayStore Visuals / Visual Theme

SchematicBack of the House or Stock RoomVendorStaffWarehouseCustomerMakeupConforming to Sephora’s Spirit or StandardsUniformFloor ManagerSephora Corporate OfficeSupplements, VitaminsKey HolderSecurityMakeoverBuyerOn the Selling FloorStore Operations ManagerSales Associate or Beauty Advisor

Private LabelUnisex

Treatment or Well BeingAssistant Manager

Selling FloorStore Manager

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EXCLUSIVITY AND TRENDSsephora4

”They can go to a handful of brands and say we want you to create powdered cleansers, and then they do an end cap with 15 brands. Guess what? There’s a trend! There’s a lot of that going on in Sephora.”

—Kelly Kovack, Founder and CEO at BeautyMatter.com

Sephora merchants are incredibly opinionated and they understand their business holistically. As you saw in the merchant quote earlier in the eBook, in some ways they create their own trends.

This eBook wouldn’t be complete if we didn’t talk about the growing demand for clean (all-natural) beauty products.

In a survey by Nielsen, 53% of respondents felt “all-natural” was important in their buying habits today. This trend was also reflected by the 24% growth that the organic channel saw over a four-year period, and is likely remove fueled by the growing distrust in the use of chemicals. (Source)

Big and emerging beauty brands are moving to using more natural ingredients. If you are contemplating a new product launch (and it fits with your brand), or you’re in your initial product design phases, this is a trend you can’t ignore.

As you can see from the quote on the left, Sephora has the power to create their own destiny when it comes to trends by having brands develop into it.

This begs the question - should you turn your destiny over to Sephora if offered an exclusive deal? We can’t advise you on which way to go, but here are the benefits and drawbacks of this option:

If you put all your eggs into the Sephora basket, you have more negotiating power for shelf space and promotional exposure.

But on the flipside, you’ll be giving up control of how you go to market and innovate moving forward. Ultimately, as a brand you need to have a strategy and stick to it. Not only for Sephora, but for retail in general. This will guide your decision.

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BEAUTYclean5

Mini Case Study: Youth to the People

Youth To The People (YTTP) manufactures natural anti-aging skin care products using superfoods such as kale, spinach and green tea.

The vegan skin care line was founded by cousins Greg Gonzalez and Joe Cloyes who grew up playing at - and eventually working for - the skin care company started by their grandmother over 30 years ago. Today, among various other channels, YTTP products are sold at Sephora and Sephora.com.

This brand’s success in Sephora encompasses all of the lessons we’ve discussed so far. They approached Sephora with a product line that’s on trend, a great story, beautiful packaging, impressive presence on social, strong customer reviews, and a plan for leveraging their field team to ensure in-store success.

“We’re thinking long-term and need to make strategic decisions to grow the business. Product launches, store education events, and where we send our field team is a big deal. We need to ensure we’re driving impact.”

—Laura Cline, Director of Education, YTTP.

To learn more about how Youth to The People succeeds in Sephora, see the full case study here.

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LINE REVIEWSsephora6

Successful brands treat their Sephora line reviews as an ongoing process. They use every touchpoint with their merchant as an opportunity to demonstrate value and bring up anything that might become an issue. Being proactive demonstrates that you are invested in the retailer relationship.

The best brands are able to be critical and concise on how targets were met or missed and they are transparent about the performance of SKUs. They communicate well before line reviews and keep merchants posted on opportunity areas and how individual SKUs are moving throughout the year.

Their recommendations are supported with point-of-sale and market data whenever possible.

If a product does perform poorly, it’s not the end of the world. A prepared brand is able to identify why this product did not perform well and they are armed with ideas for new assortments, promotions, and marketing initiatives. Merchants appreciate when you come to them with with solutions and recommendations that are backed by data.

For more tips on line reviews, check out our eBook: 10 More Things Your Merchant Hates About You.

What makes Sephora line reviews different from other retailers is the heavy focus on the digital, social, and content side of your brand. With other retailers that aren’t as savvy, you can talk around these points. Sephora is incredibly well versed, so you need to come prepared to discuss what you’re doing from an influencer standpoint, on your social media platforms, and with digital and social advertising. All these elements lead to brand awareness, which helps to move product off the shelf.

THOUGHTSinal

The beauty industry moves quickly and the competition is fierce. To be successful, your product has to look the part and deliver the results it promises.

Sephora, in particular, is known for working closely with brand partners to seize category growth opportunities in the industry. Anything a brand can do to support the experience of a Sephora shopper, especially as it relates to pricing and incentives, adds value to the retailer relationship.

Above all else, your brand has to be compelling for consumers and your numbers must prove a strong business case. Starting from your pitch all the way to your line reviews, be sure to articulate a strong story that encompasses digital, marketing, and sales.

If you can do that, then you’ll be well on your way to building a long and prosperous relationship with the world’s most successful beauty retailer.

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ABOUT THE AUTHORMarsha Druker is a Marketing Manager at Askuity. She launched her career in the CPG industry, working on six different brands at Jarden (now Newell Brands). She’s passionate about technology, startups and marketing.

ABOUT ASKUITYAskuity’s industry-leading sales enablement platform empowers retail brands to turn point of sale data into profitable insights that help grow sales, improve margins and strengthen retail relationships.

Learn how the Askuity platform can help you succeed at Sephora with profitable insights at www.askuity.com.