Business Overview - Sephora
Sephora is a powerful beauty presence in the world. It was established in 1969 by Dominique Mandonnaud in France and owned by Louis Vuitton Moet Hennessy, the world’s leading luxury products conglomerate, in 1997. (SEPHORA1)With a new concept of free access to the product, the “open space” store became popular around world. Also, under Louis Vuitton Moet Hennessy, Sephora expanded more quickly and about more than doubled its number of stores. After successful expanse, Sephora began move its target to the whole international market. Now, Sephora offers more than 8,000 products and 250 brands of perfume and cosmetics. It operates about 1300 stores in 27 countries, including over 300 stores around North America. Sephora USA was established in New York in 1998. Then it became one of the fastest growing retailers in US. Now its North American headquarters is located in San Francisco and corporate office is in New York and Montreal. Sephora also launched its website, Sephora.com in the US in 1999 as one of the foremost beauty site in the world.1 SWOT Analysis
Branching of Louis Vuitton Moet Hennessy (LVMH), Sephora holds well relationship with suppliers. Negotiation with those suppliers cannot be a problem to Sephora. Price is not the competition advantage of Sephora so that the sales profit can be ensured. For instance, the good relationship between Sephora and Lancôme make sure the latest products of Lancôme have to be sale in Sephora at least 6 month before other retailors under the condition of no lower price than other retailers. Also Sephora won its private label, which helps consumers recognizes. With the self-service environment, customers can test as many as they like. This leisure way can attract more customers and being a competitive advantage to departments. Weakness
Lacking of advertisements is the biggest problem for Sephora, which brings low brand recognition among consumers. No price competition advantage can be another issue. Because of long-term relationship with suppliers, Sephora always sell unique style product but with no difference or higher price than drug stores. Opportunities
Sephora presents a growth stage in business lifecycle so that there will be several opportunities in the future. Besides some common views, such as developing an extensive line for men’s skin care and introducing green cosmetic products, another big opportunity is brought by the shifting demographics. It shows between 2005 and 2015, there exit 10.3% increase in females who will 18-year-old and up. And the increase between ages of 45 and 65, which indicates the baby boomers, is about 14.6 %.( Mintel2) It means market of Sephora has potential changed. Additionally, the increase in minority populations in the US is good opportunity for Sephora. At the same time, all these opportunities will impact the business strategy. Sephora need new solution, which will be mention in the following parts, to adapt to the new environment. Threats
Obviously, high-level products retailors such as Sephora will always be threatened by mid-price retailors especially during recessions. Also, the competition from generalist brands and ultra-specialist brands cannot be ignored. For instance, MAC Cosmetics is the direct competitors of Sephora. They offer nearly similar products so that consumers with low loyalty will choose by distance, cost or other preference. Business Opportunity & Business Process
According to the SWOT Analysis above, Sephora may get opportunity with shifting demographics, the primary market shifts from baby boomers to Generation Y and Generation X. But the threats from competitors also can lead customers move to the other side. To build a group of loyalty customers is essential for Sephora to maintain and expand market share. As response, Sephora began its customer loyalty program in 2003. This primary enterprise marketing tool help Sephora identify customers and their preferences....
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