Last time we went through the SWOT analysis of CarMax. This time we are going through a SWOT analysis of Sephora.
This brand is one of the leading french cosmetics companies that includes personal care, skin care, and other accessories. It was founded in 1969 and in their showrooms we find products of other reputed cosmetic branches along with their products.
Sephora deals with leading brands like MAC, Estee Lauder, Kalvin Clein and LOreal. Although the headquarters of Sephora is in Paris, it exists in around 190 countries across the world and has a presence in most leading cities.
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As a result, the purpose of this article is to supply you with useful information about the brand, including the most recent statistics and updates, and even how Sephora came to dominate the lingerie sector. So, let’s get to know Sephora a little more before we go into the SWOT analysis of Sephora.
This company operates over 2700 stores in 35 countries all over the world, the first store was established US store in New York’s SoHo neighbourhood in 1998,
Sephora is owned by LVMH Moet Hennessy Louis Vuitton, it’s a luxurious store and is also known for its uniqueness featuring emerging favourites, trusted classics, and Sephora’s line, Sephora Collection. Sephora remains curated by innovative brands including a robust clean beauty assortment and exclusive brands like Rare Beauty by Selena Gomez and FENTY BEAUTY by Rihanna brought to market first by Sephora.
In today’s day and age, the Sephora is a powerful beauty presence in countries around the world thanks to our unparalleled assortment of prestige products in every category, unbiased service all along with beauty experts, interactive shopping environment, and relentless innovation, including their expanding array of how clients can catch up with Sephora.
|Founder||LVMH Moët Hennessy Louis Vuitton|
|No. of Employees||20,000+|
|Market Cap||$ 410 Billion (2021)|
|Annual Revenue||$ 500 Million (2021)|
|Net Income/ Profit||N/A|
Products of Sephora
- Nail colour
- Beauty tools
- Body lotions
Competitors of Sephora
- MAC Cosmetics
- Urban Decay Cosmetics
- Ulta Beauty
Now that we’ve seen a concise overview of the company, we can go right into the SWOT analysis of Sephora.
SWOT Analysis of Sephora
A SWOT Analysis is a strategic planning and management approach for determining an organization’s strengths, weaknesses, opportunities, and threats about commercial competitiveness or project planning. It’s a valuable planning approach that allows Sephora to compare its performance to that of its competitors and the whole industry.
To better understand the SWOT analysis of Sephora, refer to the infographic below:
So let us first start by looking at the strengths of Sephora from the SWOT analysis of Sephora.
Strengths of Sephora
- Best Working Place: Sephora has been introduced by Forbes as one of America’s Best Employers almost at a line up of four years in a row, from 2018-to 2021. For three years in a row, from 2019-2021, Sephora scored 100% on the Human Rights Campaign’s Corporate Equality Index, the national benchmarking tool on corporate policies and practices about LGBTQ+ employees.
- Range of Options: Committed to creating a highly personalized fashion experience, they have a range of apparel, footwear, accessories, beauty and skincare products to cater to the various needs of their customers.
- A Great Brand: Sephora company has included more than 2000 stores in over 30 countries having a turnover of 3000 different brands. Its product line shows cosmetics, perfumes, skincare, nail polish etc. Good branding and marketing exercises bring in higher visibility of the brand all over. Sephora has its private unique labels as well which spreads a difference to itself with other players. The company has a greater value of brands in various cosmetics categories given to its consumers.
- Best-in-Class Innovation: In digital creation, Sephora consistently provides best-in-class e-commerce experiences and satisfies every customer where they are. The vigorous changes in consumer behaviour, pushed the COVID-19 pandemic, resulted in a variety of strategic digital alliances and increased practices that the customers can shop, prioritizing comfort and convenience, which includes Facebook Live Shopping, on-time Delivery, Online Pick Up In-Store and through Instagram.
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- Exponential Growth: Sephora has grown exponentially in the region to 66 stores in five markets UAE, KSA, Bahrain, Qatar, Kuwait with its flagship store in Dubai Mall ranking as the number one store worldwide.
- Worldwide Brand Representative: Representing a wide range of leading worldwide brands, as well as offering a selection of brands, which can be found exclusively at Sephora, such as Huda Beauty, Kat Von D, Too Faced and Marc Jacobs Beauty, Sephora also houses its brand: Made In Sephora offering a variety of make-up, accessories and bath products in exciting colours and textures.
Weaknesses of Sephora
- International Presence: The brand record of Sephora isn’t as high as the other popular brands. Yet to project itself as a global player especially in emerging economies like India, China and Russia.
- Quite Expensive: Sephora comes under the premium segment and thus its products’ prices are quite on a higher side as compared to other brands in the market offering the same products at a little cheaper price. Due to this people who want to buy a product from Sephora are taking their feet back just because they are not willing to pay.
- Selling Other Brands Products: Sephora is known for selling its range of products under its brand name and also an exclusive retailer of famous cosmetics brands which are direct competitors to them also and their parent brand too harming sales and at the same time creating confusion among customers.
- Customer Experience Becoming Expensive: Sephora is always trying to emphasise creating customer experience at the best possible and that’s good but sometimes over-focus on creating customer experience causes customers to take advantage of such experiences.
- High Day Inventory: When compared to rivals, days inventory is high, forcing the company to acquire more funds to spend in the channel. This may affect Sephora’s long-term growth.
- High Attrition Rate: In comparison to other companies in the sector, Sephora has a greater turnover rate and should spend significantly more on staff training and development than its competitors.
Opportunities for Sephora
- Exposure of New Markets: Consumers always look forward to paying higher prices for greater value products and opportunities to penetrate the market. Opportunity to bring into emerging economies by engaging with their environment can help to raise Sephora.
- Good Market Knowledge: Since Sephora has been in the industry for so long and has been one of the leading brands, it has great market knowledge which it can use to understand the ever-changing consumer tastes and needs and act on accordingly to gain success in the market.
- Men’s Segment: Sephora is a brand meant for women, and with the fastest-growing men’s care segment there are great opportunities and a lot more to explore with skincare products for men as it will open a new market for Sephora.
- High-End Products: It should also start focusing on the demands and wants of the consumer as it has already mastered their needs. A brand like Sephora released its Sephora luxe range which are premium products for consumers. Introducing products like this will increase the brand value of Sephora.
- Growing Demand: The market for hair care and personal care products is expanding, and it has significant demographic and geographic potential. The market potential is always increasing as more people use hair care products daily and there is so much competition in the hair care industry, people are well aware of its importance.
Threats to Sephora
- Market Difficulty: Almost all players come under the beauty category and differentiation is very difficult. Customers are very anxious about the beauty category so attracting them needs more brand quality and services.
- Intense Competition: Over the previous two years, stable profitability has expanded the number of participants in the market, putting downward pressure on not only profitability but on overall sales.
- Fake Products: Several brands are replicas of well-known designer labels. People are hesitant to spend a lot of money on lingerie, so they go for cheaper replicas.
- Controversies & Lawsuits: Sephora has gone through several lawsuits and controversies 2 to 3 years ago which hurt the accountability of the brand. If such kinds of controversies happen in future it can badly affect the brand goodwill in the market.
- Competition from Other Brands: New skincare and cosmetics brands are also creating products with newer competitive innovation and technology for retail stores which is increasing the competition of Clinique.
This ends our detailed SWOT analysis of Sephora. Let us conclude our learning below.
Sephora has got the opportunities and risks for the future that will be needed to be prepared for. Currently, with all the amount of data that Sephora is collecting, it has the potential to push into building personalized cosmetics.
As tech giants like Amazon and other beauty players like Ulta and Glossier catch up on the technology front, Sephora needs to find ways to maintain its position and inculcate strategies. Using its community to further lock in customers, applying the knowledge gained in-store through associates to understand customer journeys, customized products might be ways to overcome the looming competitive threat.
Sephora has been successful in reimagining the beauty industry and gaining from its digital investments. Its continued experimentation with new technologies and customer insights will define if it can remain ahead of the curve.
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