Sephora Greater China Managing Director
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RETAIL & CONSUMER JOURNAL INTERVIEW
MAGGIE CHAN
Sephora Greater China
Managing Director
© Oliver Wyman 1RETAIL & CONSUMER JOURNAL INTERVIEW
How has your customers’ behavior in China with our customers. Unsurprisingly, private domain
evolved in the past 12 months, and how have traffic has become very much top of mind for online
they been engaging with you and your channels business in our sector.
and brand?
BRINGING
Finally, the pandemic has not only driven change
The past year has been transformative in many ways. in how customers shop, but also in what they
OMNICHANNEL
Let me focus on a couple of points and how they are looking for in terms of product proposition.
relate to Sephora and our direction going forward. We have noticed an increase in the awareness of
BEAUTY TO THE
sustainability and in how sustainability connects
The first — and most obvious — point to touch with wellbeing. How do you maintain your health?
NEXT LEVEL
on is the shift to online consumption: COVID-19 How do you maintain your wellbeing and healthy
underlined and substantially expanded the lifestyle at home? How do you manage for things
importance of online channels for all retail, not just to be uncluttered, given that everything is arriving
beauty. The rapid expansion of digitization enabled in a package? In China, this sustainability trend
us to reach and engage our consumers — despite has translated into a desire for products that are
the temporary offline constraints of lockdowns. simple, direct, and uncomplicated, and packaging
2020 marked Sephora’s 15th year
that is less wasteful. The simpler, the better.
operating in China — and what a
The second, somewhat linked aspect are the new,
year it turned out to be for the multi- much more direct ways we now engage with Interesting! Let’s zoom in a bit further on
brand beauty retailer. Recently, Sirko shopper communities and individual customers the private domain point you made. Why is it
Siemssen, Senior Partner and global online. Last year gave a strong boost to live- that private commerce membership schemes
head of Oliver Wyman’s Retail & streaming, social media connectivity, and private and communities are growing so rapidly and
Consumer Goods practice caught up domain sales. These approaches are enabling us effectively in the prestige beauty sector?
to connect one-on-one with our customers and
with Maggie Chan, Greater China
build a community around our brand. This in turn Prestige beauty retail has traditionally been closely
Managing Director at Sephora, to
allows us to better understand customer needs tied to stores inside shopping malls and department
discuss the impact of 2020 on the and trends, to more effectively tell stories, to stores, and relied on a “private domain experience,”
company’s business model and its explain innovative brands and products, and to in terms of personal advice and product testing. The
plans for the future. add an emotional dimension to the relationship usual online experience is radically different from
© Oliver Wyman 2RETAIL & CONSUMER JOURNAL INTERVIEW
that: Just seeing a product on a screen is simply not while connecting it to the offline experience as well. the platform, order a product, and have it delivered
good enough, because the product is ultimately Let me highlight four examples: to their door within 30 minutes, in 16 major cities in
applied to the skin and influences how we feel and China. This is a useful capability to have during the
are seen. Private domain is in a sense about bridging One change that we made is the “Smart BA” (BA pandemic, but its utility extends beyond COVID-19:
that gap and bringing back some elements of the for beauty adviser). We launched Smart BA in late For example, if you suddenly remember you need to
offline experience. This is one of the reasons that February/early March during the pandemic as a buy a gift for a loved one on Valentine’s Day or their
private domain is growing rapidly. way for customers to draw on the expertise of birthday — you can go on your app, order a gift-
our beauty advisers even though they could not wrapped item, and have it delivered in 30 minutes.
The second reason is that prestige beauty is a higher be in the stores. By leveraging WeChat, our BAs At the beginning, this was done in order to bridge
ticket item. There are a lot more requests from can connect with customers and provide them the last-mile issue, but now we have extended it
customers for the product experience. Personalized with advice that is unique to them. Our goal was beyond that.
service plays a crucial role — not just in terms of to empower all BAs to provide one-on-one service
bringing authentic customer feedback to us but and information to fulfill the beauty promise to We also are leveraging digital to share beauty
also by connecting professional knowledge from consumers. We basically digitalized the physical trends in the broader consumer base in China.
the beauty adviser to the target audience in a touch point between the BA and the customer. In the past, Sephora China launched beauty
personalized way through social media. trends twice a year at a physical fashion show
We also intensified our collaboration with Meituan, or conference. But because of the pandemic, we
So, how did you react to all the change? a last-mile service provider or platform. We rolled launched our first virtual Sephora Day, which
What changes to your business model did out this service, which allows customers to go onto literally allowed us to reach millions of viewers
you undertake? What lessons did you learn?
As a global prestige beauty company, we have
always been centered on consumers. Consequently,
our retail concept, which we call “True Retail,”
takes a holistic view of the full omnichannel retail
experience across all customer touchpoints. This
I truly believe that Sephora is on the right track
thinking was very helpful to begin with. It enabled in China. The real concern was how to protect
us to quickly adjust and optimize our strategy,
proposition, and priorities. Fundamentally, we and make sure our employees were safe during
initiated a more direct and close conversation with
the consumer, leveraging the online ecosystem the pandemic.
© Oliver Wyman 3RETAIL & CONSUMER JOURNAL INTERVIEW
much more directly. To maximize the viewership, some are located in residential and in commercial try them on. And the Smart BA will then be
we partnered with other platforms, like JD.com and areas. The type of customer visiting each of those able to help the customers when they come in
Tmall. Together, we presented 100 new products — stores has different requirements, both in terms of the store.
from Sephora and leading global brands. the time they can spend at the store and in terms of
their beauty needs. So the stores will be tailor-made Brilliant! Sounds like you have the right answers
Finally, when launching our Sephora Cross Border to suit the clientele of the specific environment. for a lot of the challenges and changes faced by
Tmall Global flagship store, we also coordinated your business. Still, are there some concerns that
it with key offline stores connected through the Digital tools will also play an important role in keep you up at night?
virtual “shelf” in more than 40 physical stores. meeting the beauty needs of our customers.
We’ve already mentioned the ability to arrange The things that keep me up at night are not the
Talking about stores, what do you see as the a delivery from your store within 30 minutes. strategy or whether the business is growing — I
future of your stores? Your stores have become But there are also other digital tools available that truly believe we are on the right track in China.
famous as real destinations for customers. What help customers to shop better. For example, we The real concern was how to protect and make sure
role will they play tomorrow? are developing a fragrance ID tool that creates our employees were safe during the pandemic. At
a profile for the customer, which, based on the start of the crisis, we had a very strict focus and
Physical stores will continue to play a key role for personal fragrance preferences, makes fragrance protocol that was built around protecting employees
us — especially in building a sense of community recommendations. There is also a tool that allows and customers. So many things were happening all
around our brand. We will continue opening brick- you to visualize how a makeup foundation will look at once that we had to figure out what to prioritize
and-mortar stores in the right places. However, on your face, which helps to narrow choices before in terms of serving the customer and executing fast.
what we see as different for the future is how we go physically trying them on at the store. Similarly, we What we learned as a result of COVID-19 is that we
about empowering our community. In the future, also have Visual Artist 2.0, which is a technology have a very resilient organization and workforce,
we see the store as being the hub of the community. that allows you to try out different types of one that is getting better as we continue to learn
While many of our stores are in shopping malls, makeup before going to the store to and evolve.
© Oliver Wyman 4Oliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. In the Retail & Consumer Goods Practice, we draw on unrivaled customer and strategic insight and state-of-the-art analytical techniques to deliver better results for our clients. We understand what it takes to win in retail: An obsession with serving the customer, constant dedication to better execution, and a relentless drive to improve capabilities. We believe our hands on approach to making change happen is truly unique — and over the past 20 years, we’ve built our business by helping retailers build theirs. For more information, please visit: www.oliverwyman.com CONTACTS Sirko Siemssen Maria Miralles Frederic Thomas-Dupuis Global Retail & Consumer Goods Practice Leader, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Germany EMEA and LatAm North America sirko.siemssen@oliverwyman.com maria.miralles@oliverwyman.com frederic.thomas-dupuis@oliverwyman.com Pedro Yip Ronan Gilhawley Rainer Muench Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Asia Australia and New Zealand Germany pedro.yip@oliverwyman.com ronan.gilhawley@oliverwyman.com rainer.muench@oliverwyman.com Nordal Cavadini Coen De Vuijst Salim Poonawala Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Retail & Consumer Goods Practice Lead, Switzerland The Netherlands France nordal.cavadini@oliverwyman.com coen.devuijst@oliverwyman.com salim.poonawala@oliverwyman.com Duncan Brewer Retail & Consumer Goods Practice Lead, United Kingdom duncan.brewer@oliverwyman.com
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