Sephora sought to penetrate the highly competitive U.S. beauty and personal care (BPC) market by pioneering an innovative phygital (physical + digital) strategy of creating customer value by enriching the shopping experience with a focus on emotions. Customers who combine in-store shopping with online shopping channels (omnichannel retailing) display greater levels of engagement resulting in increased interactions and transactions, underscoring the importance to firms of investing in the digital revolution. The United States served as a testing ground and innovation laboratory whose successes Sephora then deployed in Europe.
This case describes the market-entry challenges faced by Sephora and the ensemble of its digital initiatives and online/in-store innovations over a two-decade period. Sephora’s strategy drove customer engagement through strengthened emotional bonding and allowed it to face competitors both in the brick-and-mortar market space as well as e-commerce giants such as Amazon. Students will consider how Sephora built its digital strategy and analyze brand initiatives that capitalize on technology while applying it in a way that is fun for customers.