Insiders Estimate Sephora Pulls In $500 Million a Year From China

on February 20 2013 | in Beauty Store Openings | by | with No Comments

Sephora, China

French beauty brand Sephora, child company of LVMH Moët Hennessy Louis Vuitton, recently celebrated the opening of its largest store in Asia. Encompassing 54,000 square feet and five floors, the Shanghai Xiangyang flagship on Nanjing Road boasts two levels of retail space, a training academy, and two floors for Sephora China’s new corporate headquarters.

“I think we’ve only fulfilled a small fraction of what’s possible in this market. We are quite inspired by the huge passion of the Chinese woman to learn about beauty, be it skin care, makeup or fragrances,” said Chris de Lapuente, Sephora’s global CEO.

Though he was mum on figures, de Lapuente alluded to strong double-digit growth. Industry insiders estimate that Sephora sees $500 million annually pouring in from China.

One of the brand’s largest goals is to increasingly educate Chinese women about color cosmetics and fragrances, items that were banned for most of the 20th century, during Mao Zedong’s communist reign and the Cultural Revolution.

Today, skincare and haircare are still the leading categories for Chinese buyers. But at the Shanghai flagship, iPads with special interactive apps are placed strategically on a counter, allowing shoppers to answer a questionnaire and be directed to fragrances that may be of interest to them based on their needs and preferences.

The store on Nanjing Road stocks 17 Asian brands, 3 of which are Chinese. The most popular may be Shanghai Jahwa’s Herborist. In addition to being very popular among consumers, Herborist owns a 19 percent stake in Sephora’s China operations. Taiwan’s For Beloved One, Korea’s Erborian, and Japan’s Lunasol/SK-II are also on the shelves.

The new Shanghai store is the 135th since Sephora entered the Chinese market. The brand can be found in 47 cities throughout China. Sephora expects to keep pace with its 2012 store openings, continuing with about 25 per year in China, with many of them targeted at second- and third-tier cities to offset the minor slowdown in Shanghai and Beijing.

“We’ve got the core markets where there are still a lot of opportunities, we’ve got the newer markets that are moving out of an investment phase and are now bearing fruits and we have a whole group of more recent markets,” the CEO said, “We are in 30 countries now, I have a dream to be in significantly more countries in the world and as markets like China do well it gives us confidence that the Sephora model can work in more parts of the world.”

The Shanghai flagship is expected to be one of the top 10 Sephora stores worldwide, with the Champs-Elysées superstore in Paris leading the pack in terms of sales volume. Various locations in New York and the flagship in Brazil fill the rest of the ranks. De Lapuente states, however, that the brand also wants to grow its 30 percent market share in France, open more stores in the U.S., and consolidate strong growth in markets like Russia and the Middle East, where Sephora has been for more than five years.

photo credit: simon q

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