BW Confidential - Issue #1 - April 2010 - (Page 18)

Interview Sephora Retail therapy LVMH-owned perfumery Sephora has turned around its European business in recent years. BW Confidential talks to international and development managing director Olivier Schaeffer about the chain’s expansion, private-label offer and discounting in the region by Oonagh Phillips Is the focus now on developing in high-growth emerging t’s no secret that the selective perfumery channel in Europe is markets? going through a bad patch. Stores are not always in stock, footfall We don’t have a list of priority countries. The important thing is to continues to drop, and more often than not consumers are buying choose the best location in high streets and commercial centers. on discount. LVMH-owned perfumery chain Sephora, however, In terms of going to high-growth markets, seems to be riding out the storm. The group says such as Eastern or Central Europe, the same the chain saw growth in all markets in 2009 (it applies. However, we also want to open does not reveal sales figures). It is also planning in Western Europe, as these are the most to open as many doors in 2010 as it did last year If there were discounts in profitable countries. Even in Spain, which (there were 164 new openings in 2009). 2009, it was in reaction to was hurt by the crisis, we opened stores The chain says it has gained market share other competitors making huge last year. in key European countries in 2009. In France, Sephora now claims almost 25% of the market; discounts, which was supporIn Spain do you want to focus on in Spain the chain has benefited from the closure ted by brands through strong stand-alones or department-store of competitors’ doors and has a market share of corners? 5.3%; while 2010 is set to mark the revival of ads—even TV ads. We never In our corners in El Corte Inglés we only Sephora in Italy, after efforts to create a uniform want to be the promoters of sell Sephora and exclusive products, so the concept from the many smaller chains the com- any discount, but if someone business model is different from standpany purchased several years ago. The retailer has alones. We have good locations at El Corte fights against us, we are a 7% market share in Italy, according to NPD. Inglés, and generally rank among the first Another important market is Russia, where forced to fight back corners there. Sephora has been trying to get a strong footWe opened stand-alone stores and corners hold for years. The retailer entered the market in in 2009, while most of our competitors 2003 via a franchise agreement with Alkor, which closed doors. And on top of that some operates the L’Etoile perfumery chain. However, selective brands decided to close doors at our competitors’ things went slowly and after seven years, there are still only 20 points of sales. So this creates an opportunity to grab marSephora stores in the country. Sephora upped the stakes at the ket share. Our market share in Spain grew fast in 2009— end of 2008 by taking a 45% stake in Russian chain Ile de Beauté. it now stands at 5.3%—and we are ready to repeat this perforWhether Sephora will do better with another local partner, and if it mance in 2010. We have about 50 stand-alone stores and about will merge the two concepts remains to be seen. 30 corners there, and there is a lot of room for expansion. Sephora’s plan of attack has for the most part been based on a strategy of exclusive products and its ever-growing private-label brand—which has some suppliers worried about how much more How can you do better than competitors in a tough shelf space it will take. It has also sought to improve its service—a market like Spain? traditional weak spot. BW Confidential asks Sephora international Our concept is very different from our competitors, which have a and development managing director Olivier Schaeffer if this will be traditional type of retailing. By getting trendy, young products into enough to get customers in Europe into the store and buying. our stores, we will take market share. Most of the trading down is I “ ” 18 April 2010 - N°1 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #1 - April 2010

Update - Brand and retail recap
Take note - Market facts, figures and trends
Launches - The latest fragrance, skincare and make-up launches
Best of BW - Market highlights
Interview - Sephora international & development md Olivier Schaeffer
Insight: make-up - Category overview
 - Industry viewpoint
 - Trends
Wellness report - Overview
 - Industry roundtable
 - Spa case studies
Travel retail - Europe: little chance of a rebound
Market watch: Western Europe - Regional analysis
 - Germany
 - France
 - UK
 - Spain
 - Italy
Radar - Six up-and-coming beauty brands
Packaging special -  Industry analysis
 - Innovation
Last word - UBS analyst Nik Modi's outlook for 2010

BW Confidential - Issue #1 - April 2010