ColorIQ matches shoppers’ skin tone with the appropriate shade of foundation. It also provides the company with valuable data about its clientele. Sephora
Retail is having an identity crisis. Again.
The unstoppable expansion of e-commerce means that luring customers into actual stores—and better yet, convincing them to buy something while they’re there—is becoming more difficult by the day. This is true even during the holidays. In November and December of last year, The Wall Street Journal reports, foot traffic across all retail stores was down to 17.6 billion people. That’s a substantial number, but it’s nothing compared to the more than 30 billion shoppers who flooded stores during the holiday season in 2010, even as the country was overcoming a recession.
It’s a trend that has some lamenting the inevitable death of the in-store experience. But not Julie Bornstein, the chief marketing officer and chief digital officer of Sephora, the global cosmetics juggernaut. “I feel strongly that physical retail will never go away,” she says. “It’s been a pastime since the beginning of mankind.”
Julie Bornstein. Sephora
But Bornstein is not blind to the numbers, which is one reason why she, like many other retailers, wants to use technology to bridge the online and offline worlds. That approach is evident at Sephora’s new flagship location in New York City, which opened Thursday. The store is filled with digital accents designed to bring the brick-and-mortar experience closer to the world of online retail, including everything from a touchscreen quiz for finding the best perfume to a skincare product finder that culls e-commerce data and serves up online reviews. It could point the way forward for other retailers facing the new threat from the internet.
In-Store Data Is Just as Important as E-Commerce Data
Retailers tend to obsess over e-commerce data about what their customers want. And they should. But Bornstein says using technology in-stores can also unlock some interesting data that brands could never collect online. The most obvious example of that at Sephora is a program called ColorIQ, which attempts to match shoppers’ skin tone with the appropriate shade of foundation. To do that, Sephora partnered with Pantone to identify every possible skin tone in the world. They then created a piece of hardware that filters out external light to photograph a shopper’s exact skin tone and match it to makeup that’s in stock.
When Sephora began using Color IQ in stores, the company quickly realized that some of the 121 skin tones identified were more popular than others, and yet, Sephora didn’t have a very extensive product offering for several of the most popular tones. Using this Color IQ data, Sephora worked with brands to build out a more diverse range of shades, and since then, the company has added a whopping 2,900 SKUs to its inventory. “Brands had never been able to see that data before,” Bornstein says.
Beacons Are the Future (But Not for Everyone)
Beacon has become a buzzword in retail lately. It’s a piece of hardware that can connect with shoppers’ mobile devices when they’re in stores, enabling brands to push promotions and other incentives to shoppers as they browse. The trouble is: the technology only works if shoppers have the brand’s app already, which makes adoption of beacon technology full of friction and logistical challenges. That’s why Bornstein advises companies that are still building a mobile following to avoid being distracted by beacons. “You can put a lot of money and effort into building beacon capabilities, but if you don’t have a lot of people getting it, what good is it?” she says.
But for brands like Sephora, which has some 4 million app downloads already, Bornstein says beacon technology is the future. That said, Sephora is still in the process of researching how to best use the technology without alienating customers. It’s a careful balancing act of respecting customer privacy, while offering them perks that are personal enough to make beacons worth the investment.
Showrooms Won’t Replace Shops
Recently, some retailers, like Bonobos and Warby Parker, have begun treating the store as a showroom, where shoppers can come to try on new products. If they want to actually buy something, though, they’ll use an iPad or other device in the store to make their purchase online. A few days later, the product will arrive at the shopper’s home by mail. It’s an approach that helps retailers cut down on overhead costs and inventory. And yet, for Bornstein, replacing every store with a showroom isn’t going to be in the customer’s best interest. “If they’re coming in to get something, generally, they want to walk out with something, too,” she says.
Instead, Bornstein says stores should think about how this concept can be an add-on perk for customers. Sephora, for instance, has a program called “store to door” that enables online ordering when items aren’t in stock in stores or when it’s simply more convenient for the customer. “If we can’t get a full store, but want to be in a certain location, we can envision having a smaller store with less product,” she says. “Then we can leverage the endless aisle online.”
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