Sephora revolutionized high-end beauty and turned tiny brands into household names. Now, comes the reckoning. Fast Company’s Liz Segran on whether Sephora is too powerful. This episode was produced by Amanda Lewellyn, edited by Amina Al-Sadi, fact-checked by Laura Bullard, engineered by Patrick Boyd and Andrea Kristinsdottir, and hosted by Noel King. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members Facade of Sephora store in Concord, California. Photo by Smith Collection/Gado/Getty Images. Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: What was the innovative concept behind Sephora's stores?
On Today Explained, way back in the mists of time, 1998, a new beauty store hit the scene. Its appeal was choice.
It would put hundreds of these carefully curated beauty brands in a single store. And as a customer, you were free to roam the aisles and test all the products that you wanted to your heart's content. And that was just a very unusual idea at the time.
Chapter 2: How did Sephora become a kingmaker in beauty?
You no longer had to be Teen Clinique or a Lancome lady. Maybe for you, it wasn't solely Maybelline. And that was fine. In Sephora, you were free. Consumers loved this new way of shopping. Sephora became a kingmaker. It is still a very big deal to get your little brand into a Sephora bay. But now comes a reckoning. Does Sephora have too much power? Get in, loser. We're going shopping.
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Chapter 3: What makes Sephora the most powerful player in high-end beauty?
It's Today Explained. I'm Noelle King with Fast Company senior writer and friend of the show, Elizabeth Segrin. Hey, Liz. Hey, it's so good to be here. You recently wrote a big piece about Sephora and just how much power it has in high-end beauty. What is Sephora's deal?
Oh, my gosh. I think that for all the beauty junkies out there and even people like me who casually wear makeup and don't fully understand how to apply eyeliner, I think it's really easy to understand the appeal of Sephora. It's such a fun place to shop, and we love wasting hours there on the weekend discovering new brands.
But actually, all of that, all of the innovation around retail has put it in this position of being the most powerful player in the high-end beauty industry, which is worth $30 billion globally. And so we're talking about those brands that are slightly more expensive than what you would find in drugstores. And Sephora has got that market locked up. It has 700 stores in the U.S.
as well as 1,000 outposts at Kohl's. Wow. So it basically now controls the fates of beauty brands on the market. And that is why so many beauty founders are so desperate to break into Sephora. Right. And even though there are other retailers like Ulta Beauty and Nordstrom that are trying to replicate the Sephora model, Sephora is just one step ahead of the competition.
And I think that the reason for this is that it is able to identify and pluck these exciting beauty brands and keep the aisles stocked with a new array of beauty brands. And so there's always something to go into the store for, something new to explore the next time you're in the store.
Come shopping with me at Sephora. I'm going on a huge...
I want this Dior lip gloss, this pink shade. Let me take a look at some of the new stuff. Maybe there's something good over here. Ooh, the Corsa Sunlit. Patrick Ta. I've never bought anything from Patrick Ta. Should we get a blush?
And actually, I think that what most of us don't fully understand is that we think that Sephora is out there finding these brands, putting them on the shelves, and that's the end of the story.
But actually, my reporting uncovered that actually Sephora is getting really deep with the founders of these brands into shaping every aspect of the brand from the products that they're creating to the packaging. And founders are willing to cede control over their brands, these startups that they're creating, because being in Sephora guarantees their success.
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Chapter 4: How did Glossier's journey reflect the impact of Sephora?
And it basically pioneered this concept of makeup that looked like you weren't wearing any makeup at all, like you just woke up in the morning glowing.
Rose water spray.
And so Emily Weiss, the founder of Glossier, came up with this brand and she publicly stated that she wanted to build a beauty brand without partnering with a retailer.
We really wanted to offer this incredible new luxury experience. And we were able to do that by going, again, direct to consumer and not be beholden to retail partners or wholesalers.
who are going to make you your brand become something so that it fits on a certain gondola or a certain you know aisle of a store glossy emerged at this time when all of these venture capitalists were just pumping money into startups and emily weiss was really really good at raising money for glossier in total glossier has raised
$266 million, which is just an astronomical amount for a beauty brand. And its last valuation valued it at $1.8 billion. And so it had all of this money to pour into acquiring new customers, creating really innovative products that consumers wanted. Glossier sent me all of their bomb.coms. Look at how cute these packages are.
Glossier Cloud Paint. I love it so much. It's just... I feel like it looks so natural on you.
And even building these gorgeous stores that we're seeing pop up in New York and in Boston and all of these different places.
Basically, it's like the Apple Store where you can just try on all the products and the associates come up to you. I tried this Super Glow Serum first, and I loved it.
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Chapter 5: What challenges did Glossier face in the beauty industry?
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Beauty. Style. Today Explained.
Today Explained is back with Fast Company senior girl boss Liz Segrin. Liz, you report that before Sephora was the behemoth it is today, it, in fact, was an innovator. Tell us about the beginnings.
You know, what was so interesting as I was reporting this story is that it allowed me to kind of go back to what beauty brands were like when I was in high school, so 20 years ago. And back then... The only way for us to really get access to these high-end beauty brands was to go to a department store.
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Chapter 6: How did Glossier's partnership with Sephora change its trajectory?
And there, if you recall, there were these beautiful glass cases and there were these brand representatives.
You should try this.
And the only way for you to try these different products was to have one of these brand representatives talk you through everything.
You look amazing. Of course she does.
But Sephora in 1998 showed up in the U.S. with this completely different concept. And the concept was that it would put hundreds of these carefully curated brands into a single store and there would be no gatekeepers. And that meant that as a customer, you were free to roam the aisles and test all of the products to your heart's content.
And it also meant that you didn't have to be loyal to a single brand. And this was really a wild concept and it just made the store so much more inclusive. And so consumers just went wild for this new way of shopping. And other retailers quickly tried to replicate this model. Two of the biggest ones I can think of are Ulta Beauty, for instance, and Nordstrom.
They're all trying to create this kind of more open, exciting, model for shopping for beauty. But Sephora, to its credit, has managed to always stay one step ahead of the competition by ensuring that it has the coolest, trendiest, latest brands in store. And also, you know, I think that it has a role to play in actually just kind of shaping beauty trends from the ground up.
And so, for instance, I don't know if you've noticed, Noelle, but there are more expensive high-end shampoo brands than I've ever seen. I have indeed noticed. So there's like Pattern Beauty and Olaplex and Virtue. And this is not an accident. Shampoo had always been an inexpensive drugstore purchase.
But several years ago, Sephora decided that consumers actually would be willing to drop a lot of money on fancy shampoos and conditioners. So it actually went out there and cultivated a new generation of these brands. And lo and behold, five years later, here we are throwing $40 or more on a bottle of shampoo.
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Chapter 7: What does the future hold for brands in Sephora?
Okay, there's several different ways to get yourself in front of a buyer at Sephora.
We want everyone to tag Sephora right down in the comments and get their attention so we can get our brand into their store because we know it needs to be there.
So I've heard all kinds of stories. There are brands that are sending packages of makeup to Sephora on a weekly basis, hoping that somebody at the headquarters will open it up. There are founders who are stalking Sephora buyers so that they can start a conversation.
So, you know, these brands are all desperate to break into Sephora, but actually Sephora is kind of holding all the cards and it's going out there and deciding which brands are going to be the next billion dollar brands of tomorrow. In order to be in Sephora, you have to spend a lot of money at Sephora.
So if you sign a contract with Sephora, first of all, it means signing an exclusivity agreement saying that you won't sell your products anywhere else for at least two years. So that's the first thing. But then you have to pay a lot of money for the in-store fixtures.
So when you go into Sephora and you see those beautiful bays of products, the brands themselves have to pay upwards of tens of thousands of dollars, often a lot more, sometimes hundreds of thousands of dollars, to have those displays. And then... Whenever you make a sale, you have to give 65% of that sale to Sephora, which is much higher than, you know, the industry average.
And so brands are just paying a lot of money to Sephora in order to be in store. But in exchange for that... They are getting access to this enormous audience of beauty lovers. Their loyalty program alone has 40 million members. And if you think about the number of people who are coming into store every day and going to the Sephora website, there is just nothing like it.
So brands and founders are willing to do whatever it takes to be in the Sephora store, to spend all of this money, because the upside is just so big.
What do the founders say when they're asked about the really big tradeoffs that brands have to make in order to get into Sephora?
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