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Today, Explained

The making of a beauty king

Fri, 14 Feb 2025

Description

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

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Transcription

Chapter 1: What was the innovative concept behind Sephora's stores?

1.454 - 9.339 Noel King

On Today Explained, way back in the mists of time, 1998, a new beauty store hit the scene. Its appeal was choice.

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9.919 - 26.148 Liz Segran

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.

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Chapter 2: How did Sephora become a kingmaker in beauty?

26.328 - 52.385 Noel King

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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60.376 - 73.967 Scott Galloway

Hey, it's Scott Galloway. In today's marketing landscape, if you're not evolving, you're getting left behind. In some ways, it's easier than ever to reach your customers, but cutting through the noise has never been harder. So we're going to talk about it on a special PropG Office Hour series.

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74.007 - 88.238 Scott Galloway

We'll be answering questions from C-suite execs and business leaders about how to market efficiently and effectively in today's chaotic world. So tune into PropG Office Hour special series brought to you by Adobe Express. You can find it on the PropG feed wherever you get your podcasts.

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93.188 - 108.275 Noel King

In every company, there's a whole system of decision makers, challenges, and strategies shaping the future of business at every level. That's why we're running a special three-part Decoder Thursday series, looking at how some of the biggest companies in the world are adapting, innovating, and rethinking their playbooks.

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108.615 - 118.72 Noel King

We're asking enterprise leaders about some of the toughest questions they're facing today, revealing the tensions, risks, and breakthroughs happening behind closed doors. Check out Decoder, wherever you get your podcasts.

119.26 - 122.282 Laura Bullard

This special series from The Verge is presented by Adobe Express.

Chapter 3: What makes Sephora the most powerful player in high-end beauty?

129.884 - 148.629 Noel King

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?

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149.529 - 169.341 Liz Segran

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.

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169.901 - 198.334 Liz Segran

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.

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198.494 - 222.954 Liz Segran

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.

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222.974 - 242.93 Liz Segran

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.

242.951 - 245.233 Unknown Speaker

Come shopping with me at Sephora. I'm going on a huge...

245.493 - 259.882 Additional Analyst on Christian Conservative Views

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?

260.515 - 271.318 Liz Segran

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.

271.878 - 298.088 Liz Segran

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.

Chapter 4: How did Glossier's journey reflect the impact of Sephora?

358.38 - 366.446 Liz Segran

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.

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366.466 - 367.987 Unknown Speaker

Rose water spray.

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369.423 - 381.832 Liz Segran

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.

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382.412 - 393.5 Emily Weiss

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.

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393.86 - 419.402 Liz Segran

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

420.243 - 443.542 Liz Segran

$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.

443.582 - 449.406 Claire White

Glossier Cloud Paint. I love it so much. It's just... I feel like it looks so natural on you.

449.766 - 456.608 Liz Segran

And even building these gorgeous stores that we're seeing pop up in New York and in Boston and all of these different places.

456.908 - 464.77 Additional Analyst on Christian Conservative Views

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.

Chapter 5: What challenges did Glossier face in the beauty industry?

881.476 - 898.486 Claire White

Here's Claire. I'm definitely conscious of the things that are in my kitchen, in my pantry. I prefer products that are organic and that... have a shorter label. A lot of the things that I saw on Thrive Market totally fit that bill. Also with my first order, I got a free gift from Thrive.

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898.926 - 908.273 Claire White

I received a Thrive Market cookbook and some almond butter and ghee, all things that are staples in my kitchen already. You can skip the junk without overspending.

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908.313 - 918.26 Noel King

You can head over to thrivemarket.com slash explained to get 30% off your first order and a free $60 gift. That's thrivemarket.com slash explained thrivemarket.com slash explained.

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923.154 - 938.239 Unknown Speaker

Have you ever scrolled through Instagram in the summer and wondered how everyone you know is suddenly in Europe? You've probably thought to yourself, how can they actually afford that trip? Well, summer's almost here, and on this week's episode of Net Worth and Chill, I'm diving into practical ways to save on summer travel.

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938.339 - 955.386 Unknown Speaker

Flight prices change constantly, literally day to day, and often those changes in price can fluctuate based on your location, the strength of your country's currency, and how popular a destination is in your region. So how do we see what that flight price would be in another place? We are using a VPN.

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Plus, I'm answering some of your burning travel questions from finding better flight deals to making the most of your travel credit cards. We're breaking down the travel industry's best kept secrets. Listen wherever you get your podcasts or watch on youtube.com slash yourrichbff.

973.518 - 978.867 Unknown Speaker

Beauty. Style. Today Explained.

980.949 - 993.438 Noel King

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.

993.798 - 1015.231 Liz Segran

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.

Chapter 6: How did Glossier's partnership with Sephora change its trajectory?

1016.711 - 1022.552 Liz Segran

And there, if you recall, there were these beautiful glass cases and there were these brand representatives.

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1022.592 - 1023.432 Laura Bullard

You should try this.

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1024.552 - 1032.174 Liz Segran

And the only way for you to try these different products was to have one of these brand representatives talk you through everything.

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1033.581 - 1036.766 Laura Bullard

You look amazing. Of course she does.

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1037.507 - 1062.285 Liz Segran

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.

1062.965 - 1087.039 Liz Segran

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.

1087.26 - 1113.901 Liz Segran

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.

1119.318 - 1140.48 Liz Segran

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.

1141.101 - 1163.676 Liz Segran

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.

Chapter 7: What does the future hold for brands in Sephora?

1189.478 - 1193.622 Unknown Speaker

Okay, there's several different ways to get yourself in front of a buyer at Sephora.

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1194.33 - 1203.176 Unknown Speaker

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.

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1203.657 - 1220.829 Liz Segran

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.

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1221.409 - 1244.317 Liz Segran

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.

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1244.677 - 1261.39 Liz Segran

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.

1261.69 - 1289.696 Liz Segran

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.

1290.176 - 1317.329 Liz Segran

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.

1317.729 - 1327.851 Liz Segran

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.

1330.771 - 1337.774 Noel King

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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