Sephora, the renowned cosmetics retailer under LVMH, is considering making significant changes to its operations in China in order to meet its ambitious sales target. One of the key moves being contemplated is the appointment of a new leader for the country. Industry sources suggest that Sephora aims to select a new head for China in the near future and is also exploring ways to enhance VIP services for its premium customers.

Despite projecting worldwide revenue of €13 billion ($15 billion) this year, Sephora has experienced slower growth in China due to intense competition within the cosmetics industry. Recognizing the immense business potential of the Chinese market, senior managers at Sephora view the appointment of a new executive as a crucial step in driving growth in this region. Their ultimate goal is to achieve €20 billion in annual global sales within approximately five years.

While Sephora declined to comment on these potential developments, its parent company, LVMH Moet Hennessy Louis Vuitton SE, headed by billionaire Bernard Arnault, did not immediately respond to requests for comments. LVMH is increasingly prioritizing the Chinese market as a key driver of growth in the luxury sector. With the Chinese market expected to surpass the US and Europe by 2025 to become the world’s largest, companies are actively seeking to expand their presence in the country. LVMH has already relocated the regional headquarters and senior executives of some of its brands to China, while Arnault himself recently visited the country to tour stores and meet local teams.

Sephora, which generated an estimated €11.6 billion in sales last year, making it LVMH’s second-largest brand after Louis Vuitton, has struggled to establish itself as a top choice among Chinese consumers. Despite having over 300 stores across approximately 90 cities and a presence on popular e-commerce platforms, Sephora faces tough competition in China’s $88 billion beauty and personal care market. While global beauty giants such as L’Oreal and Estee Lauder are expanding their foothold, domestic brands like Florasis and Perfect Diary have gained market share by catering to rising consumer nationalism and tailoring their sales strategies to local preferences.

To differentiate itself from competitors, Sephora plans to implement new sales tactics. This includes offering niche overseas beauty brands that are not easily accessible online and featuring more Chinese brands on its shelves. By leveraging these strategies, Sephora aims to carve out a unique position in the Chinese market and attract discerning customers.

In conclusion, Sephora’s potential overhaul of its operations in China highlights its determination to achieve robust growth in this critical market. With the selection of a new leader and the adoption of innovative sales tactics, Sephora aims to overcome intense competition and solidify its position as a preferred choice among Chinese consumers. By aligning its strategies with changing shopper preferences and capitalizing on the expanding Chinese market, Sephora hopes to make a significant contribution to LVMH’s goal of reaching €20 billion in annual global sales within the next five years.

Useful links:
1. LVMH’s Sephora May Appoint New Head in China
2. Sephora Struggles for Relevance in China