Blurring the line between digital and physical with segmentation of one

A Sephora case study for marketing and engagement

The Beauty category is an always-evolving, immersive customer journey. In the past, the buyer journey began and ended at the beauty counter, but today the digital world is rapidly changing how we engage with each other. From social media to virtual events, digital engagement is becoming ubiquitous. Yet we still crave real, physical connections.

How can we marry the efficiency and reach of digital marketing with the intimacy of physical engagement? The answer may lie in hyper-personalization, and Sephora has successfully converged digital with physical to deliver unique customer experiences.

The good: customer insight integration

Sephora hasn’t simply used digital in their marketing, they use digital across the business, coordinating its approach on one channel to drive results in another, making the customer experience intuitive and highly personalized.

Through technology, Sephora can trace customer behavior all the way to the sale and provide a mobile experience that is tailored to the user needs. They gather this information by analyzing the actions that a shopper takes across channels to better identify the customer’s intentions. By noticing the habits of shoppers and addressing their needs in real time with its mobile app, Sephora is able to enhance personalization of the shopping experience for customers both in-store and online.

Their app is designed to emulate the knowledge of a Sephora sales associate and provides highly personalized product recommendations and social-media reviews, ability to join groups pertaining to user interest or have Q&A with other members and get expert-level beauty and personal care tips. In addition, Sephora integrated AI in their Virtual Artist feature, which uses facial recognition technology to allow customers to virtually try on products and receive advice. They create a future experience that considers whether the shopper is researching and comparing products, planning a purchase for later, or ready to buy a product immediately.

Sephora offers digitally savvy customers enough technological gadgets and computer displays to make a Silicon Valley engineer blush, according to New York Times.

The result of this approach is to give customers the tools they need to help them feel confident in making a purchase - whether in-store or online - without necessarily needing to speak to a sales representative or extensively research outside sources as they were doing previously.

Looking under the bonnet

Sephora’s marketing and sales capability improved since merging of the digital and physical retail teams under one roof, along with customer service, which allowed Sephora to realign itself with today’s multi-channel shopper, changing their way they think about sales, metrics, engagements and experiences across channels.

By combining the teams, Sephora has been able to rebuild customer profiles to include 360-degree data that tracks the whole customer journey from online browsing and purchasing to in-store interactions with sales representatives and over-the-counter sales.

“What we learned is that users have different levels of engagement, with a range of motivations, learning styles, barriers and goals. To be successful, we would need to easily connect them to voices they trust and inspire them to participate in light and fun ways. If a customer browsed online then bought in store, we can see that. We just weren't looking at it before, but it's a win for both channels," said Debra Yeh, SVP Marketing.

As the customer moves through Sephora’s environments, the experience shifts in real time.

Debra Yeh continued: "We had good relationships across our channels, but we weren't collaborating or finding synergies, and we were maximizing business in isolation. We're more aligned, and we can move faster across in-store, online and mobile strategies. Mobile is the glue that holds it all together, both flexible and feature-rich enough to solve customers’ unmet beauty needs no matter where they are on their journey. It’s not about just injecting digital, but it’s about making a successful story."

Transforming a previously fragmented digital channel, Sephora’s cult following can now enjoy the benefits they’ve always enjoyed in-store, with the added reward of an even richer and more social experience online.

The bad: unintended consequences

Sephora’s digital transformation is impressive and helped them thrive amid a retail crisis in 2019. Fast-forward to 2024, Sephora goes through a “tweens controversy and cosmetic chaos".

Impelled in large part by TikTok to seek beauty products meant for adults, younger customers — teenagers and preadolescents — are proving to be a mixed blessing for Sephora.

The trend that started initially in the US at the beginning of this year has since gone global and is now well-established in Europe, including France.

In recent months, social media has been abuzz with accounts of jubilant, and sometimes rowdy, groups of middle school-aged shoppers buying expensive serums and moisturizers. Their curiosity for all kinds of creams, gels, face masks and facial peels has even earned them a viral moniker: “Sephora Kids.”

Adult beauty shoppers and Sephora staff alike have taken to social media to complain about the behavior of these children in-store, running around in large groups, breaking testers, leaving a mess of shelves and being rude to people.

Marketing to a younger demographic

Thanks to social media, Generation Alpha (those born after 2010) has discovered skincare and beauty rituals and they’re not letting go of them anytime soon. Collectively, Gen Alpha accounts for about 2.5 billion people worldwide, a particular cohort that will likely drive growth for years to come.

In 2023, US female teen consumers spent 33% more on cosmetics and 19 % more on skincare than in the previous year, according to investment bank Piper Sandler. Cosmetic spend remained as the highest priority of spending in the wallet for all female teens.

Total cosmetics spending came in at $127/year versus skincare at $122, with upper income respondents spend on cosmetics $227 vs $196 for skincare.

From all female teen respondents, 55% of them claimed to wear make-up every day.

The major categories for male teens were clothing with $205 spend and video games at $217 spend.

While 35% of teens do not have an individual bank account yet, Sephora becomes the #1 preferred beauty shopping destination for female teens in 2023, holding the strongest loyalty membership at 60%.

Social Media plays a large role in this because once brands reach middle schoolers with their parent’s credit card, they become unstoppable, targeting a whole new demographic. It’s common sense that if a product gains a lot of publicity on TikTok or Instagram, viewers are going to be more inclined to buy it, and with the constant need middle schoolers have to “fit in” and stay up with trends, bright, “preppy”, and trendy brands have these pre-teens on a leash.

The ugly: social responsibility

It is a genuine phenomenon highlighting the transformative power of algorithms and social media marketing, where short-form videos wield significant influence over consumer behavior.

In Sephora's case, attaining top-of-mind brand status for all its customers presents a challenge, as it leads older audiences to recollect the marketing paranoia portrayed in John Carpenter's movie They Live.

Algorithms aside, why and how are teens so drawn in to buy and use products that are not appropriate for their young skin? The answer lies in the potent alchemy of good old-fashioned self-esteem, peer pressure, FOMO and extremely effective social media marketing.

Nine in ten teenage girls use make-up and almost half claim to use cosmetics because it makes them feel more confident. One study found a fifth of girls as young as 12 will not leave the house without make-up.

Generation Alpha can’t get enough of ‘get ready with me’ videos, and influencer videos have slowly built a cohort of followers that has immense purchasing power, despite not being old enough yet to hold a job themselves. The overly saturated marketing of the aesthetic that tweens dream to have has caused “early maturity”, a term coined for all the 10-year-olds that show up to their fifth-grade classrooms with a fresh set of nails and about 80 dollars on their faces at all times.

Teenagers are highly attuned to social validation and acceptance by their peers. The popularity of certain beauty products, especially those endorsed by influencers can create a sense of belonging and conformity within peer groups, paradoxically intensifying insecurities around body image.

The growing influence of teenage consumers underscores the importance of understanding evolving demographics within the industry. As demographics shift, so do consumer preferences and behaviors.

Making an adult feel special is very different than making a college student feel special, which is dramatically different than making a teen feel special. Making sure it speaks to all generations in a responsible way becomes critical.

Artemis Patrick, who took over as Chief Executive Officer of Sephora North America on April 1, said the interest from younger customers was both an opportunity and a challenge.

By prioritizing age-appropriate products, promoting respectful behavior, and fostering a healthy perception of beauty, we can create a balanced and empowering environment for the next generation of beauty enthusiasts. Artemis Patrick

Artemis Patrick added: "I think that we at Sephora have a huge responsibility— as do our brands — to make sure that we educate this future consumer on what’s right for them. Parents, retailers, and the beauty industry must navigate this landscape responsibly, ensuring the well-being and education of young consumers while maintaining a positive shopping experience for all. By prioritizing age-appropriate products, promoting respectful behavior, and fostering a healthy perception of beauty, we can create a balanced and empowering environment for the next generation of beauty enthusiasts."

Key take-aways

The ‘Sephora Teens’ trend is just the latest example of a marked shift in consumer behavior influenced by social media. It allows users to discover and embrace beauty practices that resonate with them, even if not age-appropriate. This trend challenges traditional marketing strategies, emphasizing the importance of responsibility, authenticity and relatability in product promotion.

Despite the younger audience controversy, Sephora’s immersive customer experience and omnichannel strategy was designed with efficiency in mind for both business and customer. For marketing leaders, here are three key take-aways from this case study.

1. Get a complete view of each customer

Analyzing engagement metrics and audience demographics enables brands to refine their marketing strategies, and easily identify emerging trends and opportunities for innovation. Being agile and responsive to consumer preferences, intent and behaviors is how brands maintain relevance and stay competitive.

2. Meet customers with relevance wherever they are

By blending digital personalization with real-world interaction, companies can achieve new levels of customer engagement and make sure brand stays top of mind at every touchpoint. This is revolutionizing marketing and transforming customer relationships. Savvy businesses build trust and loyalty by making each person feel uniquely valued and understood, no matter which channels they use - while still operating efficiently.

3. Balance creativity and social responsibility

Marketing plays a crucial role in shaping consumer behavior, and advertisers should avoid exploiting young consumer’s inexperience, susceptibility to peer pressure, or their limited understanding of persuasive intent. As companies strive to capture attention, they must prioritize authenticity, transparency, and the protection of vulnerable audiences while promoting positive social values and respecting privacy rights.

Whether you're a forward-thinking marketing visionary seeking to engage consumers with novel interactions, or a devotee of John Carpenter's iconic film They Live viewing AI as a contemporary antagonist, this article prompts an evaluation of consumerism's influence on customers, business and society. It underscores the notion that our decisions are influenced by a creation of our own making.