How Sephora became the kingmaker of the $30-billion, high-end beauty industry

Welcome to?Fast?Company?Daily, our?daily?newsletter on?LinkedIn, featuring a free article selected each?day?by our editors as well as a roundup of great advice on careers, hiring, innovation, and technology.

Visit?fastcompany.com?for our top stories and breaking news.?First time seeing this? Please?subscribe.

• Artificial intelligence can help with many types of work, but it's important to learn how to mitigate its cognitive cost, or ‘mind tax.'
• Amtrak’s sleek new high-speed electric trains are coming to the East Coast next spring.
• Megacities such as Mumbai and Cairo are so polluted that they’re warming slower—but this should hardly be taken as a good sign.
• Use these eight ways to take charge of your life when it feels too chaotic to manage.

How Sephora became the kingmaker of the $30-billion, high-end beauty industry

By Elizabeth Segran, Ph.D.

One of Atlanta’s hottest parties took place in late September at an old chemical-manufacturing plant on the city’s east side. It didn’t seem to matter that an epic storm was heading right toward it. As Hurricane Helene barreled across Florida and up Georgia, some 8,000 people—who’d each spent between $135 and $445 on a ticket—flew and drove through wind and rain to get to the sold-out venue. Once there, they were instructed to fit their personal belongings in a small clear plastic bag and were handed a tote. Then, as a DJ played bubbly pop music, they began loading it full of beauty products.

The partygoers—makeup junkies, beauty influencers, and industry insiders—were attending Sephoria, the annual festival from one of the world’s most powerful retailers, and they were there to collect their haul. Held in Atlanta for the first time, this year’s event was themed “Beauty Funhouse” and featured elaborate booths from more than 50 of Sephora’s most promising brands. Sol de Janeiro, currently the retailer’s top-selling brand, handed out minis of its hit Brazilian Bum Bum Cream. Rare Beauty (recently supplanted from the top spot) had set up a faux candy counter with blush-dispensing gumball machines. Tarte, one of the first indie brands Sephora had championed when the French retailer set up shop in the U.S. in 1998, gave out tubes of its Maracuja lip glosses.

Beauty founders were there too. Makeup artist Danessa Myricks, her hair in a dramatic updo, was stationed at her eponymous brand’s booth, offering pointers on how to wear the company’s signature chrome flake eyeshadow. Diarrha N’Diaye-Mbaye, whose upstart Ami Colé line for women of color landed in Sephora in late 2022, was helping attendees find their perfect shade of foundation. At the Fable & Mane booth, which looked like a Bollywood set saturated in mustard yellow and orange, cofounder Akash Mehta was explaining to passersby how to apply the bindis that he was handing out alongside samples of the brand’s hair oils.

Mehta, whose brand has tripled in revenue over the past two years, wasn’t there simply to win over customers. He also wanted to demonstrate his commitment to Fable & Mane’s exclusive retail partner. “This is a chance to get closer to the Sephora ecosystem,” he explained. “You want to show them that you’re invested in the partnership.” Invested, that is, even beyond the $100,000 he’d spent on his Sephoria booth.

With 3,000 stores in 34 countries, Sephora, which is owned by the French luxury conglomerate LVMH, is the world’s largest “prestige,” or high-end, beauty retailer. While LVMH doesn’t break out individual company sales, its “selective retailing” business unit—which houses Sephora, duty-free retail chain DFS Group, online retailer 24S, and a pair of Parisian department stores—surpassed $19 billion in revenue in 2023, up 25% year over year. LVMH chairman and CEO Bernard Arnault highlighted the retailer in his year-end earnings call, saying it had “managed to exceed all our forecasts.” It remains a bright spot, helping to drive 6% growth in selective retailing for the first nine months of this year.

Though Sephora has global reach, North America remains its biggest and most influential market, both an incubator of trends and a launchpad for new beauty brands. Led by Artemis Patrick, a Sephora veteran who became CEO in April 2024, Sephora North America has some 700 stores and 30,000 employees, along with outposts in more than 1,000 Kohl’s department stores, thanks to a 2020 partnership she helped spearhead. (Sales from Sephora’s Kohl’s shops alone surpassed $1.4 billion in 2023; they’re expected to exceed $2 billion this year.) Sephora’s success is boosting the entire U.S. prestige beauty market, which recorded its third year of double-digit growth in 2023, according to data firm Circana, increasing 14% to $31.7 billion in sales.

Like many in the industry, Patrick has been playing with makeup since childhood. But her upbringing was anything but traditional.

Read the full story about Sephora title as the world’s most powerful beauty retailer and how it uses its aisles and influence to make—or break—new brands.

Follow us on LinkedIn, X, Instagram, Threads, Facebook, WhatsApp, TikTok and Bluesky.