From AI-driven product recommendations to virtual try-ons, Sephora has not just adapted to the AI and digital era,  it has redefined it. This has established Sephora as a trailblazer in the beauty retail industry - creating a customer experience that is as unique as the individual.

Since launching their first AI-powered chatbot in 2016, Sephora Virtual Artist, Sephora has moved beyond traditional over-the-counter sales to embrace a more interactive, customer-centric approach.

‍The result: With AI and digital innovations, Sephora was able to reach a large customer base, grow brand loyalty, and increase its e-commerce net sales from USD 580 million in 2016 to over USD 3 billion in 2022 - representing a 4x increase in online sales over six years.

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What made them take on the AI transformation? 

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Sephora has been quick to catch on to changing consumer trends, with an openness to invest in tech that matches the evolving customer’s needs and preferences. This highlights their commitment to customers and to their legacy of digital innovation.

For instance, when Sephora noticed more consumers conducting in-depth product searches, they strategically leveraged AI in search engine optimization to enhance customer outreach with AI-generated landing pages.

These pages were tailored to specific queries like 'best foundation for sensitive skin', and offered relevant, personalized content to potential customers. It resulted in a 6% increase in organic search visibility for effective keywords from Q4 2018 to Q2 2019.

Additionally, Sephora released other AI tools and digital innovations, providing a blueprint for brands that were looking to refine their digital strategies.
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Sephora’s AI transformation journey in the retail industry

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Sephora had been an early adopter of technology and has continually included it in their overall strategy. For instance, they launched their first website in the US in 1999.

In 2015, Sephora launched the Sephora Innovation Lab, which marked the beginning of AI technology integration within their strategies. This lab pooled together executives from product, design, and marketing to create customer experiences that revolutionized the beauty retail industry.

Along with their technology partner, ModiFace, Sephora Innovation Lab employed these AI chatbots and assistants: 

1. Sephora Virtual Artist: Deemed as the most innovative and accessible mobile offering, it used AR technology, allowing customers to try thousands of Sephora products right from the mobile app, making it a highly interactive and personalized experience. In fact, by 2018, i.e., within 2 years of launching the app, Sephora Virtual Artist saw over 200 million shades tried on, and over 8.5 million visits to the feature.
2. Sephora Color Match: assisted customers in shade matching and provided product recommendations across Sephora's range of products. It allowed users to try different shades in real-time and buy the product directly from Sephora’s website/mobile app.
3. Sephora Reservation Assistant: Launched in late 2016, this assistant was integrated into Facebook Messenger. It helped customers with makeup appointments at Sephora stores. In less than 2 years, Sephora saw an 11% increase in booking rates and a reduction in the number of steps involved in booking an appointment. It largely translated into increased customer satisfaction and in-store spending.

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Moreover, Sephora’s AI transformation was complemented by several innovative strategies, such as an omnichannel retail strategy.

Keeping consistent and personalized customer engagement at the core, they followed an omnichannel retail strategy. This allowed them to ensure a seamless shopping experience by integrating online, mobile, and in-store interactions into a singular experience. Here are their products and offerings: 

1. Beauty Hubs: Integrated in-store interactive mirrors and iPad stations for virtual product trials with AR technology, enhancing the omnichannel experience.
2. Sephora Studio: Designed for neighborhood shopping streets, these smaller studios offer a digitalized retail experience with advanced features like mobile POS systems, catering to changing consumer shopping habits.
3. Personalization and Data Utilization: Used AI to personalize shopping experiences with data-driven product recommendations, making each customer's journey unique.

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3 AI-powered features that drove Sephora’s success

Before launching Sephora Virtual Artist, Sephora partnered with ModiFace and experimented with AR for five years. Even after launch, they were committed to bringing the latest features and upgrades to the app aligned with their customer’s needs and preferences. They released new add-ins or expanded to other platforms every four months. 

• Facial recognition and customized tracking of facial elements: The core technology behind Sephora’s AI chatbot was its ability to track facial features accurately. The software could measure the position of eyes and lips in real-time, enabling it to precisely apply eye shadow and lipstick on the user’s face. 
• Skin tone analysis: ModiFace technology enabled the AI chatbot to analyze the user's skin tone and accordingly recommend products. It also used customer preferences, purchase history, and other interactions to provide an individualized shopping experience.
• ‍Matching virtual experience with real: ModiFace and Sephora’s teams worked together to ensure that every virtual product matched with the real product, right down to the tint and gloss. This removed any discrepancy when the customer received the product or picked it from the store.

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So, what can other brands learn from Sephora (even outside of the retail industry) 

• Choosing the right (tech) partner: Besides building their team under Sephora Innovation Lab, Sephora partnered with ModiFace, Facebook, Pantone, etc. to launch new AI products and features that helped them tap into a larger pool of tech talent. This enabled them to roll out upgraded services and a tailored experience for their user base. 
• Using inter-departmental skills to take quick action: Gaining insights and understanding customer needs is straightforward, but the challenge lies in swiftly acting on this data. Sephora’s Innovation Lab was a collaboration of executives from marketing, product development, and technology. They focused on rapidly sourcing, developing, evaluating, and launching new initiatives.
• Omnichannel consistency: By leveraging the right mix of AI technology and human interaction, Sephora succeeded in creating a unified experience throughout their platform. A user would find a similar experience online as they would at the store.

Evolution of Sephora's website over the years. They adapted to changes in customer needs, preferences, and technological advancements
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Overall, Sephora’s AI transformation demonstrates how leveraging technology can create a more engaging, personalized, and efficient retail experience. It can strengthen a brand's connection with its customers and enhance its market position.

Do you know of a brand that strategically integrated AI tools and chatbots with great results?

Let us know, we would love to hear about it.

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