Beauty & Wellness Briefing: Inside Sephora’s play for Gen Z

This week, I examine Sephora’s strategy for seducing Gen Z.

Though the preoccupying theme of the season may be supply chain, the greater conversation point of 2021 has been Gen Z.

Almost daily, I receive emails from beauty brands flaunting their TikTok virality or Gen Z-esque products, or have discussions with beauty executives about how they are approaching this younger, bolder demographic. Retailers, too, are focused on the cohort. Walmart regularly emphasizes its shared values with the demo and is investing time and money into TikTok. Ulta Beauty, for its parts, is also betting on Gen Z to achieve its long-term strategic objectives and financial targets. Meanwhile, Sephora has been quieter when it comes to its Gen Z-focused strategies. But just because the prestige retailer isn’t shouting its strategy from the rooftops, yet, that doesn’t mean Sephora isn’t on the case.

Arguably, Sephora’s most enticing Gen-Z reveal was the addition of Selena Gomez’s line Rare Beauty in September 2020. With its advocacy for mental health and partnerships with real Gen Zers, Rare Beauty is poised to be the Gen-Z hit that Rihanna’s Fenty Beauty was for millennials. Sephora followed that up by bringing in more brands by big names. Skininfluencer Hyram Yarbro‘s Selfless By Hyram, created in partnership with The Inkey List, debuted in June. Addison Rae’s Item Beauty followed in August.

Priya Venkatesh, svp of merchandising at Sephora, said Gomez, Yarbro and Rae’s offerings “help personify the brands and what they stand for, which is why they resonate with our shoppers.”

“Our clients are at the center of all we do; we’re continuously listening to them to understand not only what products and trends they’re most interested in, but also who in the world of beauty is influencing them,” she said. “We know that our clients — especially Gen Z — look to social media for product discovery, and many choose to connect and engage with brands with trusted voices.”

Janine Gettinger, vp of Madeby Collective, which incubated Item Beauty, said that Sephora was a natural choice for both the brand and Rae. “Every detail, from our formula list to our messaging, has our audience in mind. [We’re] lifting the veil to create clean, meaningful products that resonate with a new generation As a clean beauty industry leader, Sephora has been an incredible retailer to debut our in-store launch,” she said.

Nearly a year after its debut, Item Beauty and Rae hosted the brand’s first in-person event at a New York City Sephora in August. All parties hope to do more events, moving forward.  “After a year of building our brand digitally, it was amazing to connect in person, sharing both products and experiences,” said Gettinger. She added that top sellers for the brand have been its Snack Lengthening Mascara, Brow Chow and Lip Quip. “Nothing beats the physical feel, test and hold of an in-store shopping exploration … We are reaching new consumers to share our products, brand and identity with.”

Rare Beauty, Selfless By Hyram and Item Beauty emphasize the exclusive retailer playbook, that Sephora has perfected over the years — not only with Fenty Beauty, but also with Drunk Elephant and Tatcha. Drunk Elephant only recently went into Ulta Beauty in September, while Fenty and Tatcha remain Sephora exclusives in the U.S. But celebrity faces aren’t Sephora’s only Gen-Z tactic. It’s also aiming to appeal to the demo by selling mission-driven brands and providing value.

Beyond its existing relationship with Sephora, The Inkey List was drawn to how the retailer was incubating lines that were focused on more than beauty in the case of Selfless by Hyram.

“Creating a purpose-led Gen-Z brand was squarely aligned with everything we know Sephora to be. [It’s] driving beauty brands that make an impact beyond having great formulas and that are in line with the increasing expectations of the Gen-Z consumer,” said Colette Laxton, co-founder of The Inkey List and Selfless by Hyram. “Whether it’s supporting deforestation with Selfless by Hyram or mental health through Rare Beauty, Sephora is helping to amplify these incredibly important messages to the world.”

According to Piper Sandler’s Taking Stock of Teens Fall 2021 report, the top-five social causes for Gen Z include the environment, racial equity, the humanitarian crisis in Afghanistan, coronavirus and abortion rights. Notably, Sephora is ranked No. 2 on Piper Sandler’s ranking of beauty destinations, following Ulta Beauty.

In terms of offering value, the retailer’s Sephora Collection has been a hit with Gen Zers, according to Venkatesh. “We know that Gen Z is a value-conscious generation, and we are finding ways to deliver just that to our clients. Our in-house brand, Sephora Collection, with its tagline ‘Really Good Beauty, Really Good Price,’ has become a favorite for our Gen-Z clients. It delivers on quality products at an affordable price point.”

Rare Beauty’s assortment, too, is also a draw for its price-conscious positioning, considering everything in the assortment is under $30. The same can be said of The Ordinary, The Inkey List and Selfless by Hyram, which Venkatesh also name-checked.

She did underscore, however, that value doesn’t merely mean cheap. “[Gen Z] rather focuses on value for money; they care more about seeing the results a product promises and what they get for the purchase price,” Venkatesh said.

Sephora’s latest Gen-Z addition, InnBeauty Project, also fits the bill. Individual products within the brand’s assortment range from $15-$32. And, in Sephora marketing and on the retailer’s website, the brand isn’t shy about saying how affordable and effective it is. Inn Beauty Project hit all Sephora doors in October.

“[My co-founder] Jen [Shane] and I have been around the block in beauty. And while clean, effective skincare was being pushed by the Drunk Elephants and the Herbivores of’ the world, we noticed something blatantly missing. The average price points from some of these brands were $50, $60, $70, so then your average basket was upward of $200 or $300. The average U.S. consumer makes less than $45,000 a year, so then these brands end up being a no-go for most people,” said co-founder Alisa Metzger. Metzger most recently worked at Tula as vp of marketing but also had stints at Rituals, Coty, Procter & Gamble and L’Oréal prior. Shane, meanwhile, worked in product development at Tula, Tatcha, Tarte and Bare Minerals.

Beyond catering to Gen Z via price, InnBeauty Project exudes that bright, imperfect aesthetic that young consumers love. InnBeauty Project launched DTC in late 2019 and, despite the pandemic woes that all brands faced last year, Metzger said the brand found favor on TikTok without a pay-for-play model because of its colorful, in-your-face design. “We sent our products to content creators and influencers, predominantly on a gifting basis. But because the packaging is so loud and bright, TikTok’s algorithm picked it up,” she said. Fans of the brand, who post about it regularly, include influencers Christina “Tinx” Najjar, Morgan Lynzi and Estefania “Teffi” Pessoa. Today, that same aesthetic beloved by TikTok stars is on display on Sephora’s Next Big Thing Wall. There, it most definitely pops.

But perhaps, the reason why emerging Gen-Z brands are choosing Sephora over other retailers is its brand-building prowess. “It’s really easy to cut a P.O. and put products on a shelf,” said Metzger. “You need a retailer that’s not just a retailer, but instead a partner that’s going to help guide you, build that brand equity, and navigate your brand with their consumer and how they’re evolving.”

Venkatesh said that’s exactly where Sephora excels. “One of our main pillars at Sephora is product differentiation. It’s our job to stay ahead of trends and always deliver an evolving assortment of products, brands and category trends to meet clients’ diverse needs.” While Sephora would not share the number of Gen-Z brands being added to its slate or its percentage of Gen-Z shoppers, the retailer is certainly hoping for more of both in 2022.

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