What All Companies Can Learn from Sephora’s AI Transformation

Numerous once-thriving organizations in recent history failed to embrace change and ended up squandering the limited opportunity they had. Legendary examples of brick-and-mortar stores that lagged and lost in digital transformation include RadioShack, JCPenny, Toys R’ Us, and Blockbuster Entertainment.

In a recent survey by the Harvard Business Review, 77 percent of top executives mentioned that they consider adopting artificial intelligence (AI) or Big Data a major challenge. Beyond getting the necessary AI skills and technologies in-house, great benefit also lies in studying the digital transformation of other organizations. 

Cosmetics retailer Sephora is one brand that makes a prime example using the power of data analytics augmented reality (AR) and AI to become a digital trailblazer. Here we take a glimpse inside this company’s digital journey and point out all that C-level executives can learn from it. 

Becoming a Leader in Specialty Retail 

Sephora’s acceptance of the digital world led to their success, both online and offline. Gartner named Sephora the top retail specialty brand in the comprehensive Gartner L2 Digital IQ Index. Sephora was praised largely because of its continuous efforts to embrace innovation in mobile. The Sephora to Go application is currently one of the top 25 retail offerings in the Shopping Category for Apple’s App Store.

The Sephora app incorporates some of the latest AI tools and models to offer a virtual lipstick assistant with rewards and promotions for customers. Their interactive tools don’t just allow users to experiment with the latest makeup trends, but also to show their designs to the world using instant social sharing buttons. 

Additionally, Sephora has a large physical operations model that has contributed to its success. The brand has more than 2,300 stores located across 33 countries (over 430 in the Americas alone), representing a significant section of the industry. 

Sephora’s success is also a use case for how to start using data-driven technologies from an early stage. The company realized the potential of AI and started using it from early 2013 and onward. While other brands across the globe were still trying to guess whether AI was just a fad or here to stay, Sephora had already started putting it to work. 

Digital innovation has always been a part of the DNA for Sephora. They place high importance on AR and AI. With Sephora’s innovation in using and optimizing AI and AR, you might think of them the same way you do the makers of self-driving cars or cutting-edge tech giants. However, they have continually proven that there is room for AI and other intelligent models, even in relatively simple industries like cosmetics. 

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Innovation with AI and AR Technologies 

Sephora’s ability to work with AI and AR techniques accelerates their progress across multiple touchpoints. Besides having an authentic online service, Sephora has used these technologies to enhance their offline retail experience further. 

Sephora’s mobile strategy is their trump card and helps differentiate them from others in the market. They continuously improve their mobile app’s features, with updates and new additions coming out continually, so the customer experience never gets stale.

AI/AR Technologies 

Some of the technologies used by Sephora include: 

  • NLP, ML and Computer Vision

    Sephora utilizes all kinds of Artificial Intelligence, including Natural Language Processing, Machine Learning, and Computer Vision, to make sure that there is no gap as such between the online and offline experiences for customers. 
  • Virtual Artist 

    The virtual artist feature allows shoppers to see designs on their facial avatars before they buy the product. Visual Artist makes buying products easier and more fun. 
  • Fragrance IQ System

    Sephora has partnered with Inhalio to provide a dry scent for customers to smell the fragrance of perfume without trying it on. 
  • Pantone Test

    This system determines the best product suggestions for different customers based on their preferences. 

Using Customer Data for an Enhanced Beauty Experience 

The customer experience strategies in place by Sephora include: 

  • Handing over the right tools to customers 
  • Predicting what customers want based on their preferences 
  • Customer loyalty programs
  • Personalized product recommendations based on the customer’s behavior
  • Addressing the most current and common customer beauty concerns

Sephora has teams that drive their customer innovation strategies forward, with new insights and recommendations, many based on what their data-driven AI indicates. They also provide classes, workshops, and tutorials to all customers to help address their beauty concerns. 

What ranks Sephora above every other brand in their industry and sharpens their competitive edge is their ability to use AI and data analytics to understand consumer behavior across the board, both online and offline. 

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Conclusion 

Organizations in any industry can learn from the successful AI implementation done by Sephora. You can start by examining your customers’ pain points and working toward using analytics to understand customer journeys and improve customer experience. Additionally, you should use data analytics not just to understand your customer, but also to increase customer engagement and interaction with your brand, as well as social sharing.

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About the Author

Ronald Van LoonRonald Van Loon

Ronald is named one of the 3 most influential people in Big Data by Onalytica. He is also an author for a number of leading big data & data science websites, including Datafloq, Data Science Central, and The Guardian, and he regularly speaks at renowned events.

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