Sephora: Financial Data and Projections

Oct 15, 2017 | 0 comments

Oct 15, 2017 | Miscellaneous | 0 comments

Executive Summary

Sephora is a beauty products company under Louis Vuitton Moet Hennessy (LVMH) stewardship, headquartered in Paris, France. Most of Sephora’s business is driven by the need to satisfy the growing demand for beauty products, specifically the middle class, which is not shy to spend for aesthetical purposes. While LVMH started Sephora as a one-stop shop for beauty products, they have expanded their in-house services to include the sales of fragrances and other services like massages and facials to meet the company’s annual sales targets. Essentially, Sephora is rolling out a mobile payment plan for its customers while simultaneously expounding on its customer’s selection of goods which in the long run is instrumental in boosting shoppers’ spending habits (Sherman 2013).

Sephora’s distributions include commercial districts and online stores. Sephora is out to tap into the market niche of small towns where they seek to launch a body care center responsible for offering people waxing and massage services. The main target population that Sephora is out to tap is the women between 18 and 45 living and its environs while at the same time, men between ages 20 and 45 in the same region. This targeted population belongs to the middle class and the upper middle class, thereby demonstrating the targeted people are eager to spend on luxury products. The target market is eager to spend on natural products, and products like cosmetics and fragrances are an averagely estimated price by all retailers (Roberts 2013).

However, Sephora stands a better chance with the retailers than the customers regarding bargaining power; the former needs Sephora as an internationally acclaimed brand to sell their products and get to their perceived target market, whereas the latter has a variety of options to buy from.

Financial Data and Projections

The marketing base for Sephora is huge considering the variety of services being offered and the strategic location of the body shop in the great Denver area, which is in a highly volatile environment compounded by a large amount of human traffic. Considering the market size and the above area, the sales projections for the first financial year are estimated at 435240€ (≈ $471,800) (Burnsley 2014). These figures will be actualized through service categorization, with services being categorized into waxing and massaging. On average, each waxing session will take 30 minutes at a rate of 40€ (≈$43) therefore establishing a massage pattern of 2 massages every hour compounded into 18 massages every single day that culminates in 720€ (≈$780) and a yearly hold of 224640€ (≈$243,509).

On the other hand, the waxing services will be categorized into three— face legs and bikinis that will take twenty, thirty, and fifteen minutes respectively. The face waxing will be valued at 15€ (≈$16.25).with a targeted daily accumulation of 405€(≈$439), legs at 30€ (≈$32.52)estimated at 540€(≈$585) daily, and 1080€(≈$1,171) for bikini daily waxing sales with each session being priced at 30€(≈$32.52). Cumulatively the waxing services are estimated to surmount a definite figure of 336960€(≈$365,265) annually, but the prospect and fact that several waxing sessions cannot be undertaken at the same time establish the sales forecast figures at 210600€ (≈$228,290), thereby giving an estimated annual figure of both services that are valued at 435240€(≈$471,800). Graph 1 illustrates these figures and demonstrates the forecasted sales figures over five years.

Graph1: Source: Bloomberg Business News

Implementation Plan

The achievement of the outlined figures will be actualized through multiple strategic plans, which will be geared toward developing a strong clientele base that will be established through extensive brand advertising. The in-house professional services Sephora is keen on offering will appeal to the middle and upper-middle-class population of Denver and its suburbs, including Aurora, Lakewood, Westminster, etc. Collaboration with JCPenney will be instrumental, considering the company brings an extensive source of shops in the great Denver area and unchallenged experience in selling natural products. JCPenney also has an operational culture where everyone is considered family, and JCPenney incorporates a neighbor spirit in its operations. While seeking to boost its sales, Sephora will maintain the sale of its own branded products as a sole subsidiary and focus more on its seasonal promotions like gifts offering offered during special occasions like Mother’s day and Christmas. To further push the brand, Sephora will tap into other avenues of advertising, website development, and poster creation that can be distributed around its stores and stores of Sephora inside JCPenney. Focus on new development should then be geared towards constructing 2 treatment rooms for waxing and massaging while maintaining a schedule similar to that of the shop. Considering the competition that Sephora is up against, sourcing professional beauty therapists will spur customer loyalty to the new body shop since the population will be eager for the quality services offered. Customer satisfaction is usually attained through multiple strategy implementations. Sephora will be keen on doing so by offering gifts to customers, loyalty card provisions, and creating special offers and competitions.

Reference

Burnsley, Kandisky. “Sephora Sales Forecast .” Harvard Business Review, 2014: 56-59.

Roberts, Andrew. “Cosmetics Seller Sephora Is Driving Growth at Luxury House LVMH.” Bloomberg Business. June 6, 2013. http://www.bloomberg.com/bw/articles/2013-06- 06/cosmetics-seller-Sephora-is-driving-growth-at-luxury-house-lvmh (accessed March 7, 2015).

Sherman, Lauren. “Sephora’s Brand Strategy .” Business of Fashion, 2013: 14-24.