This cosmetics retailer has dominated the hearts and minds of customers for decades. Here are its secrets.
| From the desk of Miles Everson: Hi! I hope you’re doing well. I’m thrilled to share another useful insight for today’s “Return Driven Strategy (RDS)!” For those of you who may not know, RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these concepts help businesses and individuals achieve their goals. In this article, we will talk about this beauty and cosmetics giant. Curious? Continue reading below! |
The global beauty and personal care industry generates billions of dollars annually and has never been more competitive. Industry analysts expect the space to generate a revenue of nearly USD 700 billion in 2026. Customers are faced with many options to choose from. They have access to thousands of products, many nearly identical in price and formula, sold across countless retailers. Yet before every product launch, one question still dominates buyers’ minds: “Will it be available at Sephora? ” For those who aren’t familiar, Sephora is a retailer of personal care and beauty products. It sells products from over 300 brands and it has storefronts located across the globe. Decades have passed since Sephora’s founding. Throughout those years, many competitors have sprung up. Yet despite this, Sephora continues to be top of mind for many customers. Why? The answer to that question requires us to dig deeper, so keep reading below! The Go-to Cosmetics Retailer
Sephora was founded in France in 1969 and is headquartered today in Neuilly-sur-Seine. Its founder, Dominique Mandonnaud, pioneered what became known as “assisted self-service.” Unlike other retailers at the time, Sephora let customers test products in-store before buying, giving them the freedom to find what actually worked for them. The model was a hit. Mandonnaud spent the next two decades expanding Sephora across France, and the brand grew large enough to catch the eye of French luxury conglomerate Louis Vuitton Moët Hennessy (LVMH). LVMH acquired Sephora in 1997 and has owned it ever since. Sephora’s product catalog spans clothing, cosmetics, fashion accessories, perfumes, watches, and others. The company reached record growth between 2023 and 2024. According to an executive, revenue hit roughly EUR 15 billion (or around USD 18.5 billion). Those are impressive numbers, especially when we consider that Sephora has to compete with other retailers like Amazon, which also has a huge catalog of luxury products in its digital storefront. That said, how did it continue to remain competitive? The answer boils down to two things: Branding and collaborations . More Than A Beauty Retailer Sephora is often seen as a beauty retailer… and while that characterization is very much true, it’s so much more than that. You see, Sephora isn’t just a store that sells products; it also creates an environment that encourages customers to buy and curates offerings that create excitement and desire. This philosophy is reflected in the company’s store design. Each location is adorned with bright lights, and products are placed in a way that encourages buyers to test them out.
Store design is only part of the equation, though. Sephora’s true bread and butter is its role as a tastemaker. The company creates hype for its customer base by offering products that people want to buy—a feat achieved through leveraging customer insights and forming extensive partnerships with trendy and high-end brands. Through the years, Sephora has inked exclusive partnerships with heavyweight brands like Rare Beauty, Fenty Beauty, Rhode, and a host of others. The retailer also closely monitors social media trends since they help in identifying products that people are excited to buy. It has gathered customer insights from platforms like TikTok to identify popular brands or products that it could offer in its stores.
The Hallmarks of Return Driven Firm Sephora’s playbook is best explained through the lens of two of Return Driven Strategy ’s (RDS) tenets:
The main takeaway from Sephora’s story? The most enduring and high-return businesses don’t just sell products. They also build a brand that has a strong mental and emotional connection with customers. — If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo. Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm. Hope you found this week’s insights interesting and helpful. Stay tuned for next Tuesday’s Return Driven Strategy! Have you ever watched a colossal empire crumble, piece by piece, and wondered how something so dominant could lose its footing—how decades of power, influence, and wealth can vanish not because the idea was bad, but because the strategy didn’t actually create lasting value? Learn more about Bethlehem Steel through the lens of RDS in next week’s article! |
Miles Everson
CEO of MBO Partners and former Global Advisory and Consulting CEO at PwC, Everson has worked with many of the world's largest and most prominent organizations, specializing in executive management. He helps companies balance growth, reduce risk, maximize return, and excel in strategic business priorities.
He is a sought-after public speaker and contributor and has been a case study for success from Harvard Business School.
Everson is a Certified Public Accountant, a member of the American Institute of Certified Public Accountants and Minnesota Society of Certified Public Accountants. He graduated from St. Cloud State University with a B.S. in Accounting.
