How Sephora is revamping its fragrance category

While Sephora’s fragrance department has lagged behind the growth of its beauty and skincare departments, the global fragrance industry is set to grow 3.6 percent between now and 2020. To bulk up its department, Sephora, which is expected to make $4.4 billion in revenue this year, is borrowing strategy from its beauty category, which is believed to account for 60 percent of the retailer’s business, according to market estimates. (Fragrance, meanwhile, is said to account for 10 percent.) According to McDonald, Sephora’s approach to beauty is to educate customers to empower purchases. In fragrance, it has built out digital tools to create perfume profiles for customers, laid out buying guides online and set up in-store demonstrations to help customers identify their best scents. That includes the Sephora Fragrance IQ, an online or in-store quiz that accounts for scent notes like floral or fruity, and other fragrance characteristics, to match customers with a selection of perfumes best suited to their preferences. The method takes after Sephora’s Color IQ, a tool that scans customers’ skin tones and matches them with a number corresponding to the right shades of foundation.

Sephora’s IQ programs are useful for giving customers a reason to keep returning to the retailer, acting like a modern loyalty program.

In some stores, Sephora has begun rolling out “InstaScent” stations (formerly called “Poof”) that lets customers smell isolated notes to figure out which core scents they like best and learn more about the 18 different “scent families.” According to Banwart, the educational process helps customers make up their minds. Similarly, in the beauty category, Sephora has begun installing video tutorial stations that help customers figure out how to master different makeup looks. McDonald said that helping to make sense of beauty and fragrance products pushes customers to purchase.