Sephora plans to redesign its entire North American store fleet According to Retail Dive.

Sephora is in the middle of the largest capital project in its history wherein it is redesigning every store in its North American fleet, Artemis Patrick, president and CEO of North America, told an audience at the National Retail Federation's Big show conference on Monday of this past week.

Some stores will, quote, get major redesigns and some will get minor, patrick said of the project, which launched last fall.

The beauty retailer has over 700 stores in North America.

Sephora has brought changes like modular fixturing and new checkout pathing to 111 of those stores over the past few months.

And as a result, key performance indicators like transactions, productivity and sales are all up when compared to the control group.

Kelly, what do you find most intriguing about Sephora's plan to renovate its stores as part of what Retail Dive calls its, quote, largest capital project in its history?

Yeah, lots of big headlines dropping at NRF Big show last week.

You know, I think the thing that was most interesting to me about this, you mentioned it, Chris and Artemis Patrick talks a little bit more about it and in the article, but she cited one of the leading factors of the redesign in effectively making a more affordable fixture structure for their brand partners.

That was kind of one of the, the leading things, she said.

We're not a cheap date to sell in Sephora.

We don't want our partners building these expensive fixtures that, you know, the deal doesn't work out and, and they don't see the, the full benefit.

So this was super interesting to me for two different reasons.

The first is the tone and tenor of it is very different from what we see from Sephora typically.

So internationally they 2023, 2024 were years spent doing huge reinvestment on their flagships.

You know, taking historical buildings, renovating it as a very kind of luxury experience and leading with this cost play just sounds and feels a little bit different from what we see in the international markets.

And then additionally it to me kind of suggests a bit of a shifting power dynamic between Sephora and its brand partners.

Having spent a lot of time more on the manufacturing side of the beauty business, you know, you'll do what you gotta do to, to get placement in Sephora.

And typically there's, you know, they have the upper hand in those negotiations.

It's more expensive but you need to be there and they have the market share.

So to hear them really being proactive about how to make the experience more affordable for their brand partners just kind of signals to me that they're thinking ahead about where the retail market might be going in the US And Ulta hasn't seen, you know, a great couple quarters in the last few quarters.

But you know, are there other tides that they're concerned about whether it's E Comm where they're trying to shift some more attention to their brand partners?

So I thought that was really interesting and there are a lot of other great things that they're doing which just seem like smart retailing to me from store of the future, really making a metrics based approach to the redesign.

So I think there's more to it than just this kind of brand cosplay.

But that was what really stood out to me.

Yeah, that's really just, I never thought about that.

You know, is it is this kind of an attempt to, you know, keep the cachet, make it easier for the brands to come into the stores and elevate the experience and play up on the brands that you really want and expect to get from Sephora?

And what do you think?

I mean, I love Kelly's points.

I hadn't thought about those.

For me, this was a strictly operational Play.

Like number one, there is 100% benefit to making your fixtures flexible.

Especially in a space like Sephora where they're getting people to come in there.

They want to make sure that people, they can do events in there.

When there's a new beauty brand launch, they're bringing in a new brand.

Like the, the flexibility of this fixturing that Artemis was talking about I think is going to be critical to them being able to convert that store to work as hard as possible as needed on weekends, you know, for big launch events.

I think that's, that's where the real trouble is right now.

But for me, the best thing about this whole thing, I love Sephora, I love the associate help there.

I hate the line.

Sometimes I've had to even leave because you have this younger demographic that's coming in.

They're each paying their own, you know, they're accru of six people and they're each paying individually.

Like it's taking too long.

And so for me, I think the key item in this article is that only 25% of transactions are happening on mobile devices with the associates right now.

And I think if you start to enable every associate, every transaction, if I just want to get out and get that thing that you helped me find, I think we're going to start to see significant increases in, in transactions and basket sizes once they enable that, you know, for all the associates and you can kind of skip that snake if you're just kind of snake line if you're just trying to come in and get something quickly.

So I, I think smart operational decisions here for Sephora that are going to continue to pay dividends in the long run.

Yeah, that was what the article highlighted for me that was most interesting too was how they're thinking about checkout and it was very light on the details in there.

But I think you're hitting on points that, you know, especially when you talk modular fixturing, you could, you could apply modular, modular setup designs to your checkout process too.

So you can scale it up, scale it down across the seasons.

You know, lots of different ways you could do this.

Mobile enabled.

John, what do you think though?

Any final words here?

Yeah, I mean my first thought is I think this is a great example of the kind of benefits of CRG because Kelly had a totally different perspective than I have.

She's got obviously way more detail and understanding and the points that she made around the dynamic between Sephora and the brands is something I never thought about.

But actually I think now looking through the information with that lens, it kind of makes a bit more sense sense to me because honestly when I was looking at it, I, I think what I wrote down when I was writing my notes is that I felt like it was kind of a nothing burger.

I was like, yeah, okay, we're, we're updating our store fleet and it's our biggest ever capital investment.

But I can tell you if I did my capital investment now versus 10 years ago, it's always going to be my biggest ever capital.

Right.

It's way more expensive.

So I felt a little bit like it was an announcement for NRF that they put some buzzy language around and, and the other point was I know that Kelly mentioned they're using a metrics based approach which is great, but I don't know if anybody here has ever redesigned a store where the sales didn't go up because.

Right.

All this extra attention, you've got all the extra staffing.

Once you pull that out, your sales normally revert to the mean.

Right.

So it's.

So for me it felt a little bit like we're doing all this work and we're going to change trajectory.

But once you went below the details, I didn't quite get it.

However, I think the checkout points also stood out to me because I think if you can make that easier to get out of the store.

Obviously I'm not like a high Sephora shopper, but My wife is.

And so, like, she has talked before about how difficult it is to get in and out of the store, and I think that would be a big thing.

But.

But more operationally, I'm actually more excited by what Kelly says about the connection with the brands because having done some work in the drug space, getting the fixtures changed over by your brand partners is a massive lift for everybody.

And if you can make that smoother, that also then feeds into the.

The idea of being more on trend and more relevant if you can make that happen quicker.

So I see a much bigger benefit from that now than I kind of originally thought.

Absolutely.

Yeah.

Those are great points, John.

You know, it's funny to me too, when I think about the psychological dynamics of doing this show too, is like, when I first read the headline, I was like, yeah, I feel like John does.

But then you go and you think.

About who's the leadership team, you know, what pedigree do they have behind them?

What performance has the company exhibited in the past?

And it gives us a little more license to accept what Sephora is telling us and being a little more optimistic about it as well.

So it's interesting as, as we review these headlines each and every week.