Sephora attracts 300-metre line as competition heats up

LUKELATTY-SEPHORA-ROBINA-5098Sephora has drawn a crowd to the opening of its first store of the year in Queensland, as shoppers queued overnight to access the international cosmetics giant’s new Robina Town Centre store.

At one point on Thursday morning the line outside the new location was more than 300 metres long, snaking around to adjacent areas of the centre.

The launch is a good start for the business, which expanded to Australia in 2015, after it announced last month that it would open the Gold Coast location, drawing in customers with new virtual artists that allow visitors to try on products virtually in-store.

Its decidedly less positive for Sephora’s competitors though, of which there are many.

Myer, David Jones, Priceline and L’Occitane all have stores in QIC’s Robina Town Centre, signalling yet another increase in competitive pressure in the beauty sector.

“Sephora always generates great crowds because they are the undisputed global beauty leaders and people are always keen to try out and play with their wide selection of brands,” Savills’ Leighton Hunziker said of the opening.

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It’s not the first-time international entrants have drawn big crowds, when others like H&M, Zara and Forever 21 opened their stores in Sydney’s Pitt St Mall shoppers flocked, creating queues that lasted for days.

But increasing competition and subdued consumer sentiment have put pressure on established beauty retailers in recent months, driving elevated levels of discounting in the sector that’s weighing on margins.

Reporting its half-year financials last month, Priceline owner Australian Pharmaceuticals Industries said lacklustre beauty sales had driven a 1.7 per cent decline in comparable store sales in the first-half.

“The amount of discounting and competition that has emerged inside the health and beauty sector has ramped up significantly,” API chief executive and managing director Richard Vincent said in April, revealing that price deflation was between 3-4 per cent in the half.

For the likes of Myer and David Jones the growing influence of international competitors is particularly disruptive, given the already weakened statuses of both businesses.

Louise Grimmer, a lecturer in marketing at the University of Tasmania, said customers are increasingly turning to specialists in the beauty category over department stores in search of education and personalisation.

“Increasingly we are witnessing consumers abandoning department stores for specialist retailers such as Sephora,” Grimmer said.

“If they weren’t already, department stores should be on notice that customers now demand much more than has been on offer. They want high levels of customer service, knowledgeable staff, specialist product offerings and a multichannel experience.”

Robina Town Centre is Sephora’s 14th Australian store, and alongside the continued expansion of other international beauty brands such as MAC, its unlikely competition will ease any time soon.

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