Janice R. Andrews
After five years of service, Sephora Greater China CEO Maggie Chan has formally departed from her role. This is a momentous development. The 18-year-old beauty retailer, owned by LVMH Group, is facing a leadership void as there hasn’t been a replacement announced as of yet.
This announcement comes after rumours surfaced in July of last year suggesting LVMH was thinking about strategically changing up its business practices in China. For Sephora, which hopes to reach a goal of €20 billion ($21.8 billion) in annual global sales within the next five years, the Chinese market is essential. With a 2023 valuation now projected at €13 billion ($15 billion), Sephora will confront fierce competition as well as a difficult economic landscape in China.
In the face of fiercer competition from regional beauty retailers like Wow Colour, Harmay, and The Colorist, the beauty retailer is working to win over Chinese Gen Z consumers. Sephora’s May 2018 withdrawal from the Taiwanese market, following barely a year of running an online store, highlights the challenges encountered in the area.
Aiming to engage clients with interactive experiences, Sephora launched many initiatives last summer, including as the “store of the future” in Shanghai and the Sephoria festival in November. These initiatives, meantime, are being made at a time when customers are being frugal with their money, holding off on purchasing until special holidays, and switching from product-to-service-focused beauty expenditure.
“Consumers are trading down, and heightened promotions post-lockdown are conditioning consumers to wait to purchase beauty items until promotional shopping holidays,” said Ashley Helgans, a beauty analyst at Jefferies, highlighting this tendency. Additionally, we’ve seen a shift in beauty expenditure from goods to services, which might make the category’s challenges more structural rather than temporary.”
Despite a 9.7% year-over-year increase in cosmetics sales in China in December, the problems still exist. This increase comes after November’s -3.5 percent year-over-year decline and October’s modest 1.1 percent decline.
Alia Gogi, the leader of Sephora Asia, must navigate the ever-changing cosmetics industry. Maggie Chan’s replacement in the vital position of CEO for Greater China has not yet been announced by the corporation. Meanwhile, Jenny Cheah, who was named managing director of Sephora Southeast Asia, Oceania & Korea last year, continues to be an important member of the executive team. The industry is currently awaiting more advancements as Sephora adjusts to the changing Greater China beauty market.
