News that US Cosmetics giants Sephora intend to open stores in Australia before the end of 2014, or “before Christmas” in their own words, has been greeted with a great deal of enthusiasm. Whilst for the most part all new businesses landing on these shores are welcomed and given a fair crack to impress, there’s the distinct feeling that this one will really prove to be, to borrow the phrase from the Americans, a “game changer”.
Whereas cosmetics around the world carry a sense of pizzazz, vibrancy and excitement, here in Australia it’s become more or less a commonplace, for want of a better word stale market. This is because, with well over 50% of all cosmetics sales between them, David Jones and Myer have dominated the market for decades. These two stores don’t seem to offer much in the way of competition to lure in customers, with both presumably – and seemingly – quite happy to enjoy customer brand loyalty.
An example of the current scenario can be found in a random product price comparison. Both stores carry the same brands and, for the most part, charge the same price. A Clinique two tone compact, for example, costs $55 from either store. One gets the feeling that if this was any other industry there would be demands for an investigation into the present “accidental collusion” on prices in the cosmetics industry, but it’s unlikely any consumer crusaders would ever champion the cause.
There might be no need to, either, should Sephora stick to their word and offer their cosmetic ranges at directly translated US Dollar prices. As Sephora carry their own exclusive ranges a direct price comparison is difficult with what Australians can get. A closer comparison is, however, possible. The Make Up Forever Sculpting Kit, a two tone compact recently launched similar to the Clinique one, retails at US$48, which would translate as around AUD$50. A similar product at $5 less might not sound like “game changing” competition, but it does represent more competition than is currently available.
Another example is the Marc Jacobs Daisy EDT 100ml spray which is US$92 (or approximately AUD$98.50) at Sephora. This spray sells for $120 at both Myer and DJs, even beating the ultra-competitive StrawberryNet who are charging $105.50 a bottle. Additionally, at Sephora you have the option of purchasing lower priced rollerball perfumes (generally 7ml in size) for around $20, which are very popular since customers can afford to buy multiple designer perfumes for the price of a single standard sized bottle.
The new products that Sephora will bring to Australia will, ultimately, be more exciting to consumers than any cost savings. Stores at the moment tend to stock the same products from the same cosmetics companies, usually at the same price. Sephora is a world of fast moving, dynamic updates, quickly latching on to new trends and attracting the hottest, most sought after celebrity endorsements.
With plans for 20 stores to be opened up it sounds like they are going nationwide from the off, although there’s no clarification yet on which cities or areas they are going for. We can take Sydney, Brisbane and Melbourne as a given, you'd expect, but it would be a welcome change if one or two stores opened up in every state.
The one possible area of disappointment for Sephora is their indication that they intend to actively target male customers in Australia with their cosmetic ranges. Australian men keep themselves in good condition, looking clean and healthy, but are not known for buying “grooming” products in any large or significant numbers. Outside of what Liz Hurley did to Shane Warne a few years ago, Australian men have not really embraced this whole “metrosexual” thing to the extent seen in Europe and in the United States. If they attract more male beauty product sales than happens at the present moment then that will really be a spectacular “game changer”, but most would suggest that it would be best for Sephora if their plan for success didn’t rely on it.
That said, if the stores do open before Christmas, there is a strong likelihood that men will be their biggest customers at first. Glitzy cheap cosmetics products as seen in fancy, expensive product and brand launches? That screams “ideal Christmas present”.
Just how serious an impact Sephora will be on the Australian cosmetics market should be visible by around October or November. If we all of a sudden see Myer and David Jones getting into a bit of a price war, or at the least ramping up their advertising instead of letting cosmetics sell themselves, it will be a sign that they are “concerned” about the imminent arrival of competition. The more visible this concern gets, the better the deals consumers are likely to find being in their way from Sephora.