SEPHORA: 6 MONTH BUYING PLAN

TA B L E O F C O N T E N T S S E P H O R A 4 H I S TO R Y 4 OV E R V I E W 5 CH A N N E L S & D I S TR I B UTI O N 6 P RO MOTI O N 7 CO LO R CO S ME TI CS 8 CO N S UME R P RO FI L E 10 CO MP E TI TI V E A N A LY S I S 12 U LTA 13 BELK 14 MACY ’S 15

6 MONTH BUYING PLAN

P E RCE P TUA L M A P S 1 6 CO S ME TI C TR E N D S 1 8 FACE TR E N D S 1 9 E Y E TR E N D S 2 0 L I P TR E N D S 2 1 N A I L TR E N D S 2 2 TR E N D S I N PAC KAGI N G 2 3 6 MO N TH B UY IN G P L A N 2 4 A S TO R E 2 6 C S TO R E 2 8 E S TO R E 3 0 A S S O RTME N T P L A N 3 2 A N N A S UI COS M ET I C S 3 3 B R A N D S 3 4 P RO D UCT CAT EG OR I ES 3 5 FACE P RO D U C T S 3 6 E Y E P RO D UC T S 3 7 L I P P RO D UC T S 3 8 N A I L P RO D U C T S 3 9 J US TI FI CATI O N S 4 0 S O URCE S 4 3

A BEAUTIFUL HISTORY

Shop 8 was renamed to “Sephora” 1993

1969 Dominique Mandonnaud founded perfumery ‘Shop 8’ in France

4

1996 Sephora opens the biggest perfumery in the world in Paris, on ChampsElysees

SOURCE: | Sephora | http://www.sephora.com/

“Beauty Insider” client loyalty program launches 2007

Receives the Retailing Innovator of the Year award.

2000

Acquired by Paris-based conglomerate LVMH 1997

1999 Sephora begins selling on-line, available in the USA.

Sephora is a visionary beauty-retail concept founded in France by Dominique Mandonnaud in 1970. Sephora's unique, open-sell environment features an ever-increasing amount of classic and emerging brands across a broad range of product categories including skincare, color, fragrance, body, smile-care, and haircare, in addition to Sephora's own private label. Today, Sephora is not only the leading chain of perfume and cosmetics stores in France, but also a powerful beauty presence in countries around the world. Sephora holds 12 % of the beauty market within the United States, 15 % of the market in China, and 27 % of the market in its flagship country, France.

2006 Sephora retail shops open within JCPenney stores

NOW Sephora continues to open stores all over the world

BUSINESS OVERVIEW

Sephora strives to build the most knowledgeable and professional team of product consultants in the beauty industry, The "Science of Sephora" program ensures that teams are skilled to identify skin types, have knowledge of skin physiology, the history of makeup, application techniques, the science of creating fragrances, and most importantly, how to interact with Sephora's diverse clientele.

Sephora is now owned by Louis Vuitton Moet Hennessy (LVMH), the world's leading luxury goods group. Sephora is highly regarded as a beauty trailblazer, thanks to its unparalleled assortment of prestige products, unbiased service from experts, interactive shopping environment, and innovation.

5

CHANNELS & DISTRIBUTION

Sephora operates approximately 1,300 stores in 27 countries worldwide, with an expanding base of over 300 stores across North America. Sephora opened its first U.S. store in New York in 1998, and its first Canadian store in Toronto in 2004. Sephora’s North American headquarters is located in San Francisco, with corporate offices in New York and Montreal.

R E WA R D S PROGRAM

Sephora launched in the U.S. in 1999 and in Canada in 2003, Sephora’s E-Commerce website, www.sephora.com, is the foremost beauty site on the Internet and is also Sephora’s largest North American store in terms of sales and selection of products and brands.

Sephora operates a distribution network consisting of a 316,000 sq. ft. distribution center in Belcamp, MD and a 320,000 sq. ft. warehouse in Salt Lake City, Utah.

In 2007, Sephora launched a client loyalty program as a way of thanking clients with special products, exclusive information, and an all-access pass to personalized beauty. The Beauty Insider Program is a free rewards program. For every dollar spent on merchandise at Sephora online, Sephora retail stores or in Sephora inside JCPenney locations, one point is received. These points can be redeemed for rewards.

Sephora began opening stores inside JCPenney in October 2006. Today, there are Sephora locations in more than 375 JCPenney stores across the country. Utilizing a smaller footprint (approximately 2,000 square feet) than a standard Sephora store, each one is located in the center of the JCPenney store and features the signature Sephora look and beauty assortment.

As the exclusive beauty offering in JCPenney, Sephora inside JCPenney features products from more than 200 beauty brands.

Sephora also features their own collection of makeup, skincare, tools and accessories. Inside all Sephora inside JCPenney stores is the Beauty Studio, Sephora’s exclusive destination for one-on-one beauty sessions with experts.

6

SOURCE: | Sephora | http://www.sephora.com/

BEAUTY INSIDER

In 2009, Sephora launched V.I.B. [Very Important Beauty Insider], a premium level for Beauty Insiders giving clients access to exclusive gifts, event invitations, and early access to select products. VIB status is earned by spending $350 on merchandise and the VIB Rouge status requires spending $1,000 on merchandise at Sephora.com, in a Sephora retail store, or in Sephora inside JCPenney store within a calendar year.

SEPHORA & JCPENNEY

7

http://www.yeutretho.com/

FACE Foundation

WHAT IS COLOR?

Tinted moisturizer BB & CC Creams Concealer Corrector Setting powder Cheek products

FACE, EYES, LIPS, AND NAILS.

Blush Highlighter / Illuminator Bronzer

Sephora currently offers color cosmetics within 48 PRESTIGE COSMETICS BRANDS.

The prestige color cosmetics department makes up:

8

SOURCE: | Sephora | http://www.sephora.com/

LIPS Tinted lip balm Lipstick Lip pencil Lip gloss Lip stain

Liquid Powder Cream

Color cosmetics include cosmetic products that contain colored pigments for the

PRESTIGE COLOR COSMETICS D E PA R T M E N T

http://www.ob-a.com/

52% of Sephora

NAILS Nail polish Effects High tech Gel UV set LED set

Nail base / Top coats Nail stickers / AppliquĂŠs

EYES Eye primer Eyeshadow Cream Powder Stick

Eyeliner Gel Liquid Pencil

Mascara

http://www.jenzeny.cz

http://www.frmheadtotoe.com/

9

THE COSMETICS CONSUMER

aficionado du jour

e f f i c a c i o u s s o p h i s t i c at e

refined perennial

Within Sephora’s target market, this youthful, fun group includes 15 to 25 year olds. Most of their makeup concerns are related to a desire to boost self-esteem and image, since makeup makes them feel good. As avid users of technology, they often look to beauty blogs and video tutorials in order to stay up to date with the latest and greatest of beauty trends, products, and techniques.

ADJs love experimenting with makeup, so products like eyeshadow and eyeliner are very popular with them. Due to their craving and curiosity for beauty, these shoppers have highly involved beauty behavior. This age group represents the largest percentage of Sephora’s online (www.sephora.com) shoppers.

This elegant group makes up Sephora’s target market with ages ranging from 24 to 45. These ladies wear makeup to enhance their features. As this group leads more active and busy lifestyles, they shop with a moderate amount of involvement. However, this group tends to have the most concerns regarding makeup and most often comes to Sephora’s beauty experts with questions.

Due to a more need-based approach towards beauty, this group leans towards multitasking and no-nonsense products and brands.

With a higher amount of disposable income and a greater desire to treat themselves, efficacious sophisticates are the largest group of customers to reach the V.I.B. Rouge status.

Ringing in the last but not least group within Sephora’s target market are our women aged 45 and older. They are most concerned with camouflaging flaws, such as dark circles and age spots. Of Sephora’s target market, refined perennials have the lowest level of involvement when shopping. They are looking for color matching and asking the cast for preferences, rather than ingredients. This group understands the concept of value for money, so they are not typically hesitant to pay more for higher quality. Likewise, this group is likely to stay with the brands they used as younger women, aging as they do – gracefully!

Product Use: Lipstick - Mascara - Blush

Product Use: Foundation - Corrector - Tinted Moisturizer

Brand Use: Tarte - Stila - Clinique

Brand Use: YSL - Lancome - Dior

Eyeshadow

Product Use: - Eyeliner - Nail Polish

Brand Use: Urban Decay - MAKE UP FOR EVER - Marc Jacobs

10

11

COMPETITIVE A N A LY S I S

largest beauty retailer in the u.s. one-stop shopping for:

21 PRESTIGE BRANDS

prestige products mass products salon products salon services Operates 664 OFF-MALL stores in 46 states.

“We cater to the woman who loves to indulge in shopping for beauty products as well as the woman who is time constrained.”

12

|| Please refer to perceptual maps for further breakdown of each competitor’s consumer profile and environmental analysis. ||

promotions and coupons for mass brands gift-with-purchase offers customer loyalty program multi-product gift sets for prestige brands SOURCE: | Ulta | http://www.ulta.com/

13

Largest privately owned mainline department store in the U.S.

26

303 stores in 16 states

PRESTIGE BRANDS

Located primarily in the southern United States Sells top national brands for women, men and children: fashion apparel shoes accessories cosmetics home furnishings housewares jewelry private label brands 14

SOURCE: | Belk | http://www.belk.com/

11 PRESTIGE BRANDS

“Obvious value, engaging service and unforgettable moments”

One of the oldest established retailers, since 1858 America’s Omni-channel Store Iconic retailing brand with 800 stores and online at macys.com “Magical” events for seasonal, holiday, and celebrity-driven occasions Uniquely tailored product assortment:

Stores anchor major regional malls or open-air shopping centers in medium and smaller markets

fashion apparel shoes accessories cosmetics home furnishings housewares jewelry SOURCE: | Macys | http://www.macys.com/

15

PERCEPTUAL M A P A N A LY S I S

Benefit to the consumer refers to the added perks of shopping at the different retailers. Merchandising refers the store displays, the state of the counters, cash wrap, etc.

Employee expertise refers to the level of knowledge and training the associates have regarding their merchandise and related concerns. Consumer involvement refers to the buying behavior of the customer, in terms of how much thought is going into their purchase.

Quality of experience refers to how the customer feels upon entering, while in, and after leaving the retailer. Number of luxury brands carried indicates both the importance given to beauty at the retailer and the level of beauty prestige.

Breakdown

Breakdown

Breakdown

Sephora Ulta Macy’s Belk 16

See Justification | A |

Very high level benefits High level merchandising Low level benefits Low level merchandising Mid-level benefits High level merchandising Mid-level benefits Very high level merchandising

Sephora Ulta Macy’s Belk See Justification | B |

Very high level involvement Very high level expertise Very Low level involvement Very Low- level expertise Mid-level involvement Mid- level expertise Mid-level involvement Mid- level expertise

Sephora Ulta Macy’s Belk See Justification | C |

Very high quality experience Very high number of luxury brands Very low quality experience Low number of luxury brands Medium quality experience Medium number of luxury brands High quality experience Very low number of luxury brands

17

With lives only seeming to get busier, and time only seeming to run away from us, customers have driven forward the multi-tasking trend.

This trend led to the popularization of BB and CC creams as well as tinted moisturizers.

These are designed to deliver skin care treatment and coverage simultaneously, so clients spend less time primping. Face products over all have enjoyed brightened, youthful, and luminous finishes as anti-aging continues to be a major concern for clients.

Natural-looking but enhanced skin is in!

The beauty industry is seeing more and more brands incorporate sustainable practices and natural ingredients into their assortments. Along the same vein, many brands have begun to adorn their packaging with the words “vegan”, “cruelty free” and/or “made in the USA”. These aspects appeal to the LOHAS (Lifestyle of Health & Sustainability) trend.

It has also become very popular for fashion labels and celebrities to come out with beauty lines, such as Marc Jacobs Beauty and Rhianna for MAC. 18

SOURCE: | WGSN | http://www.wgsn.com/

http://www.fashionmention.com/

http://www.modismonet.com/

http://www.johnlewis.com/

COSMETICS TREND REPORT

FA C E T R E N D S SOURCE: | WGSN | http://www.wgsn.com/

19

http://charlotteraatz.blogspot.com

Technological developments in the world of cosmetic pigments has brought us a myriad of new finishes for eyeshadow, with intensely glittery shadows taking the lead. Neutral palettes have maintained their famed status as well, and customers still rush out the door to get their hands on them as soon as the newest ones are released. For mascara, it’s all about multi-function and plastic bristles. Bold-browed runway beauties, like Cara Delevingne, have intrigued brands and clients alike. Nearly every brand has added or updated products to help reshape and emphasize our faceframers.

LIP TRENDS Lips are always in fashion.

This year, vivid pigments (hot pink, purple, even blue!) and metallics are taking the stage, especially in matte and velvet finishes. The convenience of crayonstyle lip products has made embarking on this trend easier for clients.

/ om

c le.

el w.

ww

:// tp

ht

EYE TRENDS 20

SOURCE: | WGSN | http://www.wgsn.com/

http://www.escentual.com/ http://www.reviewsdebelleza.blogspot.com/ SOURCE: | WGSN | http://www.wgsn.com/

21

TRENDS IN PA C K A G I N G

All that glitters is not gold, but it probably is your nails. The number of new textures and finishes in nail polish is mind-boggling; everything from tiny pearls to magnetic prints has hit the stage at Sephora. Plus, it’s easier than ever to get your nail art fix with appliquÊs.

Feeling even more crafty? No worries, at-home gel polish kits are no longer just a dream. http://snapbacksandstilettos.com

http://passingfancyy.blogspot.com/

Packaging has seen a decadent revival, akin to that of its early days in beauty. Casings have been consistently highly embellished. No detail has been spared as products come out with threedimensional sculpted details, prints, and metallics (especially rose gold). To add to the luxe feel, brands are using real, weighty materials, such as (sometimes precious) metals, glass, and leather. https://thelacquerlog.wordpress.com/

22

SOURCE: | WGSN | http://www.wgsn.com/

NAIL TRENDS

http://www.thefashpack.net/

SOURCE: | WGSN | http://www.wgsn.com/

23

S/S 2014 6 MONTH BUYING PLAN

See Justification | D |

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

JANUARY

SEASON TOTALS

GROSS MARGIN

64.71% 70% $394,712,817.84 $247,523,523.16 $609,953,442.56 $353,605,033.09

AVERAGE INVENTORY

$116,714,446.46

$53,122,154.76

8.08

10.29

MARKUP % MARKUP $

STOCK TURNOVER

24

SOURCE: | LVMH Annual Report 2013 | OneSource | LVMH Interim Report 2013 | OneSource |Sephora Financial Report 2012 | Dun & Bradstreet

25

See Justification | E |

N E W Y O R K C I T Y, N Y Total Population: 8,199,221 Female Population: 4,301,787 (52.47% of Total Population)

TIMES SQUARE, NEW YORK

15-24 Year Old Females: 609,721 (7.44% of Total Population)

1500 Broadway New York, NY 10036

25-44 Year Old Females: 1,346,253 (16.42% of Total Population)

Phone: (212) 944-6789

50+ Year Old Females: 1,585,863 (19.34% of Total Population) Per Capita Income: $31,661

|A| STORE SOURCE: | U.S. Census | http://www.census.gov/

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

JANUARY

SEASON TOTALS

NYC Cosmetics Retail Establishments: 555 (1.76% of Total New York Retail Establishments) NYC Average Annual Cosmetics Retail Sales: $490,601 (.63% of Total New York Cosmetics Retail Trade) (.64% of Total U.S. Cosmetics Retail Trade) Customer Profile: Fashion is nothing new to the young and trendy of NYC. College-age girls like their makeup like they like their clothing, hair, and apartments – colorful and reflective of how they define themselves. Expect them to rush in for the latest and greatest palettes, sets, and collections.

NYC working women are always on the go, but they will be sure to make time to lunch with their girls. And, thus, make time to blot, powder, and apply lipstick. While this set loves a bit – OK, more than a bit of black and a minimal fashion aesthetic, you best believe their counters and handbags are lined with the glimmer of the most decadent packaging we carry.

It’s a shame to call this next set “older” when they love to live young! You’ll find these metropolitan women care enormously about their appearance and have a strong desire to maintain a youthful look. Although they are refined perennials, this set has concerns beyond concealing flaws. They want to catch eyes with their own glittering ones at the next art gallery opening.

MARKUP % MARKUP $ GROSS MARGIN AVERAGE INVENTORY STOCK TURNOVER

64.71% $1,301,758.53 $2,011,619.74

70% $1,584,150.55 $2,263,072.21

$385,022.21

$339,981.79

8.07

10.29

SOURCE: | LVMH Annual Report 2013 | OneSource | LVMH Interim Report 2013 | OneSource |Sephora Financial Report 2012 | Dun & Bradstreet

27

C I N C I N N AT I , O H Total Population: 297,314 Female Population: 155,658 (52.35% of Total Population)

KENWOOD TOWNE CENTER, CINCINNATI

15-24 Year Old Females: 27,303 (9.18% of Total Population)

7875 Montgomery Road, Cincinnati, OH 45236

25-44 Year Old Females: 44,036 (4.81% of Total Population)

Phone: (513) 794-0250

50+ Year Old Females: 54,627 (18.37% of Total Population) Per Capita Income: $24,538

See Justification |E| AUGUST

SOURCE: | U.S. Census | http://www.census.gov/

OCTOBER

NOVEMBER DECEMBER JANUARY SEASON TOTALS

Cincinnati Cosmetics Retail Establishments: 11 (1.08% of Total Ohio Retail Establishments) Cincinnati Average Annual Cosmetics Retail Sales: $4,947 (.15% of Total Ohio Cosmetics Retail Trade) (.06% of Total U.S. Cosmetics Retail Trade) Customer Profile: Younger ladies from Cincy generally spend quite a bit of time getting dolled up. Even on sweatpants and Uggs kind of days, expect to see freshly flat-ironed hair and a full face of makeup – foundation, eyeshadow, mascara… the whole shebang.

Working women of Cincy like to maintain a youthful look, sometimes dressing on the weekends in styles inspired by their daughters or younger sisters. At work, however, these women are the picture of professionalism, skirt suit and all. They will certainly have makeup on daily, mostly in a neutral palette, but not necessarily sporting an au naturel look.

The older generation of Cincy likes a conservative, soccer mom sort of look – during the day. In Cincy, the night scene is still very much popping for perennials. There are many social clubs and bars for the more mature crowd, and for such an occasion, these ladies enjoy the darker side of eyeshadow.

|C| STORE

SEPTEMBER

MARKUP % MARKUP $ GROSS MARGIN AVERAGE INVENTORY STOCK TURNOVER

64.71% $108,224.03 $167,239.61 $36,093.96 8.07

70% $148,514.11 $212,163.02 $31,873.29 10.29

SOURCE: | LVMH Annual Report 2013 | OneSource

| LVMH Interim Report 2013 | OneSource

|Sephora Financial Report 2012 | Dun & Bradstreet

29

See Justification | E |

FA I R FA X , VA Total Population: 22,712

FAIR OAKS, FAIRFAX Fair Oaks Mall 11828 Fair Oaks Mall Fairfax, VA 22033 Phone: (703) 591-8036

Female Population: 11,566 (50.92% of Total Population) 15-24 Year Old Females: 1,560 (6.87% of Total Population) 25-44 Year Old Females: 3,431 (15.11% of Total Population) 50+ Year Old Females: 4,481 (19.73% of Total Population) Per Capita Income: $45,157

OCTOBER

NOVEMBER

DECEMBER

JANUARY

SEASON TOTALS

Fairfax Average Annual Cosmetics Retail Sales $7,028 (.37% of Total Virginia Cosmetics Retail Trade) (.09% of Total U.S. Cosmetics Retail Trade) Customer Profile: Most of Fairfax’s younger shoppers do not have as much disposable income, as they are in college. While they likely choose to splash out on product types they find more particular and durable, like foundation, they are probably buying their mascara at drugstores.

Fairfax hosts a large amount of DC commuters. Considering this, our workingwomen prepare in the morning for a long drive, and thus likely spend less time primping. Products that can quickly perk up her look are favorites, like lipstick, mascara, and blush.

MARKUP % MARKUP $ GROSS MARGIN

SOURCE: | U.S. Census | http://www.census.gov/

SEPTEMBER

Fairfax Cosmetics Retail Establishments: 6 (2.08% of Total Virginia Retail Establishments)

Brunches and dinner parties are popular with our older group from Fairfax, and it is important to these ladies to dress to impress, but within their very conservative styles. Therefore, natural-looking makeup is very important to them.

|E| STORE

AUGUST

AVERAGE INVENTORY STOCK TURNOVER

64.71% $183,059.79 $282,884.03 $50,647.97

70% $222,771.17 $318,244.53 $47,809.94

8.63

10.29

SOURCE: | LVMH Annual Report 2013 | OneSource | LVMH Interim Report 2013 | OneSource |Sephora Financial Report 2012 | Dun & Bradstreet

31

S/S 2014 ASSORTMENT PLAN

FACE PRODUCTS

ANNA SUI COSMETICS

PRODUCT ASSORTMENT

PRICE

$5-$25

$26-$34

$35-$50

$50-$100

$100+ Total

PRODUCT Face Eyes Lips Nails Face Eyes Lips Nails Face Eyes Lips Nails Face Eyes Lips Nails Face Eyes Lips Nails

QUANTITY 170 398 202 295 276 158 71 14 280 120 33 6 80 57 56 1 2 1 1 0

% TO TOTAL

GROUP TOTAL

1065

519

ANNA’S UNIVERSE OF FANTASY Anna Sui brought her beauty products to life in 1999, packaging them exquisitely to match her signature aesthetic. Her blacklacquered containers are decorated with ornate roses and intricate detailing, making them gorgeous collectibles for after the product has been used up. All of Anna’s products are infused with the scent of tea rose, drawing you further into the paradise created she has created.

47.95%

23.37%

SOURCE: | Sephora | http://www.sephora.com/

See Justification | F |

0.00%

Foundation

2

22.22%

Face Primer

2

22.22%

Face Powder

2

22.22%

Concealer

1

11.11%

Blush

1

11.11%

Bronzer

0

0.00%

Luminizer

1

11.11%

Total

9

100%

QUANTITY

Eyeshadow Palettes & Eye Sets

4

26.67%

Eyeshadow

2

13.33%

Mascara

3

20.00%

Eyeliner

2

13.33%

Eyeshadow Primer & Base

0

0.00%

QUANTITY

GROUP TOTAL

% TO TOTAL

$8-$25

Face

1

20

48.78%

Eyes

3

Eyebrows

3

20.00%

Lips

8

Eyelash Enhancers & Primers

1

6.67%

Nails

8

Face

9

Total

15

100%

Eyes

5

Lips

5

Nails

0

Face

2

Eyes

0

Lips

0

Nails

0

19.77%

19

46.34% LIP PRODUCTS

2

41

QUANTITY

0

0.00%

Lipstick

2

20.00%

Lip Gloss

2

20.00%

Lip Treatments & Balms

5

50.00%

Lip Stain

0

0.00%

Lip Liner

1

10.00%

Total

10

100.00%

4.88%

100%

8.73% ANNA SUI WILL HELP SEPHORA GROW. We are still witnessing the booming success of Marc Jacobs Beauty, not only in sales generally but also of the number of new clients it has brought into our stores. Consider the Guy Bourdin collection for NARS as well. It has become clear that the lovechild made by fashion and beauty is more powerful than Blue Ivy. Anna Sui has everything Sephora needs in a new show-stopper -- prolific luxury fashion history, full product line, vivid pigments, decadent packaging, and sheer fun fabulosity.

0.18%

2221 100.00% See Justification | F |

PERCENTAGE

Lip Sets (Included below)

NAIL PRODUCTS

4

PERCENTAGE

PRODUCT

Total

194

0

PRICE

$50-$75

439

PERCENTAGE

Foundation Sets

EYE PRODUCTS

$26-$50

http://andyleemakeup.blogspot.com

32

SEPHORA CLIENTS WILL LOVE ANNA SUI. On the runway, designer Anna Sui is renowned for her masterful command of prints and patterns, as well as her deft use of materials and textures. She possesses a dark and elegant sense of femininity that permeates everything from her flagship SoHo store to her exquisite makeup line.

QUANTITY

QUANTITY

PERCENTAGE

Nail Kits (Included below)

0

0.00%

Nail Polish

1

12.50%

Nail Effects

2

25.00%

Nail Base & Top Coats

2

25.00%

Nail Treatment & Remover

2

25.00%

Nail Stickers & Appliqués

1

12.50%

Get Nails at Home

0

0.00%

Total

8

100.00%

SOURCE: | Anna Sui Cosmetics | http://www.annasui.com/ | Beauty: Anna Sui| http://www.beauty.com/anna-sui/

BRAND ASSORTMENT

PRODUCT C AT E G O R Y ASSORTMENT

BRAND REPRESENTATION

34

SOURCE: | Sephora | http://www.sephora.com/

QUANTITY

PERCENTAGE

PRODUCT CATEGORY

QUANTITY

PERCENTAGE

Face

831

38.14%

Eyes

831

38.14%

Full Product Line

17

34.69 %

Half Product Line

12

24.49 %

Lips

297

13.63%

Mini Product Line

20

40.62 %

Nails

220

10.10%

TOTAL

49

100.00 %

Total

2179

100.00%

See Justification | F |

See Justification | G |

35

PRODUCT Foundation Sets

QUANTITY 16

PERCENTAGE 2.15%

Foundation

207

27.86%

Face Primer

106

14.27%

Face Powder

112

15.07%

Concealer

76

10.23%

Blush

93

12.52%

Bronzer

64

8.61%

Luminizer

69

9.29%

Total

743

100.00%

See Justification | G |

FA C E PRODUCTS 36

SOURCE: | Sephora | http://www.sephora.com/

PRODUCT QUANTITY PERCENTAGE Eyeshadow Palettes & 114 15.90% Sets Eyeshadow 192 26.78% Mascara 133 18.55% Eyeliner Eyeshadow Primer & Base Eyebrows

136 39

18.97% 5.44%

85

11.85%

Eyelash Enhancers & Primers Total

18

2.51%

717

100.00%

See Justification | G |

EYE PRODUCTS 37

LIP PRODUCTS

38

NAIL PRODUCTS

PRODUCT Lip Sets (Included below)

QUANTITY 19

PERCENTAGE 6.11%

Lipstick

129

41.48%

Lip Gloss Lip Plumper

91 16

29.26% 5.14%

Lip Stain

25

Lip Liner Total See Justification | G | SOURCE: | Sephora | http://www.sephora.com/

PRODUCT QUANTITY PERCENTAGE Nail Kits (Included below) 37 13.41% Nail Polish 85 30.80% Nail Effects 54 19.57% Nail Base & Top Coats 36 13.04% 70

25.36%

8.04%

Nail Treatment & Remover Nail Stickers & AppliquĂŠs

12

4.35%

31

9.97%

Get Nails at Home

19

6.88%

311

100.00%

Total

276

100.00%

See Justification | G |

39

| A | Map 1

| B | Map 2

| C | Map 3

Benefit to Consumer & Merchandising

Employee Expertise & Consumer Involvement

Quality of Experience &Number of Luxe Brands Carried

Sephora

Macy’s

Very high level benefits come from Sephora’s VIB and VIB Rouge programs, which includes point perks, VIB gift card, birthday gift, and “we miss you” gift card.

Mid-level benefits are due to vendor-chosen gifts-withpurchase at vendor-chosen times and the Macy’s card, neither of which are reward based

High level merchandising comes from immaculate, fully stocked shelves; ample applicators and mirrors; seasonal displays based on trends; tissue paper and gift bag at cash wrap.

High level merchandising due to clean, though not perfectly organized, fully stocked shelves. Also, the counters were stocked with applicators and provided ample lighting and mirrors. Further, Macy’s seasonal displays are highly decorative. Despite these positives, Macy’s only provides a plastic bag at checkout.

Ulta Low-level benefits rating is due to the fact that the rewards and coupons cannot be used on prestige items and that reward points take a very long time to accumulate and can only be used on select, often promoted products.

Low-level merchandising comes from the vile and barren shelves, the few products stocked on which were clearly unhygienic and overall grimy. To add to this, despite obviously used products, there were no applicators in sight. The kiosk displays had a DIY approach in that they gave education to the customer regarding purpose and usage of the products. Lastly, Ulta only provides a plastic bag at check out.

J U S T I F I C AT I O N S

Belk Mid-level benefits are due to vendor-chosen gifts-withpurchase at vendor-chosen times, which are not reward based.

Very high level merchandising due to immaculate, fully stocked shelves. Also, the counters were stocked with applicators and provided ample lighting and mirrors.

Further, Belk’s seasonal displays are highly decorative.

Despite these positives, Belk only provides a plastic bag at checkout.

Sephora Very high-level expertise comes from their implementation of Sephora University, which provides extensive training via videos from the different companies providing specific education

Sephora Very high quality experience due to the feeling you get being like you’ve treated yourself. While in store and after shopping, customers get an exciting, elated feeling|| Very high number of luxury brands at 53 total.

Very high-level involvement comes from their consumers who tend to ask many and in-depth questions of the cast members

Ulta Very low-level expertise was experienced at Ulta when the manager gave false information about brands and products, even mispronouncing brand names.

Very low-level involvement comes from the consumer behavior of convenience-style shopping.

Macy’s and Belk Mid-level expertise is due to the fact that the education received by the Macy’s consultants comes from the vendors they are trained to sell for. Therefore, the consultants cannot talk about other brands’ products, even if they know.

Mid-level involvement is due to the consumer behavior of loyalist style shopping.

Ulta Very low quality experience because it feels like shopping in a drugstore – a dread for entering and leaving.

Low number of luxury brands at 21 total.

Macy’s Medium quality experience due to the pro of beautiful counters, but cons of having to bounce to and fro each one and the fact that customers are trapped in a department store in a mall.

Medium number of luxury brands at 26 total.

Belk High quality experience due to the pro of beautiful and very clean counters, but cons of having to bounce to and fro each one and the fact that customers are trapped in a department store in a mall.

Very low number of luxury brands at 11 total.

41

42

SOURCES

1.

Anna Sui Cosmetics. (n.d.). ANNA SUI. Retrieved March 5, 2014, from http://www.annasui.com/en/#/cosmetics/

| D| Financial Plans

| E | Financial Plans by City

The original source of data for our calculations comes from LVMH’s 2012 quarterly report. From there, we used the LVMH corporate family report to find the percentage Sephora represents within LVMH’s total sales, and this value is 4.48%.

Through interviewing a manager at one of Sephora’s B stores, we discovered that the Color department makes up 51.5% of Sephora’s total sales. Monthly breakdown was determined by a reasonable estimation based on consumer buying behavior and sales trends for our given season. Due to the fact that most of the Color department’s merchandise is constant, markdowns only occur during a time of clearance, i.e. when a brand or product is discontinued at Sephora or a limited edition product or collection has run its course. The latter most often occurs with the holiday palettes and sets in December after Christmas and all throughout January.

Each of our city’s sales ($) are based on their individual percentages in relation to the US cosmetics retail industry sales ($) on the whole. NYC’s average annual sales ($) in the cosmetics retail industry is $490,601, which is .64% of all of the US cosmetics retail trade. Cincinnati’s average annual sales ($) in the cosmetics retail industry is $4,947, which is .06% of all of the US cosmetics retail trade. Fairfax’s average annual sales ($) in the cosmetics retail industry is $7,028, which is .09% of all of the US cosmetics retail trade. Monthly breakdowns and markdowns for each city are based on the same calculations we made for Sephora’s Color department on the whole, but by the percentage that each city’s store represents of the total department.

| F| Assortment

| G | Assortment by Classification

8. Macy's. (n.d.). Macys.com. Retrieved March 3, 2014, from http://www.macys.com/

Sephora’s Color merchants make buys per whole brand or major product category (i.e. only lip products), not by individual products. Our assortment is based first on our brands and the three types of distributions of these – full, half, and mini.

Full sized ranges include plenty of merchandise from at least three product categories. Half sized ranges include a moderate amount of merchandise from two or three product categories.

Mini sized ranges include a smaller amount of merchandise from only one product category

Classifications within our assortment are by the four major Color product categories – face, eyes, lips, and nails – and then by subcategories (listed in the respective tables) determined by consumer buying behavior of each major category.

9. Sephora. (n.d.). Sephora. Retrieved March 4, 2014, from http://www.sephora.com/

10. Sephora S.A.(2012). Financial Report 2012. Published Dun & Bradstreet, Inc. 2014.

Retrieved from OneSource Information Services, Inc., March 2014.

2.

Anna Sui Cosmetics. (n.d.). Beauty.com. Retrieved March 5, 2014, from http://www.beauty.com/anna-sui/qxb116308/ 3.

Belk. (n.d.). Belk.com. Retrieved March 5, 2014, from http://www.belk.com/

4. Census Bureau Homepage. (n.d.). Census Bureau Homepage. Retrieved March 3, 2014, from http://www.census.gov/

5. Louis Vuitton Moet Hennessy. (n.d.). LVMH. Retrieved March 5, 2014, from http://www.lvmh.com/

6. LVMH Moet Hennessy Louis Vuitton SA. (2013). Annual Income Statement (As Reported) 2013.

Retrieved from OneSource Information Services, Inc., March 2014.

7. LVMH Moet Hennessy Louis Vuitton SA. (2013). Interim Income Statement (As Reported) 2013.

Retrieved from OneSource Information Services, Inc., March 2014.

11. Ulta. (n.d.). Ulta.com. Retrieved March 5, 2014, from http://www.ulta.com/

12. WGSN. (n.d.). WGSN Fashion Trend Forecasting & Analysis.

Retrieved March 5, 2014, from http://www.wgsn.com/en-us/

43

morgan mccarty hana hyman

retail buying simulation | FASH 245-01 professor q.c. quach