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It was hard to tell if the opening of Sephora's new store near Herald Square was a red carpet affair or a girl's night out at the spa. A D.J. played techno-pop while guests sipped Moët Champagne and dabbed Jo Malone on their wrists. One 20-something wrapped her hair in a paper headband while an attendant dabbed cream on her cheeks. Another stood before a screen with a front-facing camera and sampled virtual eyelashes, swiping left to explore an array of styles before committing to the real thing.
"Oh! Do another!" said her friend, who was snapping photographs. "This is so much fun."
Much has been written about the crisis in retail, with shoppers deserting department stores for e-tailers and fast fashion, if they shop at all. The beauty business, though, has not had the same fate. Prestige beauty sales in the United States rose 6 percent in the 12 months ending in February, tallying $15.9 billion, according to the market research company NPD Group. Makeup alone is up 11 percent, totaling $7.3 billion. But that industry, too, is in the midst of its own upheaval, driven in part by the success of stores such as Sephora, the No. 1 specialty beauty retailer in the world according to Euromonitor International, which tracks beauty sales.
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Bloggers and YouTube stars, Instagram videos and virtual assistants are replacing department store sales clerks, whose customers now know as much as they do (or more) about mermaid eyes and ombré lips. Brand loyalty is out, replaced by Sephora's try-more-buy-more ethos. Friends hold as much sway these days as trained experts.
"For the older consumer it can be confusing," said Karen Grant, the global beauty industry analyst at the NPD Group. "But for the younger consumer, it's like, 'Wheeeee! Look at that! Look at that!' It's all about play. And the more time you stay in the store or online, the more money you are likely to spend."
Ms. Grant estimates that two out of five women between ages 18 and 54 wear five or more makeup products every day. "It defines the selfie-obsessed, image-driven culture of our time," she said.
Deborah Yeh, Sephora's senior vice president for marketing and branding, said: "The lady at the counter has been replaced by hundreds of people on YouTube. There are more voices. And we are trying to cut through the confusion," in part by allowing customers to try before they buy.
Sephora, which is owned by the French luxury conglomerate LVMH and has more than 2,300 locations in 33 countries, offers digitally savvy customers enough technological doodads and computer displays to make a Silicon Valley engineer blush. Want to try 50 shades of lipstick without getting chapped lips? There is a mobile app using augmented reality for that. Customers can scan their faces to get their Color IQ, a reference number used to find products that match their skin tones, or sit at digital workstations to take classes in contouring cheekbones. Sephora even has its own version of Smell-O-Vision, a touch screen with a fan that lets visitors smell the scents — floral, earthy — that characterize most fragrances.
Rebecca Pahle, a writer and editor in Manhattan, visits the two Sephora stores near her Times Square office twice a month. "It is easy to kill time, play around with things and then spend more money than I should," Ms. Pahle said. "I am experimenting a lot, trying to figure out what I like." She doesn't shop at department stores. "I don't associate them with makeup," she said.
What she appreciates most is autonomy. "At Sephora they ignore me, which I like," Ms. Pahle said. "I don't like the hard sell."
In 2015, Sephora opened its Innovation Lab in a converted warehouse in San Francisco to experiment with ways to combine mobile apps and in-store shopping into a cohesive experience. As a result of their efforts, customers can have as little or as much personal contact they want in stores like the one at Herald Square, which Ms. Yeh called the company's "store of the future."
Now department stores are scrambling to follow suit. In a few months, Bloomingdale's will begin a major renovation of its cosmetics department, which could take as much as a year to complete. "The new in-store experience will have more technology and an ability to 'play,'" said Francine Klein, who oversees cosmetics at Bloomingdale's. "The challenge is to keep pace."
Macy's, long the domain of beauty counters for established brands like Estée Lauder and Lancôme, has begun displaying "staff favorites" in its Dallas store. Salespeople, explained Muriel Gonzalez, the executive vice president and general merchandising manager for beauty, are shifting away from promoting only one brand. Macy's also recently acquired Bluemercury, a spa and beauty boutique, in an effort to expand its cosmetics business.
Kohl's, meanwhile, has revamped all of its beauty stores, adding high-end brands like Lorac and Bliss. And last year, Barnes & Noble began testing the Glossary, its beauty-store-within-a-bookstore, on college campuses, among them William & Mary, Emory and Tulane. There, students can test brands without having to leave campus.
But at the moment Sephora faces its stiffest competition from Ulta Beauty, a cosmetics retailer, which is the No. 1 specialty beauty retailer in the United States (and No. 2 in the world, behind Sephora), according to Euromonitor. Founded by a former drugstore chain executive, Ulta sells high-end and drugstore-brand cosmetics to customers who want prestige brands and salon service.
Naturally, the changing industry makes traditional brands nervous. Of particular discomfort to some is that Sephora is owned by LVMH, and thus stocks many of the brands the group owns, including Make Up For Ever, Fresh, Benefit, Givenchy, Guerlain and Dior. This has led to complaints among beauty companies that fear an even more powerful Sephora will favor LVMH brands or new cosmetic makers that appeal more to millennials than heritage brands.
Ms. Yeh pointed to Sephora's partnership with Estée Lauder to create the Estée Edit, a line of brightly colored lipsticks and eye shadows marketed to millennials, as an example of the company's broad-mindedness. Even so, an update doesn't mean much if those young consumers don't buy it.
"Now everything is agnostic, and you have to play differently," said Ms. Grant, the NPD Group analyst. "You just have to get the traffic."