LVMH Names New Chief Omnichannel and Data Officer for Digital Transformation

LVMH announced that Gonzague de Pirey and his team will further promote the group's digital transformation.

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LVMH has appointed Gonzague de Pirey as Sephora's new chief omnichannel and data officer, with the aim of driving Sephora's digital transformation.

In an internal statement, LVMH said that Gonzague de Pirey will manage the group's omnichannel data, artificial intelligence, and digital customer service centers of excellence.

Gonzague de Pirey has previously had extensive experience in various business areas in Asia, Russia, France, and Brazil. In 2020, he joined LVMH and was responsible for managing Sephora's German subsidiary. During the pandemic, he launched initiatives such as the Unlimited Loyalty Program and My Sephora Store sales channels to maintain customer stickiness. Two years later, he was promoted to the leader of Sephora' New Venture.

The appointment will take effect on June 1, when Gonzague de Pirey will report directly to Antonio Belloni, LVMH's group managing director.

LVMH said that Gonzague de Pirey and his team will further expand the global customer chain and provide more refined customer experiences across all channels, promoting the group's digital transformation.

(Credit: Gonzague de Pirey, Sephora's new Chief omnichannel and data officer)

Sephora drives LVMH's performance record high

In fact, Sephora has always maintained strong performance and has been committed to digital transformation and omnichannel sales both online and offline.

On April 12, LVMH released its Q1 of FY2023. The report showed that the group's sales increased by 17% year-on-year to 21 billion euros ($22.6 billion) in the three months to March 31. Sephora's luxury retail division performed the strongest, with sales up 30% to 3.961 billion euros ($4.27 billion).

In LVMH's 2022 annual report, it was mentioned that due to Sephora's outstanding performance, the group's sales in FY2022 reached a record high. The group's 2022 sales rose 23% to 79.2 billion euros ($85.4 billion), with Sephora's luxury retail division sales increasing by 26%. In the financial report, LVMH mentioned that the group further invested in Sephora's omnichannel strategy in 2022, continuously improving customer repurchase and in-store shopping experiences.

Sephora itself started as an offline beauty retail store. It began its digital transformation in 2013, merging its traditional marketing and digital marketing departments. Led by Chief Marketing Officer (CMO) and Chief Digital Officer (CDO) Julie Bornstein, this ensured that the digital team had a voice in the company's leadership. In October 2017, Sephora took a bigger step towards digital retail, combining its physical store team and digital retail team to create an omnichannel retail department.

Regarding this move, EVP of U.S. Omni Retail at Sephora, Mary Beth Laughton, said: "Customers are looking for a more comfortable experience in the consumption process, allowing them to think and choose autonomously through different channels of information. As retailers, we should make it as easy as possible for consumers to make choices comfortably and quickly across various media channels."

Through the performance of the luxury retail department after the merger, CHAILEEDO found that LVMH has continuously mentioned the contribution of digital transformation to Sephora's performance in its financial reports since 2018. The department only declined in 2020, but even so, LVMH mentioned in its 2020 financial report that Sephora showed good resilience during the health crisis, and its online sales growth reached record highs in all markets, promoting the development of services such as in-store pickup and online shopping.

(Credit: chart of performance of selective retailing at LVMH in the last 7 years)

Sephora's digital transformation has made a significant contribution to LVMH Group's performance and has also driven the group's overall digital transformation process. Sephora's successful experience provides valuable reference and inspiration for other brands under LVMH Group, promoting the overall development of the group.

LVMH to fully transform to digitalization

Sephora's digitalization has driven the digital transformation of LVMH Group to a certain extent.

Data from global consulting firm McKinsey shows that in the next few years, the online sales of the luxury goods industry will see significant growth. It is estimated that by 2025, the online sales of the industry will triple, reaching 74 billion euros ($79.8 billion). Therefore, the luxury goods industry has to make corresponding adjustments in retail and marketing models to suit current consumption trends.

In 2015, LVMH began to hire talents with digital experience. At that time, LVMH appointed Ian Rogers, head of Apple Music, as the Chief Technology Officer (CTO) for digital innovation. In 2017, Ian Rogers helped LVMH build a new luxury e-commerce platform, Sèvres.com, and created online stores for all LVMH brands. In 2017, LVMH achieved brilliant results, with a net profit share of 5.129 billion euros ($5.5 billion), a sharp increase of 29%.

Moreover, this year (2023), LVMH hired former L'Oréal CEO Stephane Rinderknech as the Chairman and CEO of its beauty division. It is reported that Rinderknech helped L'Oréal China's digital transformation during his tenure, and L'Oréal has made great progress in e-commerce channels. From 2014 to now, its e-commerce revenue share has increased by 9 times, reaching 28% in 2022, contributing about 78 billion yuan in revenue.

(Credit: Stephane Rinderknech, Chairman and Chief Executive Officer of the Beauty Division)

LVMH Group Chairman Bernard Arnault once said that LVMH will fully transform to digitalization, not only vigorously developing online sales but also using digital technology to manage internal operations and improve communication efficiency.

Sephora China's Strategy: Physical Stores + Digitalization

Entering China for 17 years, Sephora has always been the leader in high-end beauty retail. When it entered the Chinese market in 2005, Sephora partnered with Shanghai Jahwa to open its first store in Shanghai. Since then, Shanghai Jahwa invested 4.57 million yuan ($649,300) in 2006 to establish Sephora (Beijing) Cosmetics Sales Co., Ltd. Shanghai Jahwa holds 19% of the shares in both companies. According to Shanghai Jahwa's 2021 annual report, Sephora Shanghai and Sephora Beijing achieved revenues of 8.956 billion yuan ($1.27 billion) and 1.921 billion yuan ($272.9 million), totaling 10.877 billion yuan ($1.55 billion), an increase of 17.41% over 2020.

Undeniably, Sephora is paying more and more attention to the development of the Chinese market. Chinese brands are increasingly shown in Sephora stores. In 2017, Mariedalgar's high-end product line was exclusively launched in Sephora. In 2020, Sephora collaborated with Maogeping and Inoherb to develop high-end product lines.

However, the pandemic in China severely impacted Sephora's offline stores in 2022. LVMH Group publicly stated that in the first quarter of 2022, due to the pandemic, store traffic decreased, and it had to temporarily close 15% to 25% of its stores in mainland China. However, Sephora China utilized the group's well-developed online and offline sales model. In early May last year, it used the "online order, offline delivery" method to meet consumer shopping needs. As of June 3, all 35 Sephora stores in Shanghai have resumed business.

After the restriction eased in China, Sephora continued to focus on the deployment of digitalization + physical store. It is reported that Sephora Asia's second and China's first future concept store will land in Shanghai in early June 2023. The store will present cutting-edge beauty trends with innovative digital technology, professional store services, and a large selection of exclusive high-quality products, comprehensively upgrading consumers' beauty shopping experience. Previously, Sephora opened its first Asian "Future Store" new concept retail store in Raffles City Shopping Center, Singapore, on September 23 last year.

It is evident that both the appointment of Sephora's new chief omni-channel and data officer and LVMH Group's continuous efforts in digital transformation indicate that sales driven by digital platforms will help LVMH Group continue to grow in the next few years.