Sephora has chosen to reduce its workforce in China; the following are the reasons behind that decision.
It is cruel news for Sephora that the company that belongs to LVMH – a prominent beauty retailer – has cut down its employees in China because the country is going through economic hardships economically. On Wednesday the management of the company made a statement about its plans to decrease the staff, pointing to the change in consumers’ preferences as the expenditures on cosmetics in the world’s second-largest economy …
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Effects on the Workforce at Sephora China
Sephora’s luxury perfumes and makeup retailing company previously had a workforce of about 4,000 people in China. Yet, at present, with high levels of unemployment and a slow-moving and declining property market, customers are not as confident as before. Some of the world’s most famous cosmetics brands have recently said that although their sales in China are falling, the trend has affected other parts of the market too.
The number of employees to be laid off will be less than 120, which is below 3 percent of Sephora employees’ total number in China. The official of the company apologized for such a decision claiming that it is part of the general tendency to adapt to the rough business climate and develop the brand for the Chinese market.
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Sephora Was in a Position to Effectively Sell in Chinese Market
Currently, Sephora is present in about 350 locations in more than 100 cities, though still, it has a rather considerable share in the Chinese beauty industry boosted by the effective online platform. Nonetheless, the company has not been able to replicate such performance in China as it has in other global markets it has become one of LVMH’s high-growth brands. China, for instance, has a very high online sale of beauty products, posing a challenge to Sephora’s usual store-basis of operation.
Bloomberg in the past has reported the company may be axing hundreds of jobs, or 10% of its China employees, however, official reports have stated that the reduction is significantly less, and the focus is mainly aimed at streamlining its organizational structure, especially in the head office.
Here is what Sephora’s decision means for the future of luxury beauty in China
This specific workforce reduction in Sephora’s Chinese establishment points to a fundamental shift in market conditions that must be actualized by the company. As the dramatically changing macro environment continues to mulch the growth of the Chinese economy, luxury brands such as Sephora can only explore and transform themselves into the unfolding market. Although these shifts might only affect Botox sales directly, the beauty industry’s dependence on the confidence and spending abilities of consumers might indicate wider trends in the way that luxury goods are advertised and sold in China.
Conclusion
Layoffs of employees are a strategic action that has been adopted by Sephora as a means of aligning the firm’s structural model to the current market condi
Read more: Sephora Case: Organizational Structure and Corporate Strategy
Options and as a Way of creating a firm that is poised for growth in the future.
Managing operational costs is one of the critical success factors for organizations that are operating in volatile markets such as the emerging market economy Since Sephora is one of the strategic brands of LVMH, it is crucial to monitor how Sephora will manage these challenges mainly by its competitors.
