Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Oliver Chen:
Secrets to Sephora. Sephora is so important to the future of beauty and has been an amazing brand incubator. Welcome to the Retail Visionary Podcast Series, a podcast about visionary ideas and people. My name's Oliver Chen. I'm TD Cowen's new platform's retail and luxury analyst. In this episode, we have the pleasure of hosting Cassie Cowman, the co-founder and partner of View from 32. What is View from 32? View From 32 partners with exceptional brands, retailers, and investors in the beauty and wellness realm. The firm offers them a unique multi-layered approach that gives these brands a competitive edge and valuable insight and access to key partners. A quick introduction on Cassie.
Cassie's entrepreneurial roots sparked an early passion for merchandising, which led her to the luxury fragrance world in 2006. She then joined Sephora, a lifelong dream of hers, and over six years she became the skincare director for Tarte Cosmetics, while also working with other brands in the [inaudible 00:01:31] KOSÉ Group in Japan. In 2018, she became VP of strategic marketing for Briogeo Hair Care, where she helped scale the brand, and she co-founded View from 32 while consulting for her alma mater, Sephora. She's also a Tulane grad. I'm from Louisiana, so it's great to have you, Cassie.
Cassie Cowman:
Thank you so much, Oliver, for having me. Happy to be here.
Oliver Chen:
As a start, for those who are less familiar with View from 32, what led you to start this and what types of advice do you provide?
Cassie Cowman:
Absolutely. My partners, Lindsay Ullman, Gabriella Giron, and I started View from 32 almost three years ago as really a way to add value to the industry and what already was out there versus creating a new brand to really touch on our collective expertise as merchants at Sephora for many years as well as brand operators. And we also had this vision to reduce the friction between the brand retailer and investor side of things, really uniting in one goal, to bring great products and ideas to the clients. And we work with brands of all sizes, nascent brands that are just an idea today to billion-dollar businesses who need maybe a refresh and strategic thinking. On the retail side, we work exclusively with Sephora as our client partner. We help fill gaps on the team, we support strategic projects, and we found that our merchant background and approach also delivers a unique value prop to that in the investor world. And so those three arms of the business are really our kind of secret sauce, our unique point of difference, and we do just really a breadth of things across every area of beauty.
Oliver Chen:
Cassie, so we'll jump in. What are the secrets to success at Sephora? What makes a brand successful when launching there?
Cassie Cowman:
Yes, what everyone wants to know, and there's not just one thing, of course. Now, there are table stakes, the superior product that fills a white space. The brands really needing to know their customer well and have a true founder vision and conviction around what they're doing and a need that they only are meeting, how they maybe are educating the customer, et cetera. And a strong team that knows how to partner with and drive a Sephora business is a must, but there's not one lock. It's really about diving in and harnessing the brand's unique superpower and optimizing that.
Oliver Chen:
How do you know if a superpower is really good enough and if a brand should even try and/or tweaking that?
Cassie Cowman:
Yeah, it's a great question. You never really do, but there's something... I mean, that's the beauty of the merchant role as well. It's a little bit of art and science, so it's a bit of gut and believing and sealing. Not to be whoo-whoo about it, but there's a feeling that you get when you see just a truly phenomenal idea and product and a founder that has it. It's special. And today, there are a lot more founders that you can tell are maybe creating businesses for the wrong reason. They're looking for a payout, that's okay too, but a lot of times you can see through that. So it's a mix of a gut feeling and really looking at the data as well.
Oliver Chen:
And Cassie, which categories are you more excited about in the medium to long term? And second part to this, when you speak about today, you've been in this business for a long time, how would you contrast what you're seeing today relative to a couple years ago?
Cassie Cowman:
Absolutely. So one of the categories we're most excited about today is hair care. Honestly, really interesting to see this next wave of styling come. Hair has been in a bit of a treatment mode. It follows sometimes the other categories. So what happens in skincare has really informed a lot of what has happened in hair care in that regard with things like neutrophil and scalp care. And now I think it's back to this makeup inspired vision for hair care and getting looks and styling and hair and just a little bit sexier and some of the experts that are informing that as well is really exciting. And the thing about this category or every category in beauty, but beauty as a whole, it evolves and changes so rapidly and it really does follow, today, the needs and desires of the client, which they're more fickle than ever.
So I think just maybe in a negative way, it's a bit of that fickleness and volatility that is caused, of course a lot of uncertainty, but I think even more of a prime example to stay the course with key hero core products that can drive steady growth versus just chasing virality, which is so... It's very desirable and it's something that brands are looking for, but it can be a crutch and it can lead you up in the wrong path. So that, of course, that just up and down of the market, the brands, what's hot one day is down the next, that's the biggest change, not this just steady growth. And a few players are higher, a few players are lower. There's very big winners and very big losers in the market today, which is again, quite scary.
Oliver Chen:
Yeah, I'm a big fan of both Rare Beauty and RØDE, but the mystery is what's sustainable and also the evolution of RØDE of course. What are your thoughts on that in terms of you helping assess or trying to have brands for the long term versus hits and misses?
Cassie Cowman:
Absolutely. The brand longevity conversation is certainly a huge one in the retail and investor community of course. And for the brands, that's always the question. And again, that's back to part of that merchant gut. I would say in the case of rare, this subcategory ownership and continuing to build that and driving the trends in blush, for example, have been so meaningful to just the category as a whole and driven a lot of longevity through that category ownership and just it's important though to continue to reinvent and grow other subcategories. Also, some will be misses like in the case of body care, for example. I think this fragrance endeavor is really interesting. I think RØDE... They've done that in lip, which can be a low loyalty category. So what categories are high loyalty for the consumer is also really important to look at. And I think now having the e.l.f. team behind the brand to look at those things more strategically and high level is really important, not just trend categories, but balancing trend categories with core high replenishment categories.
Oliver Chen:
Yeah, that's a great topic to dive into a little bit. Which categories are lower versus higher loyalty? I think skin care follows that S-curve where if you can get that consumer, it can be very high loyalty, but it takes a while. And on the other hand, cosmetics can be fleeting.
Cassie Cowman:
Absolutely. And it's really the subcategory level that's important to look. So in makeup, for example, complexion products have potential for high loyalty because you find a complexion product that you're potentially using daily and you want to continue to buy that and you're not as likely to switch. Similar to your point in skincare, a cleanser, a moisturizer, really great basic products, not necessarily a trend product like a mask or something like that. So it's really prescriptive at this not only just category, but the subcategory level and finding those items that are tried and true and are universal in format and texture too, and don't feel too trend-driven. Youth to the people. Kale cleanser, it's just a crowd pleaser and it drives an incredible amount of loyalty. So those types of products, you can't just build one easily overnight, but you'll see the longer term return on the investment of products like that that you can really build this business because you want the shiny new objects to attract the clients, but where you're going to scale and make real money is through those higher plentiable goods.
Oliver Chen:
Would also love your view, Cassie, on the cosmetic sector, it's been bumpy and cosmetics has a fair bit of standard deviation in the upside and downside. What's your latest thinking within cosmetics in that category and what you're seeing and also how might you compare and contrast that relative to the skincare segment?
Cassie Cowman:
It absolutely has been bumpy. It's getting back on track, depending... Again, as I mentioned, there's some key winners here. What I think is really interesting in terms of what's coming and the Mary Phillips brand announcement just coming out, this idea of new experts that just really excite the consumer on another level and keep them engaged in the category. It's beyond influencer, it's who's driving the conversation today. I think, really important... I mean, Chris McMillan as well, doing this in hair care with a new brand. So this idea of new experts, Dr. Idriss in skincare. But in makeup, I think Patrick Starr, Mario have done this really well and have been performing consistently. And I think those new players to the stage are going to drive that as well because it also just creates a lot of engagement and a lot of fun when you have someone to look up to that, again, is not just an influencer, but really an expert in this space.
Oliver Chen:
Yeah. That moves us to another cool topic, which I follow a lot like medicalization of beauty and also the convergence of biotechnology and skincare. We follow that closely with brands such as AV Laboratories, as well as Augustinus Bader and many others. What do you think about exosomes, peptides, simplex optimization and all these things in terms of skin care?
Cassie Cowman:
Very excited about this. Skin care is where... I've actually worked in every category but the most in skin care and most passionate about it. Love seeing some of this new technology come to light. It's been a long time coming. We're still used to these tried and true ingredients like vitamin C and retinol that have been around forever. And so to see true innovation and I think it feeds on itself. So for example, there was a brand called Mother Science that we love that discovered an entirely new molecule, like really breaking barriers in terms of how can we do things differently. I think some of these things, of course, are trend in the way that we saw CBD skin care explode. There's of course with exosomes a lot of discussion on whether plant-based exosomes are actually effective on human skin. So still waiting for a lot of the actual science and clinicals to come through for... Ultimately, at the end of the day in cosmetics, it's how does it make you look and is it hopefully a good experience to use?
A lot of people are willing to use products that are not pleasurable to use on their face if it makes them look good. But I'd say what we're really excited about is just the idea of what you first brought up, the medical-grade skin care products at home. So whether that's accessibility via a platform that's offering prescription-level products to the consumer, or just taking something like Rejuran and the salmon sperm facials that are so popular in Korea and giving you a topical version of that. And so bridging those gaps and seeing more of that and pushing the boundaries. Dr. Diamond has done a great job of that as well, taking something he's known for and putting it in a bottle. You can never promise the same results, but just really pushing the conversation forward. From an innovation standpoint, it's really exciting in skin care to see these-
Oliver Chen:
There's a lot of-
Cassie Cowman:
IP-led brands.
Oliver Chen:
... clinicals and efficacy and also these trials, but tons of fascinating innovation and also the intersection of biotechnology and AI to discover new molecules too.
Cassie Cowman:
Absolutely. And AI for just the most basic, which is skin diagnostic tools and helping people find the right products for them because ultimately some people just don't know, right?
Oliver Chen:
Yeah, we need to do a whole other podcast just on skin care, then we can do one on cosmetics and we can do one on haircare, and then also fragrances. So you spoke earlier about merchants and guts and authenticity, but at the same time you're very familiar with the launch metrics and KPIs. Could you walk us through the process of a brand launching at Sephora? What metrics are they held against in terms of delivering targets and any common incoming questions and debates you get on that topic?
Cassie Cowman:
Yes, and in terms of planning, a brand typically works on a 9 to 18 month plus timeline to plan the launch. There's so many things that go into it. You only have one shot building out the asset library, people, visual merchandising, 360. In terms of building out the targets, if the brand has an established DTC business or retail presence, we always advise to be transparent as possible with the retailer. Share those metrics, share what you're comfortable with to get to as an accurate forecast range as possible because if Sephora or Ulta don't have any idea where you're sitting, they're going to use just their baseline metrics based on comparable new brands or subcategories, and it's not always the most accurate. Sephora is quite fair with baseline benchmarks, we feel for a new brand. They're not folding them to unrealistic numbers and they're really rooting for brands to over-deliver on the forecast and initial budgets.
However, it could mean that the brand doesn't have enough stock in case things go really well. So it's really important to also push for scenario planning. Good, better, best. What does this look like and what is our risk tolerance? And that's very, very important. The metrics, again, are unique to each category, so a baseline for a fragrance brand versus a skin, makeup, et cetera. And again, I think looking at the... Of course, you're still going to look at the comparable brand skew level analysis mixed with the historical data and just be very prescriptive. Don't be democratic in planning. Don't baseline look at everything the same, really look at where the bets are together with a retailer, where do you want to take risks, and align from there.
Oliver Chen:
As we think about the landscape, it's been tougher for Ulta in terms of losing share in prestige and also Sephora has done a great job launching Colé Sephora quickly. What does it take for Ulta to increase competitiveness? Is there a place for both of these players?
Cassie Cowman:
The prestige channel is... Or even [inaudible 00:17:35], the specialty channel, is that anchor today. I absolutely believe there's room for both Sephora and Ulta and Sephora Colés. There are distinct experiences for the client and assortments. Ulta really could drive more differentiation in their assortment and do a better job of building and fostering those brands. They've been successful with the model of... Sephora is helping to build the brands, then we launch them. And yes, that absolutely has worked well, and they do have exclusivity in their assortment, but I've heard from many brands who chose that channel maybe over Sephora. Especially in skincare, it is hard. You're lost in a sea of brands and you're not quite sure what the platform is.
They've certainly gone harder on this Sparked at Ulta platform, but I just really think that they can take more joint ownership in building the brands together in the way... They're not going to do the Sephora model. They need to be them and play to their strengths. But I also think that from a promo positioning and competing with Amazon, they've probably been hit more there and have a higher overlap in the assortment. And I don't just mean at the brand level because a lot of that is at Sephora, but really even at the skew level, do they have differentiation versus Amazon.
Oliver Chen:
Yeah, I try to buy everything from Ulta and Sephora or department stores, but then I do buy stuff from Amazon. I just put in beauty.
Cassie Cowman:
Of course.
Oliver Chen:
What's happening now, I mean, Amazon's been fierce and adding new brands, Estee Lauder amongst many others. And has relationships with L'Oreal direct. What do you think is going to happen with Amazon? What are some key points that you're advising clients on?
Cassie Cowman:
Yes, they are pushing through and winning in the same way that they do in every other category with convenience, and in some cases, price. We feel that they've kind of commoditized beauty in a way that takes out some of the fun discovery and the emotion that is so important in prestige. And so they've carved out luxury, they're trying to meet all these different needs and different brand positioning to, I think, mostly satisfy the brands. I don't know how much credit they get from the client. So they're here to stay. They're very important player in the space. I think it's now more about what Sephora has... And Ulta of course. But what Sephora has that Amazon does not is over a thousand points of sale in North America, staffed with passionate beauty professionals. And while assortment differentiation is the number one thing, they can also truly stand out with service and experience. And I do feel they need to double down because that's where they have something unique that Amazon does not have today.
Oliver Chen:
Yeah. I often think about this. Basically the future of the store. In your dream scenario, how would an Ulta store look? How might a Sephora store change?
Cassie Cowman:
Sephora, I think has backed a bit away from services and experiences, again, in this time when post-COVID, being back in store and touching and playing with product is, again, a true point of difference for them and why they created really the modern specialty multichannel. So what does that look like? What does education look like? Sadly, when I walk into a store today, I do find there are more brand reps in store than educated Sephora staff. So that feels like an opportunity, just again, the people. Something that is not AI, that is not Amazon. And I think that just a better client experience and unique experiences that you can offer and service and what does that look like. And I also think a bit more curation in the sense of some of these other wellness, for example, didn't really ever take off in a Sephora.
I think body care has become a small piece, but luxury. How do you really create and carve out a space that feels different within certain doors? Obviously, not for everywhere, but there isn't a luxury channel that's scalable in the US market today. So do you create almost a side store in the way that they've done these smaller neighborhood type of door concepts that's solely for luxury brands and a luxury experience because you don't get a luxury experience walking into the average Sephora store, and that's okay, but you need a platform for some of these incredible brands and that client is expecting something different. So that really is my dream of seeing something unique carved out to really win. In wellness, that could be the case as well. And some of these subcategories really... In the true Sephora fashion, having deep conviction behind developing out a new subcategory and taking a big risk with it.
Oliver Chen:
Okay. Yeah, why don't we start a store together.
Cassie Cowman:
Okay. I love it.
Oliver Chen:
So what about Ulta though? I mean, I think you touched upon it. What we see is brands can sometimes get lost in there. I think there's some curation opportunity, especially with shoppers going up and down and being cross category, and then the stores can just have a lot of stuff versus knowing what you're doing. But I think it's tough on Ulta because they're all things beauty all in one place, and they're bigger boxes too. So what's your secret for what Ulta should be?
Cassie Cowman:
Oh, that is a great question. I just the other week was spent a lot of time in Ulta and was asking myself the same thing. The breadth of assortment is truly unmatched. I do think though it feels slightly democratic. I don't know what's the most important thing in each of these worlds that they've carved out. They have a gondola for ingredient-driven, global beauty, natural, and it's just story after story. And I'm like, "Well, okay, so within those, what is the one thing I should care about?" And then even with all of these, they're all equally spaced in some cases, and it just feels, again, like this overwhelming breadth without the conviction and the push of, "Here's what you should know about."
I think with the exception today of the Isima, like the Shakira brand, it was very well-represented. It was everywhere. So certainly making a statement there, but with some of these more subcategory trends, I think the K-beauty piece for Ulta has been very interesting. They've had a lot of conviction and they're going after it in a big way. So I'm excited to see how that continues to come to life, both from a footprint and merchandising and assortment, but I just would overall like to see a little bit more conviction and curation.
Oliver Chen:
Yeah, for sure. It's always this balance, but I think you and I are enthusiasts here where the editorial component can really tell a story, and then you have to take bets too. You have to have-
Cassie Cowman:
Absolutely.
Oliver Chen:
... a unified view and take some bets and think about that harder. Another hot topic, obviously TikTok. I'm a bit addicted to TikTok and sometimes I'm scared to buy things on it, but it's definitely very easy. What's your take on TikTok meets beauty? It's explosive.
Cassie Cowman:
Beyond explosive, and I am also spending way too much time on TikTok. And what's incredible is when you look at one product and you don't purchase it, how they just... They hammer you. You [inaudible 00:26:07] you're like, "I have to buy it now." It's been incredible to see this channel just explode out of nowhere. Honestly, I... It's very hard to wrap your heads around TikTok, even in the sense of a brand working with the channel. There's multiple business models and how to operate within TikTok Shop and how to win, and it's very complicated at that level. What I love though is to see an emerging channel out of nowhere because I do think it puts a positive pressure on Sephora and Ulta to continue innovate and be better.
The part that is very interesting is just the discovery angle. So what... We did a study with the new consumer last year or earlier this year, and our hypothesis was that the discovery was happening on TikTok shop, but the purchase, and maybe the replenishment was happening at Sephora, Amazon, or Ulta, but clients are... If they discover it there and the ease and the lack of friction to purchase, like why not repurchase there, right?
Because you're also still getting promo. And so the fact that they've created this flywheel with the content machine, the creators, the shop in a way that no app has done that in the US, I mean, it's just... It's phenomenal to watch. It's difficult to, again, wrap our heads around. I think sometimes with brands, it's proceed with caution because you also can have, again, those spikes in virality and not be able to get ahead of it. And it is now... It is competing with Sephora and Ulta. There's no way around that. So you really do have to decide as a brand, "What is my channel priority and focus?" It's very important because you can just between DTC, TikTok Shop, Amazon, Sephora, Ulta, just really balancing your resources accordingly as well, and not trying to just win everywhere. Something will suffer.
Oliver Chen:
What is your feedback there? It's an important, difficult question. I think if I launched... Well, I have a charity fragrance, but if I launched Oliver Chen Skincare, I should be in multiple channels or what's your general advice for cannibalization risk and incrementality across channels and how people can make the margin mix work? We have a book on this as well, but it's somewhat controversial too, how much money you make by channel.
Cassie Cowman:
It is. It is. Absolutely. We're, of course, very Sephora biased because we built brands there, careers. We think they are the best at helping brands to build their... Not only brand, their presence, their longevity, [inaudible 00:29:05] strategy. So they are phenomenal partners at that. So even if you decide to launch exclusively in Sephora and not focus on DTC, you can absolutely win that way and then tier your channel approach from there. So how are you... Again, not being democratic from a channel investment standpoint and saying, "Maybe you're designing your brand specifically for a channel as well. Hey, it's optimized for TikTok Shop because of XYZ, about the packaging, the product, how people talk about it, where it's resonated." So I think that's also... Who the target consumer is and where they are, of course, is number one, but it's always... Some brands are expecting just consistent growth in every channel, even when they expand.
We hear this every day and we're like... Well, you do have to have some level of expectation that there will be cannibalization and be okay with that and decide how you're going to invest accordingly. And also not compete with your retail partners from either, just from an SEO, from traffic driving initiatives. Saying, again, back to the question of how to launch and drive a successful Sephora business, out the gate, make sure a lot of your resources are driving traffic to and awareness that you're in the channel because you just have that one shot to get that out there. So it's, again, back to steady growth. Obviously, expanding in a healthy way, not putting yourself out there in too many channels too quickly. And it does depend on the subcategory and brand. So I think body care is an interesting one. It's very different. Some of these emerging categories like deodorant, more personal care adjacent that have been more typically mass that are getting more dominant and prestige. Again, very different depending... We get very prescriptive and detailed in terms of advising depending on your product category, segmentation, et cetera.
Oliver Chen:
Very cool. Very helpful. Couple more to close it out. What are your favorite beauty products that you use and what are some emerging brands that you're most excited about? What should we all try?
Cassie Cowman:
The products that I use are generally deeply personal because they're founders or businesses I want to support. I'm loving Sofie Pavitt Cleanser. I think it's just so universal, easy. The AKT deodorant is surprisingly very, very efficacious, plastic free, which is awesome. The scents are very sophisticated. I'm just loving trying all of them. Irene Forte has very luxurious skincare line. This Hibiscus night cream is absolutely phenomenal. Yeah, I am always in rotation of a lot of different things. Kulfi Beauty, makeup, the eye shadow. It's just products that are fun to use also in makeup. I think fun, easy to use, are great. In terms of emerging, I mentioned Chris McMillan. We've been fans of his for many years. He's magnetic in every way, very talented, on the pulse of culture. There are so many new brands, influencer brands, celebrity. His is well deserved in a sea of some that are arguably not and very long overdue.
And again, excited to see him lead this new... There was a golden age of styling back in the day, and it's kind of gone away. And to see that come back, it's just... It's a sexy category. It's been less so, so love that. There's a small makeup brand called QUEEN MUSIA. It merges the world of fine art and makeup. It just makes it very approachable, yet covetable, they do some of the most innovative packaging that we've seen and just incredible content and creative that actually some of the big guys have copied. I think Ultra Violette leading this next wave of sunscreen and bringing this super fun personality and very distinct identity that's just connected really well with consumers in a lot of global markets, which is amazing to see because especially in that sub category, like how one country has an attitude towards sunscreen is very different from another in terms of usage and products. And I would just say [inaudible 00:33:52] hitting every category here. The Maker is a great brand that-
Oliver Chen:
It's been really impressive. Yeah.
Cassie Cowman:
Incredible, just this universe, merging hospitality and fine fragrance and bringing back romance, heritage. It's been kind of lost these days with virality and just the proliferation of products, like just being a bit more subdued and special in how you storytell and communicate. It's really beautiful. And I mean, of course, full disclosure, we work with many of these brands, but as merchants, we just don't take on clients that we're not incredibly excited and passionate about. So we're shouting from the rooftops all the time how much we love these brands, and if we didn't believe in them, we couldn't do everything in our power to help make them successful. So just putting that out there.
Oliver Chen:
Yeah, that's exciting. What we need to do at my next beauty conference is have you do a panel with your favorite brands. That would be fun.
Cassie Cowman:
Oh my gosh, I love that. Absolutely.
Oliver Chen:
Well, Cassie, it's such a pleasure. You hit upon really essential topics across this evolving industry, and you have a deep passion for helping brands succeed and also cultivating the future of beauty. So thanks so much for your time.
Cassie Cowman:
Thank you, Oliver. An absolute pleasure.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.
