How Mecca outfoxed Sephora in Australia

Summary

Style-ish Podcast Episode Summary

Episode Title: How Mecca Outfoxed Sephora in Australia
Release Date: January 28, 2025
Host/Author: Shameless Media
Description: Style-ish is the podcast for all things fashion, brand, business, and beauty. In this episode, Shameless Media delves into the competitive dynamics between Mecca and Sephora in the Australian beauty market, uncovering how Mecca has successfully maintained its dominance and thwarted Sephora's attempts to establish a strong foothold.

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1. Introduction

The episode begins with the hosts, Madison Sullivan Thorpe, Anika Joshi Smith, and Joanna Fleming, exchanging greetings and sharing their excitement for 2025. They hint at upcoming discussions and set the stage for an engaging exploration of the Australian beauty landscape.

2. The Swap Segment

Joanna Fleming kicks off the "Swap" segment by showcasing a handmade bag from the brand Whimsy. She highlights the craftsmanship involved, mentioning, “[00:22] These bags by Whimsy are handmade and the girl that makes them is called Connie and she takes up to 20 hours to hand make these bags...”

Madison Sullivan Thorpe transitions to current fashion trends, discussing the Spring-Summer 2025 (SS25) collections in the U.S. She notes the rise of "ethereal beings" with whimsical, mermaid-esque vibes, and emphasizes the influence of Mediterranean styles on local Australian brands like Mode, Mischief, Harpaloo, and dzo.

Joanna then shares her admiration for Mecca’s local brand collaborations, praising their "beautiful prints and patterns" and the unique offerings that resonate with Australian consumers.

3. Introduction to Traced – Sephora's Attempt in Australia

After the Swap segment, the hosts move into "Traced," where they analyze why Sephora has struggled to gain a significant presence in the Australian market, while Mecca has thrived. Madison introduces the topic: “…we are doing a trace today on why Sephora has not quite landed in Australia and how Mecca is largely responsible for keeping them at bay.”

4. Sephora's History and Entry to Australia

Joanna Fleming provides a comprehensive history of Sephora, detailing its origins in France and its evolution under the ownership of LVMH:

“[07:50] Sephora was founded in France by Dominique Mandanoord in 1970. The first US location opened in New York in 1998…”

She highlights Sephora's initial expansion efforts and its flagship store in Sydney’s Pitt Street Mall, which opened on December 4, 2014. Joanna mentions the ambitious price-matching strategy Sephora employed:

“[15:51] They focused on price matching the US, but due to the stronger Australian dollar at the time, products were significantly more expensive…”

5. Mecca's Strategy and Success

Madison Sullivan Thorpe recounts Mecca’s founding by ex-L'Oréal executive Joe Horgan in 1997. She emphasizes Mecca's customer-centric approach, which contrasts with Sephora's model:

“[26:27] Joe believed that beauty products were better sold by staff who were knowledgeable across a variety of brands instead of being pushed to sell one brand over another.”

Joanna adds that Mecca remains fully owned by its founders, ensuring consistent brand vision and quality.

6. Comparative Analysis: Customer Experience and Loyalty Programs

The hosts delve into the differing customer experiences offered by Mecca and Sephora. Madison praises Mecca’s "Mecca magic," highlighting their personalized service and welcoming environment:

“[28:41] The Mecca magic is so alive and well... beauty is something that is so quite a vulnerable thing to talk about... they listen to you and care about your needs.”

In contrast, they critique Sephora’s more self-service model, which can feel overwhelming and less accommodating for beauty novices:

“[40:28] I just feel like if I go into a Sephora store, it's almost like self-service and I don't feel like the environment caters to my wants and needs as a consumer.”

Joanna discusses Mecca's Beauty Loop loyalty program, which boasts a higher positive sentiment compared to Sephora's Beauty Insider:

“[37:12] The phrase 'Mecca Beauty Loop' has a 61.2% positive sentiment, whereas 'Sephora Beauty Insider' only has 56.7%.”

7. Challenges Sephora Faces and Ongoing Efforts

Despite Sephora's global success, their venture in Australia has faced significant hurdles. High operational costs, limited brand exclusivity, and strong competition from established local retailers like Mecca have impeded their growth. Joanna notes:

“[23:38] ...Sephora Australia still only stocked 41.2% of the brands available at Sephora in the US because 45.6% of Sephora's US brands are available exclusively at Mecca.”

Madison observes that Sephora is attempting to adapt through influencer programs and exclusive brand partnerships, citing the success of brands like Fenty and Rare Beauty in the Australian market.

8. Conclusion

The episode concludes with the hosts acknowledging Mecca’s robust strategy centered on exclusive brands, exceptional customer service, and deep understanding of the Australian market. They remain intrigued by Sephora’s ongoing efforts to recalibrate their approach and anticipate future developments in this competitive landscape.

Joanna wraps up with a call to action for listeners to engage with their content and thanks their team and sponsors for supporting the episode.

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Notable Quotes:

• Joanna Fleming [26:27]: “Joe believed that beauty products were better sold by staff who were knowledgeable across a variety of brands instead of being pushed to sell one brand over another.”

• Madison Sullivan Thorpe [28:41]: “The Mecca magic is so alive and well... beauty is something that is so quite a vulnerable thing to talk about... they listen to you and care about your needs.”

• Joanna Fleming [30:24]: “76.8% of Australian beauty revenue was generated offline... only 44.53% of beauty revenue in the US comes from bricks and mortar stores.”

• Madison Sullivan Thorpe [41:53]: “If you are a makeup artist or a skin expert and you have an interest, you're probably more inclined to want to work at Mecca for all of the reasons that we've stated earlier.”

• Joanna Fleming [44:37]: “Even like a Boxing Day sale, they do their Boxing Day online. It’s not like your really popular products that you would be repeat purchasing all the time.”

This detailed exploration underscores how Mecca's tailored approach, brand exclusivity, and superior customer experience have effectively overshadowed Sephora's attempts to penetrate the Australian beauty market.

Transcript

[Joanna Fleming]

Foreign.

[Anika Joshi Smith]

This episode of Stylish is brought to you by Carted, our favorite wishlist app. Save all your shopping in one place, get alerts when things go on sale and make 2025 the year you shop stress free.

[Madison Sullivan Thorpe]

This is Stylish, the podcast for all things fashion, brand, business and beauty. My name is Madison Sullivan Thorpe. My co hosts are Anika Joshi Smith and Joanna Fleming. How are we all this week?

[Unnamed Speaker]

Feeling good, Feeling great. How about you?

[Madison Sullivan Thorpe]

I'm feeling really good. I'm really enjoying the start to 2025. I feel like the weather's been good.

[Unnamed Speaker]

Yeah.

[Madison Sullivan Thorpe]

Said that like I've got like something really exciting. Who knows? Stay tuned.

[Unnamed Speaker]

I've loved this month. The tennis has just been such a vibe.

[Madison Sullivan Thorpe]

Yeah. It was such a good year this year. I think they did such a good job. But like, Melbourne's buzzing.

[Unnamed Speaker]

It is.

[Madison Sullivan Thorpe]

So I don't know what Sydney's doing, but you know, hello. Right, let's not start spark a debate here. Yeah.

[Joanna Fleming]

Jan is really Victoria's time shine.

[Unnamed Speaker]

I feel.

[Madison Sullivan Thorpe]

Yeah.

[Joanna Fleming]

Melbourne's the place to be in Jan.

[Madison Sullivan Thorpe]

We've got it going on, guys. I'm so excited for today's episode.

[Joanna Fleming]

It's a good same.

[Madison Sullivan Thorpe]

I think anyone who is remotely interested in brand, business or beauty will really enjoy this one. We haven't done a trace for a little while, but we are doing a trace today on why Sephora has not quite landed in Australia and how Mecca is largely responsible for keeping them at bay. But first we're going to do a little swap, which, as the name suggests, is where we just bring in something that we're loving at the moment. Jo, why don't you kick us off?

[Joanna Fleming]

Oh, my one was hard today. I was really struggling to pick one that I really wanted to, like, hone in on. I was literally going through my bedroom and then my bathroom and I was like, oh, what do I do I want to do beauty? Do I want to do fashion? Today I. And then I spotted out of the corner of my eye something new that I haven't actually taken out in public yet, but I'm dying to take out into public. And it is a bag that I was sent by a brand called Whimsy.

[Unnamed Speaker]

Okay.

[Joanna Fleming]

I think RE has one of these bags. RE as in Re head of business development at Shameless Media.

[Madison Sullivan Thorpe]

And our fill in co host.

[Joanna Fleming]

Yes, and our fill in co host.

[Madison Sullivan Thorpe]

Whenever any of us are away sick, most importantly.

[Joanna Fleming]

So these bags by Whimsy are handmade and the girl that makes them is called Connie and she takes up to 20 hours to hand make these bags and they're made from beads. They are so cool. They come in all these different colors and prefacing. She did send this to me. I didn't actually buy it, but they are beautiful bags and I absolutely would consider buying one, but I absolutely love it. It's so cute. It's so different to everything else I have.

[Madison Sullivan Thorpe]

Yeah.

[Joanna Fleming]

And I just keep looking at it in my bedroom, like, what can I put that with? I considered bringing it today because it's kind of see through. I didn't want to have to like shove my tampons in there and try to conceal it.

[Madison Sullivan Thorpe]

Maybe you need to get like a cute little coin purse or something. You can hop in, she can fish.

[Unnamed Speaker]

Your little going out bag.

[Joanna Fleming]

It would be a great bag to take to a wedding. Yeah.

[Unnamed Speaker]

Okay. You know what, this kind of leans into my swap. So I have not given anyone a fashion tidbit for a long time now, so I thought I would lead with that today. We are now delivering into the U.S. our SS25. So spring, summer, 25 deliveries. February is like one of the funnest times because it's when all the stores flip to new season products. So it's like reinvigorated, fresh, just so fun. And one of the key trends we are seeing is all about ethereal beings. So it's very whimsical, very mermaid esque vibes and almost like a glittering charm of summer is what they're calling it. So we're definitely seeing quite a few Mediterranean influences. But sequins, eyelets, a lot of color.

[Madison Sullivan Thorpe]

And even Jo's shaking.

[Unnamed Speaker]

I know she's so excited. She's like, my bag is so on.

[Joanna Fleming]

Trend, except it's brown.

[Unnamed Speaker]

Stunning. No, because we're also looking at mocamous espressos and pairing colours that go back with those tones. So I feel like you can do this in a really kind of fun way by bringing in some really subtle influences. But then local brands that are doing this on quite a good level, I would say Mode, Mischief, Harpaloo, like they're doing things that are fun, poppy, kind of having those Mediterranean vibes coming through, like Paige Lorenz all over the tennis this season was just amazing. Even one of the brands I represent called dzo, they're doing it in a really fun way. It's all very much sparkles, glitz, glam and just quite sexy as well. So ethereal beans and accessories are going to be loud and proud. So it's all about more is more. So I think that little bag, it's going to go a long way.

[Joanna Fleming]

I love that for me, I love.

[Madison Sullivan Thorpe]

That for you and your bag and I hate it for the rest of my wardrobe, which is minimal pad back. My accessories, which are very minimal pad.

[Unnamed Speaker]

Back, you can add in a little bit more, you know, accessories, a little bit more kind of accoutrement, a little more diamond.

[Joanna Fleming]

Another brand that came to mind as well was have you seen what Rome is doing at the moment?

[Unnamed Speaker]

Yes. It's so fun, isn't it?

[Joanna Fleming]

All those beautiful prints and patterns. I just wore a dress by Jag a couple of weeks ago. You love tennis stunning. And that had the prints and stuff on it as well. So similar vibe. I feel like that's where we're headed 100%.

[Unnamed Speaker]

Another good one. Soleil. Soleil. They do the most beautiful prints that are actually all hand painted. So it's all very much really leaning into that as well.

[Joanna Fleming]

Yes. I got a very nice Soleil Soleil hat.

[Unnamed Speaker]

You do.

[Joanna Fleming]

Asked about a lot recently.

[Unnamed Speaker]

I love that.

[Joanna Fleming]

Anyway, Mads, yours.

[Madison Sullivan Thorpe]

So my swap this week is actually just like a bit of a trend that I was like, oh, this feels like a nice evolution. So I traditionally always wore a heel. I'm 5 foot 3. Someone did actually DM me the other day and said, I'm just using you as like a bit of a blueprint blueprint. Which was toughed with that. She said, but I don't think you're five foot two like you mentioned on the podcast. You're five two. So I have done my research now. I am in fact 5 foot 3, which I was thrilled about discovering a whole. So thank you so much that lovely lady who DM'd me. But I am really loving the ballet flat thing. Like I loved the ballet flat trend coming in because, well, who would have thought wearing a flat is quite comfortable.

[Unnamed Speaker]

Yeah.

[Madison Sullivan Thorpe]

But the trend that I am loving I've got there eventually is the boat shoe.

[Joanna Fleming]

Oh, yeah.

[Madison Sullivan Thorpe]

And I know that we spoke about in kind of our for the year and the Pinterest predicts, we spoke about this sort of nautical sailor thing coming in and I think I kind of was a bit like, oh God, am I going to be wearing like ropes on jumpers circle like Sassenbai 2000, like, you know, nine or like nautical jumpers. But I love the little boat shoe trend and I saw a Miu Miu pair. I'm not going to be investing in the Miu Miu pair.

[Joanna Fleming]

I was going to ask for a brand example, but I won't if it's Mew mew.

[Madison Sullivan Thorpe]

So one of my friends who's a stylist actually had a great pair from Timberland and it was like, they've got some really cute ones and RM Williams have some really, really chic sort, weighted ones. And they were more like that 200 price point. Even on the iconic. I saw Ruby's shoes had a pair for like, 15, so there's a lot of brands that are doing them. I think there's going to be a lot more that are coming through as well. I've got a friend who's got a shoe business and he's sort of buying a year in advance at the moment and was like, mads, I'm seeing a lot of these, like, sort of nautical shoes, boat shoes coming in for both men and women. But then I went on, like, a little bit of a Pinterest thing, which is one of the things I'm doing now for, like, style boarding. And they look really cute with just little mini skirt, mini dress. Anyway, love the vibe. So that's my swap in. I'm on the hunt for my perfect pair, but I love it.

[Joanna Fleming]

I actually looked at your feet before and I was like, I don't think I've ever seen you wear a flat shoe. Like, it's very rare for me to see you in a flat.

[Madison Sullivan Thorpe]

It's true, you know, New, New me.

[Unnamed Speaker]

I love this for you.

[Madison Sullivan Thorpe]

She's crazy. I will never go to a restaurant in a flat unless it's McDonald's.

[Joanna Fleming]

And even then, maybe not.

[Madison Sullivan Thorpe]

Well, kitten, he'll never killed anyone.

[Joanna Fleming]

Depends what time it is. All right, well, we're getting into Traced now that we've done the swap and Traced. Obviously, if you listened this podcast before, it's where we take a brand or a trend or a person and we trace that story that influenced the industry, for better or worse. If you haven't heard this podcast before, you might want to go back and listen to our previous traits, because we've done a few pretty good ones, if I do say so myself.

[Madison Sullivan Thorpe]

Oh, yeah, the Birkin one's a personal favorite. Yeah.

[Joanna Fleming]

This one, I almost reckon, could be my fave.

[Madison Sullivan Thorpe]

Oh, it will be by the end. We haven't finished it.

[Joanna Fleming]

Yeah. So, as you said, Mads, what we're tracing today is why Sephora didn't land in Australia and how Mecca kept it at bay. But before we actually jump into the history of Sephora, I want to ask you guys, do you ever shop in Sephora?

[Unnamed Speaker]

I'd be lying if I said I did. I'm A Mecca girly. I know.

[Madison Sullivan Thorpe]

Well, I mean, is that a stupid.

[Joanna Fleming]

Question for you, Mads?

[Madison Sullivan Thorpe]

It might be. And look, context is probably important here. I worked at Mecca for a number of years and I don't think I ever mentioned it on the podcast, like to keep, you know, personal and professional life separate. But I did work at Mecca for quite a few years. I've worked with them on two different occasions. I've done all sorts of roles. I worked in store, I worked in their private label team, their marketing team, but I also had time in between as a customer. So all of my opinions and my thoughts today are by no means intel or insider information. They're purely my opinions and they are all my own. But as for Sephora, yes, I have been a Sephora customer before, largely overseas, particularly in the U.S. yeah. And largely due to the fact there's some brands there that we don't stock here in Australia and products that, you know, aren't necessarily meeting Australian regulations that I like to buy over there as well. It is also worth mentioning that Shameless Media has worked with Mecca in the past. This, however, is a complete editorial piece and is no way sponsored. I just thought it was worth mentioning that. Anyway, Jo, how about you? Do you shop at Sephora?

[Joanna Fleming]

I can't say that I am a Sephora shopper either.

[Unnamed Speaker]

Okay.

[Joanna Fleming]

I just don't like the fluorescent vibes in there.

[Madison Sullivan Thorpe]

You have Fenty, though?

[Joanna Fleming]

Yeah, that's the only exception.

[Madison Sullivan Thorpe]

Okay.

[Joanna Fleming]

Reason I would step foot in there is to get my hydrovisor tinted moisturizer.

[Madison Sullivan Thorpe]

Yeah.

[Joanna Fleming]

From Fenty.

[Unnamed Speaker]

Okay. This is a common theme, I think, but we'll get into that.

[Joanna Fleming]

Yes, we are definitely going to expand on this a little bit more. So let's jump into a brief history lesson on Sephora. First, there's a little bit of speculation around Sephora's real origin story. And maybe we can link this very detailed YouTube video that our researcher Chloe found, because it's very extensive and we can't fully go into that, but the company website will tell you that it was founded in France by Dominique Mandanoord in 1970. Now, he was a soap seller from Le Montaigne Limoges in France who opened up a Fragrance Boutique called Shop 8 in 1969. And this store really revolutionized the way that beauty products were being bought and sold. It allowed customers to shop unassisted and try products in store, which seems like an absolute no brainer for us now. But back then you had to speak to the shop assistant. Everything was, you know, behind a cabinet you had to actually engage with someone to be able to access it. You couldn't just go and grab something off the shelf and try it for yourself. So you would get the hard sell from the shop assistant and have that whole interaction which I think would send some people into hives thinking about doing now. But shop eight became Sephora in 1979 and it's said that Dominique purchased an existing chain with the name Sephora and then merged it with his own business before selling Sephora to LVMH in 1997. Which is obviously a huge move and the reason that Sephora has become what it has become now. From there, LVMH introduced a number of new product categories which made Sephora a one stop shop for all things beauty, which we know it to be now. Sephora then opened up the first US location in New York in 1998. I don't think I'd be the only one who's mistakenly assumed that Sephora was an American founded business. Did you guys know it was French?

[Unnamed Speaker]

I had no idea.

[Madison Sullivan Thorpe]

None. And I got to say I stayed pretty bloody close to Sephora in the last few years, as you can imagine, working in the beauty industry. But no, I had no idea. But yeah, then again, I probably wasn't really googling their origin story.

[Unnamed Speaker]

I feel like in their branding they should talk to that more because for me I'm like, Parisians are just so chic. Like I'm like, you know all of the skin care you can get at their pharmacies. I'm like, hype that up.

[Joanna Fleming]

Yeah, they want to go back to the origin story because we don't actually really know. So yeah.

[Madison Sullivan Thorpe]

So how good is being able to touch, feel and try?

[Joanna Fleming]

So well, after opening in the us, Sephora also entered a number of other markets within Europe. Although I should mention their foray into the UK didn't go too well. Which now that I'm like learning more about this story, it came to mind that, yeah, actually the same thing kind of happened in the UK as it did in Australia, but we'll kind of get into that a little bit more. So Sephora entered the UK at some point in the late 90s or early 2000s, but by 2005 they had really made a quiet exit out of the uk. It's reported that the fierce competition from discount cosmetics retailers like Boots and Superdrug made their operations in the UK unfeasible. And then it wasn't until 2022 that Sephora actually re entered the UK, which blew my mind. That's a big space of time to not be in a really key market. But they carved out a clearer niche for themselves as a destination for high end beauty by then and beauty was obviously booming at that time, so it makes sense. But I do think there's considerable parallels between the UK and Australia, as I mentioned, both who've had really successful beauty retailers dominate their markets. Like we have Cult Beauty and Space NK in the UK and then Mecca in Australia.

[Unnamed Speaker]

Yeah.

[Joanna Fleming]

And they just kill it. And it's like, how does Sephora get past those big retailers that just own those markets when they're coming in? Kind of second fiddle. Yeah, yeah.

[Madison Sullivan Thorpe]

But they have entered other markets successfully. Like Sephora have done a really great job in the Middle east and I think it's quite interesting that they didn't quite crack the uk. Yeah, there was a lot of chatter when they came and they left. Because traditionally a business like that to exit within five years when you've got the money like LVMH have is like, okay, these really didn't work because usually a business like LVMH would spend a lot of money and time investing in building the brand awareness in a new market, fitting out their stores and doing all of those things. So I think it surprised a lot of people. And I was quite a bit younger than I am now, as you can imagine. It was 20 years ago, I was a small girl, but, you know, researching it. So when they went back into the uk, I think this was them being like, okay, we've really got to learn how to crack these markets where we have really fierce competition.

[Unnamed Speaker]

Definitely.

[Madison Sullivan Thorpe]

Because they're the leaders in the U.S. totally.

[Unnamed Speaker]

And if it's anything like the fashion space, like we say this all the time to a lot of our brand partners, the UK is really heavily dominated by the high streets, so that's affordable, accessible, flagship stores even. And like when you're kind of coming into the luxury space, there's even Selfridges, they've got a whole beautiful area dedicated to that install beautiful experience like Harrods. There's so many beautiful options. So to really come in and nail that demographic and get those customers coming to you, it is. It's no easy feat.

[Madison Sullivan Thorpe]

It's almost like they were trying to be somewhere in the middle of the two. And I think Space and K is probably who is dominating that little middle section.

[Joanna Fleming]

Yeah, well, in that hiatus, which according to my maths, 18 years, that hiatus from the UK, Sephora, as you mentioned, really grew their business elsewhere and has become arguably probably the most powerful beauty retailer in the world. I think everyone would know what Sephora is, even people that don't shop beauty.

[Unnamed Speaker]

Yeah.

[Joanna Fleming]

But despite this, when it comes to their presence in Australia, I think we can all agree that they have struggled and I think Mecca has something to answer for there. But before we chat about their biggest competitor, let's talk about their arrival into Australia in 2014. They opened their Sydney Pitt street flagship store on 4th December 2014. I actually do remember this, which at the time made it the largest Sephora store in the Southern hemisphere. And we're going to talk about the rent on that place in a moment. But it's interesting to note that a lot of their marketing surrounding the launch focused on them price matching the US at the time, which is wild to think about now.

[Unnamed Speaker]

Yeah.

[Joanna Fleming]

The average price of the Australian dollar against the USD in 2014 was 90 cents with a yearly high of 95 cents. What a time to be alive. This meant that a lot of legacy or popular brands were cheaper to purchase in the US than they were to purchase in Australia.

[Unnamed Speaker]

Imagine.

[Joanna Fleming]

But anyone who's traveled to the US in recent times will know that's absolutely no longer the case.

[Unnamed Speaker]

So crippling to your Honestly.

[Madison Sullivan Thorpe]

I remember going to the US before, the dollar is what it is now and it was like so close to dollar for dollar and I was in Hawaii and I was like, this is amazing. Everything just seemed like it was like so cheap.

[Joanna Fleming]

Yes. I was in America in 2013 and I was like, oh, it's just the same.

[Unnamed Speaker]

Are you guys ready for this? So when I was there last year I went to Era 1 and I had to get Hailey Bieber's beauty smoothie. It cost me 40 Australian dollars.

[Madison Sullivan Thorpe]

Yeah. Because isn't it like 1920?

[Unnamed Speaker]

Yeah. Plus tax.

[Madison Sullivan Thorpe]

Oh yeah, of course. And a tip.

[Unnamed Speaker]

Yeah, and the tip. You can't forget that. Plus plus I was just like deceased. Yeah. But it was delicious and I glow after.

[Joanna Fleming]

Worth it. It's also interesting to see that much of the conversation around Sephora's launch focused on their competition with the big department stores like Myron DJs, which is interesting I think in itself I don't think they were ever really Sephora's biggest competition, which obviously we've, you know, addressed Mecca actually being their biggest competition. And I think that might have been maybe the beginning of them misreading the Aussie market and what they're really up against. So by 2014 Sephora had over 320 stores in the US alone.

[Unnamed Speaker]

Wow.

[Joanna Fleming]

But why do we think it took them so long to open a store in Australia.

[Unnamed Speaker]

We just so forgotten about.

[Madison Sullivan Thorpe]

No one gives shit.

[Unnamed Speaker]

I know we're cool to you guys.

[Madison Sullivan Thorpe]

So it's funny to me because I don't think they thought we were small fry. I think they knew that we were there, ready to be taken. And Australia's a really interesting market, right? Because we're kind of like a majority leads. Like you look at Bunnings, they have total monopoly over, you know, the hardware store sector.

[Joanna Fleming]

Bit harsh to mitre 10. Come on.

[Madison Sullivan Thorpe]

But remember when woolies brought out masters that quickly came and left?

[Joanna Fleming]

I don't actually, so that probably says a lot.

[Madison Sullivan Thorpe]

There you go. But you look at the supermarkets, we've only got a couple of supermarkets, we've got Mecca. And so there's like a really, really interesting case for. Yes, maybe they didn't know. There's also a really interesting case for even when a business is like lvmh, they're designed to make money.

[Joanna Fleming]

Right.

[Madison Sullivan Thorpe]

These businesses need to have really solid business cases and plans to bring out into a new market. It's incredibly expensive to set up a new operation here. You can't have everyone based in the US to have something running here. You need a localised PR agency that understand your market. You need an operating team, you need a warehouse, you need retail stores, you need a logistics partner. Like this is not. Okay, cool, let's find a lease and then send everything over. It'll be great. Yeah, you need someone who's going to manage your education. Like the list is never ending. I could honestly do an hour on just what you would need to open in a new market. So I don't know that it was necessarily we were too small. It's just how much effort are we going to put in for the output that we need to make this viable and work?

[Unnamed Speaker]

Totally. And it's the same when brands go the opposite way. It's like you have to have the right infrastructure in place to really tackle that market and actually build your brand successfully. It's a huge job. And like, not even that, but just like the time zones alone. Like I work in global sales. Some days my days start at 6am and finish at midnight. But it's the nature of the game. But it's not for everyone. It's a big job.

[Madison Sullivan Thorpe]

Yeah, absolutely.

[Joanna Fleming]

So, Mads, you're going to pull a few stats and quotes for me from beauty analyst and data student Lily 12th Tree, who analyzes data from the beauty industry to break down trends and industry news over at Bareface. Media. So I'm going to throw to you. You're on a roll already. I mean, as well.

[Madison Sullivan Thorpe]

A roll or a rant. You decided. Okay, so if anyone does want to have a look at Lily, you definitely should. You can find her on TikTok at Bareface Media. As well as that, she's got a substack Instagram and wherever you get your podcasts, you can listen to hers as well. But she has some really incredible data driven deep dives on the Australian beauty industry in particular. And we definitely recommend checking out her content. It's a little bit data, but make it fashion vibes for me.

[Unnamed Speaker]

We love that.

[Madison Sullivan Thorpe]

But in her P.O. last episode titled the Mecca Effect why Sephora can't compete in Australia, Lily suggested that the reason Sephora took so long to open here is due to the competition in smaller market. So it's exactly like I was kind of mentioning earlier. In Australia we have two major supermarkets, three mobile providers. The list really goes on. This really reduces the amount of competition across industries, which gives these big names a lot of power when it comes to what they charge. And Lily also says the only way to succeed in a smaller market is to start really, really small, which we know isn't really Sephora's style.

[Joanna Fleming]

Yeah. Prior to their Australian launch, it's reported that Sephora rejected partnership deals to open concessions with David Jones and Maya. And they were pretty confident that their global presence and success as a standalone store would be enough to win over the Australian consumer. I think that was the better choice of the two.

[Unnamed Speaker]

If I make that such an interesting.

[Joanna Fleming]

Decision, I don't know how that would have looked.

[Unnamed Speaker]

Yeah. I feel like you could always dip your toe in and test the brand, test what the reception is through this already acquired customer base before making the informed decision. Okay, are we actually going to really now navigate and penetrate this market because we've now got the sell through and the return.

[Joanna Fleming]

Yes.

[Unnamed Speaker]

Or just go all in and open all these stores and just try and really start competing head on with like Mecca and the other really leading retailers that are established in the space. It's interesting.

[Madison Sullivan Thorpe]

Yeah. I don't think it was the wrong decision. I just think they were probably banking on their credibility and their brand awareness, which. Absolutely. I think probably at that time more people would have known about Sephora than Mecca. Mecca didn't have 107 stores then. Yeah, yeah.

[Joanna Fleming]

Right.

[Madison Sullivan Thorpe]

But what I would say is that when people lined up at Pitt Street Mall when that store opened, they were probably expecting to see all of the brands they're used to seeing there. And the reality is they didn't launch with all of the brands they have in their US stores. So, yeah, yeah, I don't know that partnering with David Jones or Maya would have been a win for Sephora. I think that would have been more of a win for Maya or David Jones. Yeah, to be honest.

[Joanna Fleming]

Absolutely.

[Unnamed Speaker]

That's true.

[Joanna Fleming]

Well, talking about that day, on the day of Sephora's launch in Sydney, the Daily Mail reported hundreds of excited shoppers poured through the doors of Sephora's first Australian store in Sydney's Pitt street mall today. In the same article, the Daily Mail said that Sephora launched with 32 brands new to the Australian market, which we know is actually a huge USP or unique selling point for Mecca, which I'll expand a little bit more on soon. But they promised price matching to the US on anything new. But they also confirmed they wouldn't undercut local retailers when it came to the brands that were already available here. So for example, like Dior or Clinique would cost the same at Myer, David Jones and Sephora. There was no, you know, price matching going on there. But it didn't take long for them to break the price matching promise because just two weeks after opening in late December 2014, social media users began sharing discrepancies between their sales receipts from Sephora Sydney and the Sephora US online store. And the Sydney Morning Herald reported at the time, the most glaring price differences are in its own brand, Sephora Natural Volume Mascara, where the price in the US is USD $12 or $12.84, including an average sales tax of 7% and $15.66 when converted into Australian dollars. But the same product was selling in its Sydney flagship store at 25 Australian dollars, including GST, making it a whopping 60% more expensive than the US.

[Unnamed Speaker]

Oh.

[Joanna Fleming]

The Sydney Morning Herald suggested that a possible explanation was the eye watering amount it cost to rent Sephora's flagship Pitt street location. They estimated the yearly rent to be $3.8 million, which meant Sephora would need to generate over 40 million in revenue for an adequate return. But I don't think that was really on customers minds. When they noticed the price differences, they were just kind of pissed off, which I think was probably fair at the time. And they were quick to discover that Sephora Australia didn't actually carry all the brands that they would expect to find in a Sephora store overseas. Lily at bareface Media ran the numbers on this and she discovered that in October 2024, 10 years after Sephora's entry into Australia, Sephora AU still only stocked 41.2% of the brands available at Sephora in the US because this will come as no surprise, 45.6% of Sephora's US brands are available exclusively at Mecca. What do we think of that?

[Madison Sullivan Thorpe]

I mean, not surprised personally, how can.

[Unnamed Speaker]

You compete with that? Like, for me as a consumer, it's like, okay, if I'm buying into Sephora and the brands that they represent, I want that full experience. That's just kind of encouraging me to then either shop online or go back to what I love and adore, which is Mecca.

[Joanna Fleming]

This, for me is the crux of why Sephora hasn't kicked off in Australia. This is the issue, essentially. And back in 2014, the figures would have looked slightly different. But from the get go, Mecca had exclusive deals with Nars, Stiller, Urban Decay, and that's just naming a few. So let's chat about Mecca now. But before we do, let's hear a word from today's sponsor.

[Anika Joshi Smith]

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[Joanna Fleming]

The Mecca Story so Mecca was founded in 1997 by ex L'Oreal exec Joe Horgan. The business started with a single storefront on Tour Road in Melbourne. Mads, are you feeling like this is deja vu hearing this story for probably the 150th time?

[Madison Sullivan Thorpe]

I think it's probably 1050th time. But no, I always love hearing it. So go on.

[Joanna Fleming]

So Joe believed that beauty products were better sold by staff who were knowledgeable across a variety of brands instead of being pushed to sell one brand over another. And I have to also point out this sounds very similar to Kate Morris's story of starting Adore beauty. A lot of similarities there. But the department store model reigned supreme at the time and Joe's vision for Mecca was radically different to anything that Australian beauty consumers had ever seen before. Jo was the sole CEO of Mecca Brands up until 2005 and then she brought her husband Peter Wettenholt in as the co CEO. So the company was entirely self funded and is still fully owned by the couple.

[Unnamed Speaker]

Wow.

[Joanna Fleming]

In 2022, Joe told AFR, right from the outset I was really clear on what Mecca was. She says it was the very best products in the most beautiful space, a space where you would want to live with your best friends. The guiding principle was to make people feel good. And she frequently refers to this as the Mecca magic. And I think that is something that they have stayed very true to since, since 1997. From what I can see, the brand and the vibe is something they have just been able to maintain immaculately over all those years, even as this landscape has changed. And I'm not a massive Mecca shopper, I'm not a massive Mecca customer, but I can see that their branding is so strong and it just seems like the values of that brand are really like at the heart of the business.

[Unnamed Speaker]

Totally. And I think as well the exterior is just so polished and pristine. But when you enter those spaces there is such warmth and like I honestly have spent time in there where I will speak to all of the amazing beauty advisors or the consultants, I will buy products because they spend the time to actually sit there with me and go through what actually works for me. They listen to me yap and we know I love a yap and literally like such a warm and welcoming environment. Now just quickly for me if I shift to Sephora, you don't get that kind of same level of engagement.

[Madison Sullivan Thorpe]

The Mecca magic is so alive and well and you see it. I have had the privilege of seeing it behind the scenes and it's so lovely actually just hearing two people talk about their experience in store. Those team members and they are called hosts because their role is to host you as the customer. Customer is queen. And the store team members are so, so close to that, you know, top of the pyramid. I think when you go in it is to Listen, it is to care, it is to know, it is to take care. And I think ultimately beauty is something that is so quite a vulnerable thing to talk about. And a lot of the time you're going in to get a lipstick because you've got a wedding or, I don't know, I've gone in when girlfriend's parents have passed away. God, I'm gonna get emotional to buy care packages because you're like, what's gonna help them sleep? What's gonna help them feel better? And you're there when you break up with your boyfriend and you wanna get a new foundation. There's mums going in with their teenage daughters for the first time who've got acne and you know, are feeling self conscious and want to lovingly have you hold their hand and find a concealer or a primer or a moisturizer or a skincare routine. Like it really is endless. And I think beauty is consumerism and it can feel fast paced. And I think to feel cared for and heard and cared about is really important. And also those fit outs, no two stores look the same. You go in, there's like no lighting or lamp or feature of basin, sink materiality or taps. None of them are the same. Every single store is different.

[Joanna Fleming]

Interesting. I didn't know that.

[Madison Sullivan Thorpe]

Because they want it to feel like a home.

[Unnamed Speaker]

Yeah, that's beautiful. And it is, it's such an intimate experience. And I love that they've been able to capture that in everything you just said in such a beautiful way. I love the Mecca magic.

[Joanna Fleming]

And I think a key part of that success is that it's always been tailored to the Australian consumer because it started with the Australian market. Did you guys know that in 2023, 76.8% of Australian beauty revenue was generated offline?

[Unnamed Speaker]

No, because I know, because they, they.

[Joanna Fleming]

Love purchasing in store. People want that in store experience. In contrast to that, only 44.53% of beauty revenue in the US comes from bricks and mortar stores. And both of these figures come from Statista. Because of that, I think Jo and her team at Mecca have really focused, as we've spoken about, on that in store experience since day one. And in 2022, Joe told the AFR that Mecca brands spend 4% of their annual revenue on training, which I think comes back to those hosts. You want people who are really knowledgeable, really welcoming. You're going to get the same experience regardless of who you talk to. The same level is expected across all of those hosts. You know, when you walk in you're going to be able to speak to someone actually knows what they're talking about.

[Madison Sullivan Thorpe]

Yeah. And I think that you see that a lot when you go into store. And I think even when I was working for the business, I was still a customer. Like, there's 107 stores. You know, if I'm traveling, if I'm down the Mornington Peninsula, I'm popping into Sorrento. They didn't know that I did work at Mecca until I say it. You know, you go in and you're like, I need a gift for someone. Okay, what do they like? And what sort of home fragrances do they usually buy? And do you know what perfume they wear? And let me. There is so much expertise and care. I think you can see it the minute you're like, I need a foundation match, they're like, great. They sit you down in the chair, suddenly you've got a concealer on as well, a little bit of blush and bronzer. You're leaving looking like a million dollars. Walking in your activewear with your dog. You can take your dog into a high street store as well. That's probably the best tidbit that I've got.

[Unnamed Speaker]

Yeah. Miso has frequented them.

[Madison Sullivan Thorpe]

If you're in a Mecca shopping centre, don't take your dog. You will be taken out by security. But dogs are welcome in the boutique on strip shopping stores. Yeah.

[Joanna Fleming]

Really.

[Madison Sullivan Thorpe]

George loves his local stores.

[Joanna Fleming]

That is actually the best tidbit you've brought so far. I reckon.

[Unnamed Speaker]

It's actually a really good one. Yeah.

[Joanna Fleming]

Well, when it comes to Mecca's success, there's a few key factors for us to touch on. As we mentioned, Australians love to purchase cosmetic products in store. Mecca maintains this really high standard of service and they also just have a lot of stores. So at the moment, Mecca has over 107 physical locations in Australia and at the time of this recording, Sephora only has 32.

[Madison Sullivan Thorpe]

Yeah.

[Joanna Fleming]

Right. So obviously there's that factor at play then. Of course, it's the product range. As we mentioned before, one of Mecca's unique selling points is their exclusivity with many, many brands that Sephora in the US has. I would argue this is the most interesting part of the business's strategy and has been the key to their success. According to Lily At Bareface Media, 61% of Mecca's brands are on exclusive deals, which mean they can't be sold anywhere else in Australia. Anna McKenzie, former concept development manager at Mecca, shared a piece on her sub stack last year about her time working under Joe Horgan at Mecca. In this piece, she wrote, I'll never forget Joe telling the story of getting Niles on board when Mecca was nothing but a sparkling glint in her eye. Twenty plus years ago, the Internet didn't exist. And so she found NASA's New York phone number and rang and rang and rang. She continued ringing even when they politely told her to please stop because she was clogging up the voicemail. But after many months of persistence, she finally landed a meeting, which ultimately led to an exclusivity deal. She didn't give up. She won. Which I think says a lot about her approach to business. Yeah, and I really love that resilience. It's also interesting to consider how far back these relationships go. Like, NAS and Mecca have worked together since the late 90s, which means they've renewed their exclusivity agreement multiple times. The deal must be working for the brands as well as for Mecca. So we obviously know they're keeping brands happy, but how do they keep keep their customers happy? Which I think leads us into the Beauty Loop.

[Unnamed Speaker]

My favorite thing.

[Joanna Fleming]

What's your status?

[Unnamed Speaker]

I'm still at three. I need to get to four. I know. After the zip, I'll jump on it.

[Madison Sullivan Thorpe]

Well, I'm a zero as of very recently because.

[Unnamed Speaker]

Crippling.

[Madison Sullivan Thorpe]

I know. Well, look, I was very handsomely rewarded working. Yeah. In the business.

[Unnamed Speaker]

Yeah.

[Madison Sullivan Thorpe]

With a very generous staff discount. But no, I am now a Beauty Loop level zero. I don't think that will last for long because I am a very frequent customer at Mecca. So I think that hopefully I'll be joining you, you know, one step, two, step three.

[Joanna Fleming]

Mads, can you explain the Beauty Loop for anyone that doesn't know what it is? Like anyone that is in a Mecca shopper or isn't in the Beauty Loop?

[Madison Sullivan Thorpe]

Yeah. I mean, I didn't work in the Beauty Loop team, so I'll do my best. I'm sure you know the most eloquent answer, but the Beauty Loop program is essentially a rewards program for those who shop at Mecca. And so based on your engagement with the business, you get a set of rewards. So there's level one through to four. And so based on that spend, you know, level one being $300 enters you into level one. Can't remember each price bracket, but essentially, however much you spend enables you to receive a bunch of rewards. Now, those rewards are things like gift cards for your birthday. You get Beauty Loop boxes, which, I mean, they're my personal favorite. I have not worked at Mecca for the entirety of my corporate career. But I was a customer in the time I left and I used to race to store the day those boxes would drop because it's a little curation of samples and sometimes it can be a singular full size product which is a Beauty Loop reward. And then there's Beauty Loop discovery boxes, which are sort of a curation of little samples, which I love because I go away on weekends a lot. I traveled for work a lot, both in my job at Mecca and beforehand. So I love like a mini fragrance vial or a mini mascara. But it's essentially a reward that drops a few times a year that is essentially to thank you for being a customer of Meccas and a beauty connoisseur and people who like beauty and skin care. I don't think you could love anything more than getting a little present when you go in store to do what you're doing.

[Unnamed Speaker]

Such a warm fuzzy. I just love it. Every year I save my. I get a really cool beauty application and I save it for my birthday every year.

[Joanna Fleming]

Oh, I know, I love it.

[Madison Sullivan Thorpe]

Yeah, there's lots little things like that. And I think it's been so funny watching the evolution of Beauty Loop over the years because it was kind of this thing that people just went in and got and they only knew about it through their emails. And now it's like you're sitting on TikTok, you're on Instagram. It's like girls are on their bedroom floors or they're like in their kitchen opening up the boxes, like ravaging through them, going like, I got this. I love this fragrance. Oh, I love this brand. Or I haven't heard of this before, like kind of dissecting what they're getting in each level. And because the boxes can vary or what the samples are, there's lots of like, I didn't get that in mind. I got the moisturizer, not the mascara.

[Joanna Fleming]

Yeah, Well, I don't think it's a secret as well that there can be a bit of tension about the Beauty Loop. And Sephora does have a loyalty program as well. But I've seen a lot of conversation before, both negative and positive about the Beauty Loop. You know, like some people pissed off with the sizes of things. And as someone who's worked in this space, like it's free, honestly. But there is a lot of discussion around that online, especially, you know, with the rise of tick tock. But in recent years, creators have taken to comparing Mecca and Sephora's rewards programs to decide where to shop, essentially. And after noticing Similar sentiments on her TikTok FYP, Lilia Bareface decided to gather some data on Mecca Beauty Loop's popularity. And in order to do this, she analyzed over 2, 500 Reddit comments with the search term Mecca Beauty Loop. And according to her data set, the phrase has a 61.2% positive sentiment and a 16.1% negative sentiment. And in contrast, when she ran the numbers on Sephora Beauty Insider, I did not know that's what their program was called. She found 56.7% positive sentiment and 23 negative sentiment. But when she changed the search term to Sephora Australia Beauty Insider, the results were 48.4% positive sentiment and 21.1% negative sentiment.

[Madison Sullivan Thorpe]

Wow. The Mecca stat interests me because there was a customer experience survey that KPMG have done for quite a few years now, and Mecca actually got the number one spot in 2024. And from memory, it's one of only five brands that have maintained that position since 2021. So you're talking like four years.

[Unnamed Speaker]

Yeah.

[Madison Sullivan Thorpe]

So it's funny that that's the percentage split and yet they're still retaining that number one spot.

[Joanna Fleming]

It is interesting.

[Madison Sullivan Thorpe]

It goes to show it's a lot more than just beauty loop, 100% for sure.

[Joanna Fleming]

So let's get into what Sephora got wrong then. I guess when they entered the Australian market, we mentioned that Mecca were able to pin down some of Sephora's biggest overseas names before they even made their way here, probably before we were even on their radar. But what else stood in the way of Sephora succeeding in Australia? AFR interviewed shoppers outside of Mecca's George street store last year, where one customer told them Mecca is more of an Australian brand. The marketing and the social media is very Australian, very clean girl. Sephora feels very American. The makeup in their marketing is very heavy, and I don't relate to that. Another customer said, it's just everywhere. Mecca's just everywhere. It's in every shopping center. It's so convenient. And when asked about the two stores, brand strategist Eleanor Cameron said, you know, if you walk into Mecca, someone will be able to help you. Sephora, by contrast, feels overwhelming. There's an expectation that you know a fair amount about beauty and that can be ostracizing. What are your thoughts on those quotes? I think you've kind of alluded to that already.

[Unnamed Speaker]

I'm with Elena on this one. I just feel like if I go into a Sephora store, it's almost like self service and I don't Feel like the environment caters to like my wants and needs as a consumer. Like I am a beauty novice. I lean on both of you a lot when it comes to this space. I literally sponge up everything you both have to say. So you could sell me probably anything as well. I probably am also that person that will walk out with something and it might be something that I don't even use in the end either versus Mecca. Completely different experience.

[Madison Sullivan Thorpe]

Yeah. And I think ultimately the customer wants to shop how they want to shop. There is a customer who, a new customer now who's, you know, on TikTok or Instagram or YouTube or whatever it is and finding out everything they need to know and they want to go into a Mecca and they want to pick up a basket and they don't want to talk to anyone.

[Unnamed Speaker]

Yeah. That's just, you know, I wish that was me.

[Madison Sullivan Thorpe]

And then there are people like you who are like, please help. But I think ultimately it probably does come down to the investment that Jo is making in her people. And I think to spend 4% on training is, might not sound like a huge number, but at an operating cost that is enormous. And I think you see it in those moments. I've got a girlfriend who's got a three year old little girl and they walk past their local mecca every day and the same woman is there with a little applicator with lip gloss on the end because Charlotte likes having lip gloss applied. People have to care and they have to like the business that they work in to do that. And so I think the one thing that I just miss from those quotes is maybe there's that care. It's not just the service of what do I know about the products, the care for the customer. And that's maybe just the only bit in those quotes that I think is missing. And of course they are Australian, they're going to understand the Australian consumer because they're here on the home base. I think it's worth noting as well, I think for Sephora, like their model does work in the us.

[Joanna Fleming]

Yes. And I think for a reason, obviously.

[Madison Sullivan Thorpe]

Totally. But I think they haven't had the focus and effort and energy on what the Australian consumer wants. And I think they didn't come over with the brands and they didn't come over with the care. And ultimately people remember not only what they bought but how they felt when they bought it. And I think if you're going into a store and you're not loving the experience and there's a whole lot of reasons people might not love the experience in Sephora and I feel like we've really shat on their customer experience.

[Joanna Fleming]

I was just about to say, I think it's important to say there probably is a lot of people working there that are very knowledgeable and have a lot of training and significant backgrounds in beauty.

[Madison Sullivan Thorpe]

But I think if you are a makeup artist or a skin expert and you have an interest, you're probably more inclined to want to work at Mecca for all of the reasons that we've stated earlier. But I also think Sephora's challenges have been in their stock. I think think if you've ever tried to buy anything from Sephora, if you go on their website or in store, I think there are some operational challenges which I think if they cleaned those up, it's kind of just process basics to kind of get things going. Yeah, the worst customer experience you can have is to go in with the intention to buy something and it not be there. You don't even need anyone for that. So I think there's like a whole host of reasons. But yeah, I just don't really see them cracking it wide open just yet. It's not through lack of trying though because they've brought out Sephora Squad, which is an influencer program that they've got now they are using PR agencies, they are gifting galore. I think Fenty and Rare Beauty in this market has helped them a lot, has been innovation.

[Joanna Fleming]

Yeah.

[Madison Sullivan Thorpe]

Because I think even just speaking to my girlfriends and you know, seeing what's in their handbags, traditionally they were all exclusively an ordinary skincare customer or they were a, a Mecca Drunk Elephant customer or a NAS customer. Whereas now I think it's a NARS foundation and a Rare Beauty blush or you know, there's a little bit more integration that I feel like I've literally just my anecdotal, you know, wine bar discussions with friends. But I think that's helped them a lot and I think from a PR perspective, you know, I'm seeing them do a lot more in terms of press events and send outs, a mixture of both Sephora LED and brand LED send outs as well. And I think that sort of thing will hold them in better stead in this market. Trying to capture our talent and our market. I think some of the things they're doing or trying to do moving them in the right direction for this market.

[Unnamed Speaker]

Yeah.

[Joanna Fleming]

Remember when we said about smaller markets and competition because Mecca has a stronger customer base, they have more power as well when it comes to pricing and that means that they Very, very rarely, if ever go on sale.

[Unnamed Speaker]

I've never actually seen Mika on sale.

[Joanna Fleming]

Yeah, even like a Boxing Day sale, they do their Boxing Day online. Yeah. So they do their Boxing Day sale online. But it's not like your really popular products that you would be repeat purchasing all the time. Like, am I right in saying that some of it is like maybe discontinued shades or things like that? Would they include them?

[Madison Sullivan Thorpe]

Yeah. And I think what they put on sale a lot of the time will be holiday sets that you might have seen the year before or things like that you can kind of see on their website.

[Joanna Fleming]

Whereas Sephora offers far more discounts. They play into all of the sales periods. Cyber Weekend, Click Frenzy. Like I've shot brands like Bioscience on Click Frenzy and in Cyber Weekend. But because Mecca has the brands and the in store experience and the brand loyalty, it doesn't really matter that they don't go on sale. People still want to access those products. So they're like, oh, I'll just buy it full price. Like that is such a monopoly on the market. It is wild.

[Unnamed Speaker]

Like it's very rare.

[Joanna Fleming]

From working at a door, I know that there was competition in having to price things so that you weren't the most expensive one online because there was always gonna be someone else that was trying to undercut.

[Unnamed Speaker]

Yeah.

[Joanna Fleming]

With discounting. So yeah, it's just such an interesting business structure to me. So that takes us to where we are now. According to the AFR, in 2022, Mecca posted a revenue of $971 million with a profit of 36 million. Sephora's revenue for that year was 246 million, but it booked a loss of 11.4 million. And as of 2024, Mecca was a one billion dollar turnover company, factoring in its store growth. In early 2025, Mecca set to open their largest store to date in Melbourne's Bourke street mall. And recently Sephora announced they'll be redesigning their North American stores, which I think is a huge move and I'll be interested to see whether that does does flow out amongst other regions. I feel like maybe they need to differentiate amongst regions with their stores. What do you guys think?

[Madison Sullivan Thorpe]

I think personalization is key. I think to go into a market and not localize for a brand, a business, no matter the size of the conglomerate, in the way that the world is now, people want you to feel like you are tailoring to them. You see it in the rise of personalization at a brand level. For a business to go in and say every single person across the world wants to shop in the exact same look and feel with the exact same service model is arrogance and naivety to me.

[Joanna Fleming]

I also think we should mention as well that this reputation Sephora has in the US has allowed a lot of brands to come into Sephora Australia. So it's very interesting behind the scenes, like hearing all of these negotiations that go on with different brands. And like, I know from my days being behind the scenes that there's a lot of those conversations happening around Sephora Australia versus the US and that reputation being a major factor as to why some brands end up there.

[Unnamed Speaker]

Yeah, yeah.

[Madison Sullivan Thorpe]

And I think Sephora is changing and as I mentioned, I think just from an outside view, it looks like they are changing things a little bit. Like, I think their campaigns, they've changed the creative direction a lot more. I think their talent squads are an interesting move. I think they're learning more about the influencer landscape here. I think the brands are helping them a lot. As I mentioned, rare fenty makeup by Mario Patrick Tar as well. Like, there's a lot of brands that they're piggybacking on the virality success overseas that are resonating here with our customer who does still go in store. And I mean, even though we say, you know, 71 is still a lot who like shopping in store, I think there's still an online customer who's probably like, great, I've seen it on TikTok, I'm just gonna go buy it online.

[Joanna Fleming]

Yes.

[Unnamed Speaker]

Yeah.

[Madison Sullivan Thorpe]

But I think that, as I've said, I've had a personal glance into Mecca, but my view is mainly from when I was a customer during the time between working there the first time and the second time. And I think it's the care, it's the store fit outs, it's the fact they feel exclusively inclusive. Like, they feel illustrious and grand, but also like the door feels like it's always open. And I think that in conjunction with the brands is ultimately what's led to success.

[Joanna Fleming]

Yeah. And that conversation we had around Atomica and Adore Beauty stores coming out as well. I think this is going to be a very interesting year for Sephora Australia. So I'll be really interested to see whether that revival of the stores in the US then trickles down and has an impact on their performance in the Australian market.

[Madison Sullivan Thorpe]

But intrigued to see where to from here for Sephora. And that wraps up this week's episode of Stylish. Thank you very much for joining us. We know that was a long trace but I hope you stayed with us. Of course. Thank you both. Joanna Fleming and Annika Joshi Smith. Jo, very well done. Big trace to run us through today.

[Joanna Fleming]

But I loved it.

[Unnamed Speaker]

You were in your element, remember?

[Madison Sullivan Thorpe]

You can drop us an email or a Note anytime at [e-mail] or you can slide into our DMS over at style_ishau. And of course, we can't forget to thank our lovely Shameless Media team, head of podcast, Lucy Hunt and our senior podcast producer, Kate Emmerburg. And Chloe Wilson, you are the God. Chloe is our researcher. She has done a very, very phenomenal job in this one. There's a lot of research behind it. We'll be right back with you next Wednesday. See you then.

[Joanna Fleming]

Bye.

[Unnamed Speaker]

Ciao for now. This podcast was recorded on Wurundjeri land, Always was, always will be aboriginal land.