Sephora

Sephora isn't a retailer—it's a constructed ecosystem where beauty brands compete for shelf space, customer attention, and survival. As part of LVMH's selective retailing division, Sephora generated $16.8 billion in 2024 sales through platform economics that make brands dependent on access. The open-sell format and in-store trial model create what ecologists call ecosystem engineering: Sephora doesn't just occupy the beauty retail niche, it actively constructs the environment where brands must adapt to Sephora's rules or perish. Launching Rhode beauty and expanding partnerships while opening 200 stores annually demonstrates preferential attachment—market leaders attract the best brands, creating self-reinforcing dominance.

The platform's biological advantage appears in network effects that compound over time. Sephora's Beauty Insider loyalty program and "Store of the Future" AI-driven personalization tools create switching costs that lock in customers. Each new brand strengthens the platform (more choice, more traffic), while each new customer strengthens brand incentives to participate (more potential sales). This is mutualism with power asymmetry: brands need Sephora more than Sephora needs any single brand, allowing Sephora to extract higher margins through wholesale terms while brands bear inventory risk. The $3.48 billion digital channel in the U.S. alone shows how platforms capture value from both sides—customers pay retail prices, brands pay for shelf space and promotions.

Sephora's 2024-2025 expansion strategy reveals keystone species dynamics: the platform's presence transforms entire markets. When Sephora entered the U.K. with five stores in 2024 (targeting 20 by 2027), incumbent retailers immediately shifted positioning. The Kohl's partnership termination and Ulta's Mexico entry show competitors recognizing that Sephora's ecosystem model beats traditional retail economics. The company's Sephoria events in Shanghai (4,000 attendees), Atlanta, and Paris aren't marketing—they're ecosystem maintenance, reinforcing community bonds that make the platform stickier than any individual brand could achieve alone.