Dive Brief:

• Sephora last week announced upgrades to its Beauty Insider loyalty program, which went into effect May 29 across Sephora North America.

• Among the new features is Beauty Insider Cash, which allows members to exchange loyalty points for money off purchases, at a rate of 500 points to $10. A press release also detailed changes to shipping, with free shipping for Insider members when they spend $50, for VIB members when they spend $35 and on all purchases for Rouge members.

• The program update introduced members-only discount and point multiplier events, experiential rewards like meet-and-greets and facials, first access to certain product launches for Rouge members beginning this fall, an expansion of birthday gift offerings, and more rewards in the "Rewards Bazaar," including using points to donate to charities like the National Black Justice Coalition​ and Project Glimmer.

Dive Insight:

As stores begin to reopen, Sephora's included, the beauty retailer introduced updates to its loyalty program, some of which customers won't be able to use until retail returns to a more stable state.

As part of the revamp, the beauty retailer focused on offering up more experiential rewards for customers to cash in their points for, including one-on-one talks with brand founders and a glimpse into how their favorite products are made. For the time being, though, such elements of the beauty sector, and retail in general, are on pause as the coronavirus pandemic changes what customers feel comfortable with in stores, and what's safest for employees and shoppers alike.

In reopening plans detailed on May 19, Sephora noted that testers would be used for display only, and that in-store services would be suspended "until further notice." Ulta, too, announced similar precautions, and pushed its Glamlab tool in the mobile app in place of some of the more physical in-store experiences. In areas where salons are open, Ulta has begun services by appointment, with social distancing between stations.

While both players are usually lauded as examples of successful retailing, the pandemic has put a damper on their growth. Ulta's net sales in the first quarter fell by a third as a result of the coronavirus outbreak, and the retailer pulled back on plans for 75 new store openings in 2020 to somewhere between 30 and 40. Sephora also had big ambitions for its physical expansion in 2020, with 100 stores set to open in North America this year. When asked in late April about how the pandemic has impacted those plans, though, a Sephora spokesperson said the company had nothing further to share.

When customers do start coming back to stores, and spending more on discretionary items again, Sephora is banking on its oft-updated loyalty program to strengthen its emotional connection with shoppers. The retailer debuted its members-only social platform in 2017, previously updated its loyalty program in August 2018 and then again in January of 2019 before launching a store branded credit card in March of that same year.

"We also know rewards that provide greater emotional and memorable experiences are the most meaningful for our clients, and we want to continue to deliver personalized experiences where our clients can choose what works best for their needs," Allegra Stanley Krishnan, vice president and general manager of loyalty at Sephora, said in a statement. "The emotional component of loyalty is a vital driver of our loyalty program and what really matters most to our clients."