In-Store Tech Is So Hot Right Now: Sephora Acquires Fragrance Software Startup Scentsa

While a lot of young commerce-related companies are focused on e-commerce, smart retail folks realize that there’s also great opportunity for tech innovation inside brick-and-mortar stores.

Some aim to give physical retailers Web-like data on their shoppers, increasingly in ways that some find creepy. Others are investing in tech that makes shopping easier for customers.

Louis Vuitton-owned beauty retailer Sephora is trying to do the latter, and has acquired young software startup Scentsa to continue to invest in in-store digital products. Terms of the deal were not disclosed.

Sephora first started working with Scentsa five years ago on a product called Fragrance Finder. The startup had built a massive database of scents and mapped them to different commercial products, and then built a user interface on top to appear on touchscreens inside Sephora stores. The touchscreen experience surfaced product info and videos, and also recommended products based on factors such as a shopper’s mood.

The two companies later partnered on another digital product, Skincare IQ, which launched in Sephora stores about a year ago.

Julie Bornstein, Sephora’s CMO and chief digital officer, said her company acquired Scentsa for a combination of reasons: To achieve long-run cost effectiveness, to keep the tech from winding up in the hands of competitors and to develop new in-store products more rapidly.

“Everyone wants to do something digital,” Bornstein said. “But we think we really figured out how to use digital to create value for the consumer.”

Bornstein said eight to 10 Scentsa employees would be joining Sephora.