French chain Sephora is expected to open several shops in Iran from next year, as it becomes one of the first major European specialist cosmetics retailers to directly invest in the country as it emerges from years of economic sanctions.
Sephora, part of luxury industry group LVMH, currently runs around 2,000 outlets worldwide and is looking to develop its presence in Iran where there is significant appetite for cosmetics and make-up.
"Sephora is currently finalizing talks with its partner in Iran," one of the sources close to the matter said.
"Talks are already quite advanced with their distributors," another source said, declining to be named. One source said Sephora was hoping to open up to seven boutiques.
With a female population of over 39 million, Iran is the Middle East's second biggest market for beauty products after Saudi Arabia (and the world’s seventh largest), with annual sales reaching more than €3.5 bln ($3.86 bln) in 2014, according to market research company Euromonitor.
With sanctions being lifted, Iran is expecting an influx of luxury brands as global retailers look to meet the demands of affluent consumers with a thirst for high-end products. Numerous shopping centres have been developed in recent years, particularly in Tehran, and whilst historical sanctions made business tricky for Western brands to establish in such centres this is expected to change as the potential of this market is untapped.
LVMH and Sephora declined to comment.