Sephora and Ulta partner with Kohl’s and Target to try and overcome pandemic recession

December 10, 2020

Sephora will open hundreds of beauty shops inside Kohl’s stores in coming years in a deal that rivals Target’s recent partnership with Ulta Beauty. Some 200 Sephora at Kohl’s locations will open by next fall, rising to at least 850 sites by 2023, the companies announced Tuesday. Sephora will also launch on Kohl’s website next year, offering more than 100 beauty brands, some of which are exclusive to Sephora. The announcement of the 10-year partnership comes just weeks after Target unveiled plans to open hundreds of Ulta makeup shops inside the discount retailer’s stores.

The beauty category has historically been dominated by America’s department store chains, but it is now increasingly moving out of malls, giving retailers that had been hardly invested in the category an opportunity to steal share. “When we think about the beauty industry today, we’re very underrepresented,” Kohl’s CEO Michelle Gass said. “It’s a huge market [and] it’s expected to grow over the next few years.” Kohl’s shares soared more than 14% Tuesday morning.

“Thanks to the pandemic, the beauty specialty store is at risk of becoming obsolete, at least without a dramatic rethink,” writes Rachel Strugatz for Business of Fashion, noting that the answer to this predicament for beauty retailers has been to turn to big box partners. “Sephora and Ulta’s partnerships with Kohl’s and Target could make thousands of their products even more accessible to the millions who still don’t live in close proximity to either specialty retailer. They’ll be broadening distribution just as large numbers of consumers may have received Covid-19 vaccines.”

The Sephora shops on Kohl’s will be about 2,500 square feet, offering most of the same services found at other Sephora stores, including help with makeup application, and replacing Kohl’s current beauty assortment. Kohl’s employees trained by Sephora will staff the locations, which will be positioned near the front of the store and occasionally accessible by a separate entrance, Gass said. The Sephora logo will join Kohl’s outside the stores. “We’re going to be very loud about this,” Gass said. “There’s no question that [shoppers] will see Sephora from the exterior of the building.”

While the beauty industry has been hurt by fewer women dressing up for the office and other special events during the Covid pandemic, some bright spots point to stronger days ahead. The NPD Group reports that U.S. sales of prestige beauty products — those sold mainly in department stores — dropped 17% year over year to $3.7 billion during the third quarter. That marked a softer decline than during the second quarter, buoyed by nail products and body products like soaps and exfoliators. Sales of fragrances were also up, according to the NPD data.

Ulta shares have gained more than 9% this year, bringing its market value to $15.7 billion. Although sales in its stores declined, Ulta’s e-commerce revenue more than tripled in its fiscal second quarter ended Aug. 1, signaling strong demand for beauty products online. LVMH, Sephora,’s parent does not breakout Sephora’s sales performance in its financial reports. At the end of fiscal 2019, though, the company said Sephora was experiencing strong growth and gaining market share.

Kohl’s hopes that Sephora will bring in new customers, who will then add other items like leggings and home decor to their baskets. Target has a similar goal in working with Ulta. For Sephora, Kohl’s offers it access to new markets, which can help attract new brands. Sephora this year landed actress and singer Selena Gomez’s Rare Beauty brand, as well as the clean beauty brand Beautycounter, over its rivals.

CNBC reports that beauty brands have struggled with distribution as department stores’ makeup counters see less foot traffic. Some, like Glossier, have opted to go the way of selling directly to consumers online. “This is going to resonate with our existing customers, and it’ll draw new customers,” Gass said. “We’re looking forward to hopefully decades ahead of us. … It starts with a 10-year term, but our goal is that this will be extraordinarily successful and it will last far beyond that.”

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Photo Credit: Glynsimages2013 / Shutterstock.com

Written by: Vipology Staff Writer

Beautycounter brand Business of Fashion CNBC Glossier brand Kohl CEO Michelle Gass Kohl's Selena Gomez Rare Beauty brand Sephora Sephora partners with Kohl's Target The NPD Group Ulta Ulta partners with Target

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December 10, 2020