Sephora opens mini-boutiques in Kohl’s stores

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The partnership will replace a previous partnership with which Sephora has entered into JCPenney (JCP) which, according to the cosmetics chain, is expected to end in the next few years.
The deal is also expected to allow Kohl’s to offer a wider range of high-end beauty products to appeal to its younger buyers. Actions of Kohl’s (KSS) closed 13% higher at $ 36.52 on Tuesday.

“Beauty is an area where Kohl’s is currently underdeveloped, so it doesn’t capture a lot of spending from shoppers who are already in its stores,” said Neil Saunders, Retail Industry Analyst and Managing Director of GlobalData . “Adding a Sephora automatically fixes this problem, and it also makes Kohl’s a more attractive destination, which can help generate traffic.”

From Sephora’s perspective, Saunders said Kohl’s provides access to many non-mall locations where Sephora is currently under-represented.

Kohl’s (KSS) expects to have up to 850 “Sephora at Kohl’s” stores in its stores by 2023, as well as an online store by the end of next year.
Sephora will open at least 200 mini-shops in Kohl stores next year.

The 2,500-square-foot mini-boutiques will replace the current beauty offerings found at Kohl’s and will be staffed by Sephora-trained workers..

Deal draws closer to Sephora’s rival Ulta Beauty (ULTA) make a similar move to open cosmetic mini-stores inside Target stores next year.
Industry watchers say the two collaborations are revealing of how cosmetics sellers are trying to raise the profile of a category that has been largely sidelined by consumers amid the pandemic.
Sephora introduced a concept of a one-storey store inside JCPenney sites in 2006. But Penney has faced significant challenges since then, including filing for bankruptcy.

Sephora and JCPenney have said in emails to CNN Business that their partnership will continue until the deal ends. A spokesperson for Sephora said it was slated to end in early 2023.

For Penney, losing Sephora could become “another nail in the coffin,” Saunders said. “This would weaken the attractiveness and productivity of JCPenney’s already struggling stores and also mean they would need to develop their own beauty proposition or lose spending in this segment.”

A spokesperson for JCPenney said in an email that the company is developing a “new inclusive beauty concept that offers our customers a wide range of products.”

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