The strategic partnership between Sephora and Kohl's continues to pick up traction, seeing incremental increases in sales, traffic, new customer acquisition, and highly accretive operating margins. Kohl's expects to see a significant return on this investment with an expected payback period of under 3.5 years.
On the last earnings call, Kohl's CEO Tom Kingsbury reported that last year close to 8 million Kohl’s customers purchased beauty products, while roughly 50% of Sephora at Kohl’s baskets had an additional category purchase. In the fourth quarter of 2022, total beauty category sales increased 90% for Kohl’s, achieving high-single-digits percent comparable beauty sales growth in the 200 Sephora shops that opened in 2021, and better than expected beauty sales in the 400 shops opened in 2022, with continued solid sales growth on Kohls.com.
Kohl’s recently announced the 250 stores that would add full-sized, 2,500-square-foot Sephora at Kohl’s experiences in 2023. The 250 new locations brings the total Sephora at Kohl’s fleet to more than 850, achieving the partnership’s initial planned goal of the Sephora at Kohl’s rollout. In addition, Sephora will also plans to open 50 additional small-format Sephora at Kohl's locations by the end of 2023.
“We are making great strides in building a formidable beauty business with the addition of Sephora at Kohl’s,” said Karen Daoust, Kohl’s Senior Vice President, General Manager, Sephora at Kohl’s. “The completion of our 850 stores in 2023 is just the beginning as we look to expand Sephora at Kohl’s to all stores, enhance the customer experience and deliver prestige beauty to our customers across the country.”
The new location rollout will see the Sephora at Kohl’s concept enter seven new states in 2023, including Arkansas, Idaho, Louisiana, Mississippi, New Mexico, South Dakota, and Utah, bringing Sephora at Kohl’s presence to 48 states.
The 850 full-sized Sephora at Kohl’s shops feature an immersive beauty experience that mimics the look and feel of a freestanding Sephora. Customers can explore the carefully curated assortment of brands supported by Sephora-trained Beauty Advisors on hand to offer personalized beauty consultations and assistance with finding products. At the same time, testing and discovery zones serve up a rotating assortment of new, emerging, or trending products.
The beauty brands currently found in Sephora at Kohl’s are also seeing the benefits of expanded reach and a new customer base as it looks to keep attracting younger and more diverse customers and drive more foot traffic and sales. Strong momentum has also attracted new brands to Sephora at Kohl’s with the recent additions of K18 and JVN Hair.
As a result of the promising trajectory of the initial Sephora at Kohl’s stores, the retailers announced last year that they would deepen the partnership by expanding the concept to all Kohl’s 1,100+ locations. Kohl’s projects that Sephora at Kohl’s will grow to achieve $2 billion in annual sales by 2025.
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