I'm not sure anyone saw that coming - Sephora is launching in Tanger outlet centers across the US. Sephora has one location in Huntsville, Alabama, followed by five more stores in Charleston, South Carolina; Deer Park, New York; National Harbor, Maryland; Palm Beach, Florida; and Phoenix/Glendale, Arizona, which will open this year. Each store in Tanger's shopping centers will average approximately 5,000 square feet.
Sephora joins competitors Ulta Beauty and Bath & Body Works, which have established a footprint with Tanger. Primarily, it is an operator of outlet centers tapping Sephora, which reflects part of Tanger's strategy to diversify its offerings and services to attract younger and more affluent shoppers. Currently, Tanger owns and operates 38 outlet centers across the US and Canada, with over 15 million square feet primarily positioned across tourist destinations.
"We continue to evolve our centers into true destinations by elevating and diversifying the overall brand and category mix across our portfolio, bringing in new, high demand categories and brands to attract the next generation of shoppers," said Stephen Yalof, President and Chief Executive Officer. "The expanded partnership with Sephora is an exciting step in Tanger's growth."
Many centers are in suburban areas and beach communities that traditionally draw a heavy percentage of tourists but are increasingly attracting a new local population moving to the regions or having second homes. According to the company, 120 million people visit Tanger centers annually.
The Financial Times reported that HSBC estimates the beauty retailer had €14.4 billion ($15.6 billion) in sales last year and generated €1.4 billion ($1.5 billion) in earnings before interest and taxes. The US is Sephora's biggest market, and they are the largest prestige beauty player with sales of $10 billion.
Sephora partnered with Kohl's in 2021 to become more accessible to beauty shoppers across the US, with the expansion focused on increasing the retailer's 500+ footprint to off-mall locations. The retailer has approximately 1,000 Sephora shops operating inside Kohl's and is projected to achieve $2 billion in annual sales by 2025. The partnership with Tanger appears to be a continuation of this strategy.
"As the category's leading prestige retail brand, Sephora will bring an elevated and aspirational beauty experience to our centers and enable us to offer our guests a comprehensive suite of price points and products in the beauty category," added Justin Stein, Executive Vice President of Leasing for Tanger. "We believe this will be a very successful partnership for both our companies as Sephora continues to expand its presence with Tanger."
