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Ulta x Target vs Sephora x Kohl’s: Who’s Winning?

December 20, 2021 Faye Brookman
December 20, 2021
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The Ulta Beauty x Target alliance appears to be getting out of the gate faster than the rival Sephora x Kohl’s partnership. That’s the assessment of financial experts, brands both in and not part of either tie-up, retailers, and consumers.

“From what I gather, the rollout of Sephora in Kohl’s has been going slowly,” said industry consultant Allan Mottus.

Store checks on Black Friday revealed the Sephora concept in several Kohl’s visited was not heavily shopped. However, a store employee in a New Jersey location said that the Saturday two weeks before Christmas (December 11) started getting crowded—perhaps from people who just discovered the partnership, or the fact beauty is often a last-minute category (despite the season getting an earlier-than-usual kickoff). But brands who would only comment off the record said takeaway is slower than they expected, and that Kohl’s is not inviting brands to service the stores. Kohl’s did not elaborate but did say there are no in-store services being performed at this time.

Meanwhile, the availability of premium brands in Target appears to have hit a bull’s eye. Beauty departments in Target stores with Ulta Beauty experienced heavier traffic than those without the upscale addition, as per visits to stores in California, Florida, and New Jersey over Black Friday weekend.

“Imagine going to Target and seeing Too Faced, The Ordinary or MAC,” said a top executive at a mass brand that is in Target. “My only fear is the area looks so good I hope it doesn’t hurt the mass side.”

To date, both Target and Ulta Beauty said sales are complementary rather than cannibalizing.

“We are very excited about our collaboration,” said Monica Arnaudo, Chief Merchandising Officer for Ulta Beauty. “We are great partners. We have a very close relationship with their merchant team. The consumer sentiment is very positive. They love Target; they love Ulta Beauty.”

The company noted the contributions of the Ulta-trained beauty consultants in the aisles. Social media is assisting with spreading the message, and TikTok campaigns also chalked up more than 8 million views, Arnaudo said.

Also encouraging is that all categories are performing on target, Arnaudo said, and haircare is even exceeding expectations. Guest are gravitating to the “Discovery Zone,” which is part of the 1,000-square-foot shops within shops. The trial area is heavily shopped, offering accessible price points to introduce shoppers to brands.

There are now 101 of the Target and Ulta Beauty shops within stores with a blueprint calling for 800. Kohl’s has moved more swiftly to build out the Sephora presentation, with 200 doors up and running. Plans call for a total of 850 by 2023. The stores stock 125 prestige brands in about 2,500-square feet ranging from Estée Lauder and Lancôme to Supergoop and Fenty.

Despite the Sephora signage on Kohl’s entrance, at least some stores require traversing through the entry of Kohl’s to get to the department. “I had hoped to be able to just dash into Sephora rather than wade through some Kohl’s stuff,” said one 27-year-old shopper on Black Friday.

“From what I gather, the rollout of Sephora in Kohl’s has been going slowly.”
By Allan Mottus, Industry Consultant

At first blush, Sephora’s decision to go into Kohl’s seemed genius. Kohl’s offers off-mall locations and is undergoing a transformation led by Chief Executive Officer Michelle Gass. She is spearheading the effort to shift the positioning of Kohl’s to a lifestyle concept and has brought in brands like Nike, Calvin Klein, Under Armour and Adidas. But at least for now, those who have been tracking the concept believe it has become just another “Sephora in JCPenney.

The issues are price points that are too stiff for Kohl’s customers and a store vibe that still doesn’t resonate with Sephora’s beauty enthusiasts. Over the years, Kohl’s has launched several beauty concepts, including a much-heralded presentation created with the help of Estée Lauder called American Beauty and BeautyBank. According to store checks from Jefferies equity analyst Stephanie Wissink, the combo stores appear to be phasing out the popular E.l.f. cosmetics going forward.

“The Estée Lauder range years ago couldn’t make it,” said one industry expert. “Kohl’s hasn’t been able to make the category work. Kohl’s and JCPenney have one thing in common, they both have an identity crisis. Target does not.”

One seasoned beauty executive, who has brands in Target, said Sephora would be better served opening smaller prototypes such as it tried with its Studio concept. “With retail closures, there are plenty of sites to move into,” he said.

A former beauty executive suggested the partnerships should have been swapped. “Target has always been better at innovation in beauty. They weren’t afraid to push the envelope. They were the first with indie brands.”

Kohl’s Gass, however, is confident the concept is hitting the mark. In an interview with CNBC, she disputed those who say Kohl’s isn’t making beauty work, stating “We’re finally in the beauty business.” Gass said it is still the early days of the concept but that stores with the partnership are witnessing a mid-single digit gains in store sales, asserting that “Twenty five percent of customers are new, younger and diverse and are putting other items in their baskets.” The Sephora shops serve as a centerpiece for the entire restructuring of the retailer, she said.

In its Q3 earnings, Kohl’s reported “early response is positive with mid-single digit sales lift to overall sales (where launched)."

Many of the brands interviewed added that Kohl’s and Sephora could kick into gear, especially as more in-store demonstrations are allowed. But for now, Ulta and Target are hitting on all gears and it will be a waiting game to see the viability of Sephora domiciled in Kohl’s.

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