Kohl’s Is Upping Its Beauty Game With The Help Of Sephora

“Game-changing,” is how Kohl’s CEO Michelle Gass characterized the partnership with Sephora it announced today, and the impact it will have on the Menomonee Falls retailer’s beauty business.

“It’s a massive deal,” Gass said in an interview. “We’ve been looking at the beauty opportunity for a long time. We’ve put a greater emphasis on beauty. We were doing [nicely.] We wanted to make much bigger, bolder progress.”

Sephora at Kohl’s, the 2,600-square-foot beauty destinations, are designed to look like Sephora’s own stores. At Kohl’s units with two doors – about 80 percent of the fleet – Sephora will have a dedicated entrance, its logo on the facade. “That’s how much we believe in this partnership,” said Gass.

The shops will be prominently located at the front of stores, with the first 200 Sephora at Kohl’s shops-in-shop bowing in fall 2021. Kohls.com’s online beauty selection will exclusively showcase an expanded Sephora assortment. The concept by 2023 will expand to at least 850 stores, Kohl’s said.

Sephora at Kohl’s will provide immersive and elevated experiences combining Kohl’s customer reach and omnichannel convenience with Sephora’s prestige service and selection of premium products.

“Beauty is expected to grow over the next five years,” Gass said. “We’re significantly under-represented. We’ll tap into that.” While beauty is only a modest low single-digit penetration of the business, Kohl’s has driven steady growth of nearly 40% over the past five years, Gass said during the retailer’s third-quarter earnings call last week. Gass also made the bullish pronouncement that Kohl’s has its sights on tripling sales and driving incremental traffic.

“As you would imagine, with a deal of this magnitude, we’ve been in conversations for a long time, many months,” Gass said.

Gass said Sephora at Kohl’s aims to make aspirational beauty products accessible to more consumers. “This is an extraordinary time of change,” said Gass. “I’m thrilled to partner with Sephora, a brand that shares our values and passion for innovation and reinvention. This is a perfect illustration of the bold moves Kohl’s is making to accelerate our growth and reimagine our future for the next era of retail.”

The new deal will allow both retailers to grow their respective customer bases. Sephora, which operates 500 stores in the Americas, will gain access to most of Kohl’s 65 million consumers who shop its 1,150-plus locations, with limited overlap between the two retail networks. Gass said, “We’re absolutely expecting younger customers.”

Kohl’s has been on a mission to attract younger consumers for several years, launching new brands such as LC Lauren Conrad, PopSugar, and creating the Pinterest-inspired, trend-oriented Outfit Bar. The retailer has also shown its propensity for innovation and taste for risk. Case in point, Kohl’s deal with Amazon
to accept returns on behalf of the digital behemoth.

“This is not a pop-up collaboration, but an investment our brand partners can rely on for the long-term,” said Jean-André Rougeot, president and CEO of Sephora Americas. “As a company with a history of sustained, decades-long partnerships, Sephora has every confidence in the future of this collaboration and the unique experiences it will bring to consumers across the U.S.”

Kohl’s news follows last week’s Target Corp.’s announcement of its own lofty beauty goals, which include hooking up with Ulta Beauty
to create shops-in-shop launching in 2021 in more than 100 stores, with plans to scale to hundreds more over time. There will also be an online Ulta Beauty component at Target.com

Department store cosmetic counters were once cash cows, driving traffic to stores and building loyalty among consumers, and were considered so sacred, beauty products were rarely put on sale.

The decline of beauty sales at department stores opened the door to mass retailers, which have proven to be more nimble than their pricer cousins. Beauty product sales in department stores in the third quarter declined 17% year-over- year to $3.7 billion. “The prestige beauty market is increasingly being shaped by channel shifts and a whole host of indie brands,” said The NPD Group.

Sephora for years has been nipping at the heels of department store beauty counters such as Macy’s
, with its mix of prestige and indie brands, and knowledgable sales assistants, some of whom are also makeup artists. The open-sell format allows customers to try-on and experiment with the products, however, that’s on hold due to the coronavirus pandemic.

“We’re not a department store,” Gass said, noting that the majority of Kohl’s stores are located off-the-mall. “What distinguishes us from a department store will allow Sephora to accomplish its goals. Sephora’s strategy is to reach customers where they live.” For Sephora consumers who don’t live near a store, Sephora at Kohl’s will offer convenience, and attract new clients and achieve frequency for Kohl’s.

Kohl’s isn’t Sephora’s first retail hookup. The beauty retailer had a deal with J.C. Penney, which became fraught when the Plano, Tex.-based retailer filed for Chapter 11 bankruptcy protection, and subsequently closed stores.

Martin Brok, global president and CEO of Sephora, said, “Great brands are always looking for new ways to serve their customers and innovate, even in dynamic times. With Kohl’s, we’ll be able to bring Sephora closer to where our customers want us to be, offering them one transformative beauty experience that integrates our prestige product offering, our values and our communities in a place where they come to get inspired and fulfill their lifestyle needs. This partnership also shows our confidence in the future of omnichannel retail and ideally positions both Kohl’s and Sephora to seize tomorrow’s opportunities, today.”

The Menomonee Falls, Minn.-based retailer said it has a leadership position in fragrance, and is expanding color and skincare. Kohl’s is introducing additional relevant national brands, while leveraging its success with Lauren Conrad to beauty, an extensive line of makeup, skincare, bath and body products.

Kohl’s has also been also curating unique digital offerings. It’s prestige brands include Lancôme, Philosophy and reVive, with other more widely-distributed labels such as Pure Aura, La Roche-Posay and Vichy. Gass said, “We’re going to really leverage our omni capabilities. We have a full digital Sephora at Kohl’s shop in shop going in live fall 2021.”

Sephora at Kohl’s will feature about 100 brands that are representative of the beauty retailer’s assortment. Sephora is known for launching new indie brands such as Drunk Elephant, Phluid and Otherland, as well as stocking labels such as Clarins, Estee Lauder, Clinique and L’Oreal Professional. Sales associates at Sephora at Kohl’s will be trained by Sephora.

“There’s going to be a role for assisted purchase advice and experience,” Gass said. “I have great conviction in the future of brick and mortar retail. That’s why we’re making this big investment. It’s long term. We’ll come out of pandemic.

“This will significantly accelerate our opportunity to be a leading player in the beauty industry and perfectly aligns with our most trusted retailer of choice,” Gass added.

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