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Ulta shop in shop
An Elevated and Integrated Ulta at Target Experience Photo Credit: McMillanDoolittle

The Beauty Battle: Sephora @ Kohl’s vs. Ulta @ Target

Retail partnerships work to combine the strengths of brands and retailers to create newness in familiar stores, promote brand awareness, and establish a unique and exciting customer experience.

Two strategic beauty partnerships recently opened their doors this summer – Ulta Beauty shop-in-shops at Target and the Sephora shop-in-shops at Kohl’s, both initially announced last fall. The mass retailers recently launched these concepts across the US, with expansion plans already underway. Read on for our take on how these beauty partnerships offer significant benefits to the retail parties and their customers.

Ulta Elevates Target’s Store Experience, Gaining Access to the Retailer’s Massive Customer Base

The Ulta at Target mini shops are attractively executed and located adjacent to Target’s existing beauty section in store.  Immediately upon entering the approximately 1,000 square foot shop-in-shop, guests are greeted with the message that Target and Ulta rewards programs are now linkable – a major perk when purchasing your Ulta must-haves at Target. Customers earn both Target Circle and Ulta Ultimate rewards by easily scanning a QR code to link the accounts. This feature is promoted at various points throughout the shop and is a great example of how retailers can use a robust digital platform to enhance their store experience. One concern, however, is the “double dipping” reward points customers receive when shopping at the Ulta within Target locations as compared to standalone Ulta stores, which could ultimately dissuade customers from visiting Ulta stores in favor of the shop-in-shops.

Ulta's haircare and skincare

A Balanced Assortment Emphasizing Inclusivity and Sustainability; Photo Credit: McMillanDoolittle

Haircare and skincare line the perimeter of the shop, with makeup filling the center store. Diversity is an important focal point throughout the environment delivered through inclusive products and clear messaging that aligns with recent diversity commitments at both Target and Ulta. Celebrity-driven brands like the fragrance collection by Ariana Grande are featured along with more than 50 other brands across Ulta’s offering. Rich product information is conveyed, including personalized recommendations based on skin type or hair type. Sustainable brands are another Millennial and Gen Z-oriented highlight within the assortment.  Target employees staffing the Ulta shop were educated by Ulta staff, providing them with important tools to aid customers as Ulta employees at a classic Ulta store would.

Ulta's assortment

An Accessible Assortment to Attract New Customers. Photo Credit: McMillanDoolittle

We now wonder: why go to a traditional Ulta when you can get Ulta products at Target? In addition to the rewards points benefit, the Ulta-in-Target format leans more mass-market and less premium than the traditional format, catering to the discounted price points that Target shoppers are accustomed to. We can see this concept being the perfect segue for Ulta to convert Target shoppers into Ulta shoppers, introducing them to the brand at an accessible price point, then converting them to Ulta loyalists once they see the value and quality that Ulta can provide. Time will tell how this new concept will impact Target’s incumbent sales of mass beauty brands.

Sephora Lands Coveted New Footprint with Shop-in-Shop at Kohl’s

Sephora's storefront

Sephora Benefits from Storefront Opportunity through Kohl’s. Photo Credit: McMillanDoolittle

Unlike the Ulta at Target collaboration, Sephora at Kohl’s feels a bit more like its own storefront – this makes the 2,500 square foot Sephora shop-in-shop prominent but less integrated with its surroundings. From the entrance to the parking lot, Sephora stands out with a dedicated entrance and a large Sephora sign displayed. The shop-in-shop is located near the entrance – much like the Ulta in Target concept – and features haircare and skincare on one side, and makeup on the other. While the Ulta section at Target was laid out as an open concept, much like any other department, Sephora at Kohls is a walled off section, with only the front of the shop open to the Kohl’s store.

A Premium Assortment with a Focus on Sephora’s Own Collection

Sephora Collection products comprise one side of the shop-in-shop perimeter. Celebrity brands including Jennifer Lopez’s JLO Beauty and Rihanna’s Fenty makeup and skincare lines are featured, and about 125 prestige brands are available in total. While Ulta shops at Target carry an accessible assortment to match Target’s Good/Better price positioning, Sephora in Kohl’s leans more premium overall.  There are “Sephora Collection Under $20” and small “Clean Beauty Under $20” sections that will appeal to a more price-conscious shopper.   The physical separation of the Sephora shop-in-shop mirrors the assortment’s price-positioning gap from Kohl’s traditionally discounted shopping experience. This approach could struggle to capture the attention of the Kohl’s consumer that is so accustomed to the steep sales/coupons that Kohl’s features almost year-round.

Sephora's assortment

A Strategic Footprint and Controlled Sephora Experience within Kohl’s. Photo Credit: McMillanDoolittle

Sephora at Kohl’s unlocks a highly covetable new footprint for Sephora to compete directly with Ulta at standalone centers vs. mall-based stores. While Sephora experienced great success throughout the pandemic in their online sales, the brand’s mall-based stores were not suitable for essential contactless pickup options, which will be another plus that the partnership with Kohl’s can provide. Customers can earn both Kohl’s Rewards and Sephora Beauty Insider points, like the Ulta at Target concept. However, Kohl’s customers cannot redeem Kohl’s cash on Sephora at Kohl’s purchases, which could be a significant drawback for shoppers. Checkout was completed at a counter within the shop-in-shop in contrast to the Ulta in Target concept which utilized the standard Target checkout aisles. Employees working the Sephora at Kohl’s shop-in-shop were Kohl’s employees trained by Sephora staff to guide and educate customers.

Sephora's separate checkout

Photo Credit: McMillanDoolittle

New Beauty Partnerships Could Drive Benefits Across Stakeholders

To be successful in the long-term, these partnerships need to provide an upside for three separate business stakeholders: the large format retailer, the beauty specialist, and the beauty brands they carry. In this case, both strategies provide unmatched brand representation and exposure for the makeup, skincare, and hair care brands involved. After Ulta’s international expansion plans in Canada stalled, the partnership with Target gives them access to a significant growth opportunity, exposing them to the Target shopper whose profile matches well with Ulta’s retail positioning. Meanwhile, Target gains access to a valuable assortment of products and improves their floorspace efficiency. In the Sephora and Kohls example, Sephora benefits from additional foot traffic and exposure to new customer segments. It also greatly aids Kohl’s, since last fall the company announced it would refocus its goals to be a destination for wellness, beauty, and lifestyle, and since it has struggled in appealing to younger customers in the past.

Whether you are a retailer or a brand, large or small, McMillanDoolittle can help you find the right strategy to stand out in the mind of the consumer and win in today’s challenging retail landscape. To learn more about our work in retail strategy, simply contact us.  If you’d like to stay up to date on our latest retail insights, be sure to follow us on LinkedIn.

Ava Buechel

Ava provides market and consumer research, planning, and analysis support for McMillanDoolittle retail consulting projects. Her experience in marketing, digital transformation, brand strategy, and retail innovation brings an updated perspective in the fast-paced business climate of today.

1 Comment
  • Rich Hollander

    December 4, 2021 at 12:24 pm Reply

    Ava, thank you for your insightful analysis. You did not pick a winner here. I don’t think you mentioned the experience Sephora got from being at JCP. Is that an execution advantage?

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