Sephora at Kohl’s: the big revelation
In the battle for beauty market share, the opening salvo has been fired.
The first Sephora at Kohl’s, a partnership between LVMH-owned beauty giant Moët Hennessy Louis Vuitton and the midsize department store, opened at a Kohl’s store in Ramsey, NJ on Friday. Measuring approximately 2,500 square feet, the shop-in-shop is located in the front and center of the 85,000 square foot store, placed squarely between the two main entrances, one of which is now topped by a Sephora sign. in full view.
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This move has the potential to be transformational for both retailers. Kohl’s gets instant access to around 125 top premium beauty brands (and the customers who love them), while Sephora grows and takes a foothold in the non-mall real estate industry, so far dominated by Ulta. Beauty.
“We are at a turning point in beauty,” said Jean-André Rougeot, CEO of Sephora Americas. “We are seeing these big moves from the top players position themselves for the gold medal.”
This year alone, Ulta Beauty unveiled a partnership with Target Corp. retail player The Hut Group acquired Cultbeauty.com last week.
“It is quickly becoming a much smaller group of players who have a legitimate chance to run this business,” Rougeot said. “With this decision, we are positioning ourselves to be the dominant leader in selective beauty for years to come. The market share with Kohl’s is quite significant.
The numbers are indeed significant – Kohl’s had 1,162 stores in 49 states at the end of 2020, with an active consumer base of 65 million people in the United States. store to buy beauty products.
“We can now be a true beauty destination,” said Michelle Gass, CEO of Kohl’s. “We worked on our strategy of pivoting Kohl’s from a department store to a leading omni-retailer serving an active and relaxed lifestyle. Beauty is a key element of our strategy.
“This whole transformation is falling into place,” she continued. “It’s a new, fresher Kohl’s. Modern and relevant experience.
Under Gass, the retailer significantly reduced its assortment, removing 25 clothing brands and focusing on names like Nike, Adidas, Champion, Under Armor and Calvin Klein. While Kohl’s, based in Menomonee Falls, Wisc., Has dived into beauty in the past, teaming up with Estée Lauder Cos. Inc. in 2004 for example on a trio of brands exclusive to the retailer, it was never able to gain traction. in the category.
“We did some experimentation along the way, but we’ve never really been in the beauty business,” Gass said. “The little we did and the more we put in front of our client, however, she was voting that she wanted beauty at Kohl’s. Our beauty business has grown by over 40% in the last few years – and even so it was small, it resonated. “
Gass declined to comment on Sephora’s sales expectations at Kohl’s and how beauty should rank against other key categories, but said she expects the company to be “important.”
“You can see the investment we’re making in the business – the store-to-store concept we’ve built, the investment in the digital experience, the investment in marketing,” she said. “We’re making a really big bet on beauty, especially Sephora at Kohl’s.”
If that first outpost is any indication, Kohl’s put his money where his mouth is.
“They definitely get points for the ‘wow’ factor,” said Stephanie Wissink, analyst at Jefferies. “It was distinctly and distinctly Sephora – everything you need and a little more.
“The partnership works when everyone is allowed to do what they do best and that’s what happened here – Sephora becomes Sephora and Kohl’s becomes the host, leveraging its off-mall real estate, the loyalty of its customers and its omni-platform, ”she continued. “The rest of the store is branded and curated by Kohl’s, but Sephora is, figuratively and literally, the centerpiece. It’s the game in style, and Kohl’s brought a “pretty powerful” weapon to the fight.
To that end, Sephora at Kohl’s looks like a standalone Sephora store, separate from the rest of the box with its gondolas, signage, and black-and-white color scheme, right down to the striped floor. Each store will have a team of 15 Kohl’s employees in post and trained by Sephora. Even the lighting is different from the rest of the store.
“Lighting is crucial for the success of beauty,” said Rougeot. “This is top notch luxury lighting – not even all our stores have it. This store ticks the box of what our consumers and brands expect.
As noted, the brand lineup is very strong, with around 125 brands in total and over 8,500 storage units. The space is also divided between skincare on the left and makeup on the right, with hair care and fragrances lining the back walls. The Sephora collection is housed on a full wall adjacent to the makeup, and multi-brand Sephora merchandising areas such as Beauty on the Go, Clean at Sephora, and Top Picks are also featured.
Legacy brands include Estée Lauder, Clinique, Lancôme and Kiehl’s. Dynamic players like Olaplex, Fenty Beauty, Drunk Elephant, Charlotte Tilbury, Milk Makeup, Briogeo, Ilia and The Ordinary are well positioned, while more recent names like Gisou in haircare and Patrick Ta’s One Size round out the offer. Fragrance offers luxury brands like Tom Ford, Giorgio Armani and YSL, as well as niche players like Nest Fragrances (the first brand to sign, Rougeot said) and Juliette Has a Gun. Signs stating “Clean Beauty Under $ 20” and “Sephora Collection Under $ 20” highlight the value-oriented aspects of the proposition.
Artemis Patrick, Executive Vice President and Global Head of Merchandising at Sephora, noted that she and her team have had an incredible reaction from brands, and that around 90% of the offering in a standalone Sephora is represented at Kohl’s.
For their part, the brands seem just as optimistic about the concept. “This new distro that completely reflects the high-quality experience people love at Sephora, combined with the database of over 60 million Kohls, most of which are in addition to Sephora’s Beauty Insider program, means that we have a great opportunity for outreach and testing with clients, but also an opportunity to build stronger relationships with existing clients, ”said Tim Coolican, CEO of Milk Makeup. “We believe this is a significant opportunity that could grow our business in the US by at least an additional 50% once Sephora at Kohl’s reaches full distribution.
Plans call for 70 Sephora-at-Kohl’s to open this month, with a total of 200 by the end of the year. This number will reach 800 in total in the coming years. Kohl’s size and speed was one of the main reasons Sephora chose to partner with it for its expansion, rather than going it alone and opening more non-mall stores.
“Kohl’s is a bit of a magic wand – doing 200 stores in eight weeks is pretty remarkable,” Rougeot said. “We have practically tripled the size of our fleet in two years. This is something that this partnership allows us to do. We get reach, which is very important to us, at a much higher speed and we get it with great quality. “
Leveraging Kohl’s real estate strategy is another key advantage for Sephora, especially over rival Ulta Beauty, which has around 1,250 stores in all 50 states, mostly in malls.
“We’re just not very practical for most of the American population today. To be fair, Ulta did a phenomenal job leveraging this, ”Rougeot said. “It’s a more convenient retailer – since yesterday. Going forward, it’s a whole different ball game. Completely different.”
Wissink estimates that there is an overlap between Kohl’s and Ulta stores in about 70 percent of the locations, and here in this one New Jersey location alone, there’s an Ulta Beauty across the street and a Sally Beauty about 10 doors in the same mall.
Rougeot said he was confident Sephora’s proposal would win in the end. “Since I came [to Sephora Americas], I talked about reach and being more competitive with Ulta, ”he said. “This is a very aggressive desire to offer customers an alternative. I firmly believe that when we fight one-on-one, we win. We have a better assortment, a better story, better levels of service.
“Ulta is a great company and I respect them for sure,” said Rougeot, who worked closely with this retailer when he ran Benefit Cosmetics. “But I think our stores are better and the fact that we can now bring the Sephora experience to pretty much anywhere Ulta is located is a huge win for us.”
Already, online sales, launched on August 1, are well oriented. All categories exceed estimates, said Patrick, who noted that hair care and fragrances performed exceptionally well.
“Brands are very comfortable with this – we’re already getting great feedback on dot-com,” said Patrick. “The numbers are significantly better than expected, well above what we expected. There is a strong pent-up demand. “
Additionally, Kohl’s customer is not expected to cannibalize Sephora’s existing base. “The power of this partnership is scale,” added Doug Howe, Kohl’s chief merchandising officer, who noted that 70 percent of the 65 million active customers are women. “And there is very little overlap with the Sephora client,” he added.
Rougeot said early metrics for online sales show they are an avid consumer of what’s trending, relevant and new to the category.
“Exclusivity remains very important. Beauty is fun. Beauty is a game, ”he said. “As a consumer, you are always on the lookout for new things.
“Patrick Ta and Charlotte Tilbury are two of the greatest hits of [Sephora at Kohl’s] dot-com so far. I wasn’t necessarily expecting it, ”continues Rougeot. “But the consumer is smart. The Kohl’s consumer knows exactly what is going on beautifully. She just couldn’t find these marks before, and now they are within her grasp.
FOR MORE BEAUTY NEWS
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Firmenich sales accelerate in the second half of the year
The Hut Group acquires Cult Beauty as Pure Players see explosive growth
Launch gallery: a look at the first Sephora to open inside Kohl’s
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