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Kohl’s Challenges Target/Ulta Partnership with Sephora Addition

Kohl's and Target go for growth through beauty lines.

Kohl's  (KSS) - Get Free Report continues to reinvent itself and works to build a stronger retail experience. Earlier this year Kohl’s was facing decline and was looking to sell. The most likely buyer was Franchise Group  (FRG) - Get Free Report, but Kohl’s put the kibosh on the deal just a few weeks ago. Kohl’s stated that a volatile market sparked the decision to end the buyout talks with Franchise Group.

Since the talks ended with Franchise Group, Kohl’s has been adding new fashion lines and adding marketing campaigns like Discover @ Kohl's. The new campaign is an attempt to diversify the labels Kohl’s carries and have a rotating department of brands and targeted themes each quarter. The current marketing campaign includes For Women By Women, Back to School, Get Outside, Fall Family Fun and has a give back portion of its campaign where the Gorongosa Coffee Co. donates 100% of its profits to the Gorongosa Project in Mozambique, Africa.

Kohl’s has reached an agreement with Levi’s  (LEVI) - Get Free Report to bring back its Silver Tab denim line from the 1980’s and 1990’s in an attempt to entice Gen X to relive the glory days through purchasing a new pair of their old favorite jeans. All of these changes have come on the heels of the deal that fell through with Franchise Group. Kohl’s also announced a partnership with Buffalo David Bitton, to diversify the denim clothing lines.

The Beauty Battles Between Target and Kohl’s Deepen.

Target  (TGT) - Get Free Report and Ulta Beauty  (ULTA) - Get Free Report have been building their partnership since 2021. The shop-in-shop partnership offers roughly 1,000 square feet of Target's retail footprint to the Ulta cosmetics brand. Ulta’s pricing ranges from a couple dollars to a couple hundred. The fragrance lines offer a few high-end products for Target shoppers.

Ulta looks at the partnership with Target as a 'beauty appetizer,' as customers can get a taste of what an Ulta Beauty shopping experience is like. Ulta is going to train new Target beauty employees on the Ulta beauty lines giving customers true product experience. Ulta shop-in-shop locations will offer GLAMLab, which is a digital experience to try on different beauty products.

Breaking Up is Hard to Do.

JCPenney  (JCP) - Get Free Report and Sephora had been in a business relationship since 2009 but have been winding down the relationship which ends in 2022. JCPenney is replacing the beauty brand with JCPenney Beauty, which will have over 170 different brands.

The partnership with JCPenney let the Sephora expand its customer base quickly without opening standalone storefronts and will be doing the same when Sephora opens in more Kohl’s locations. It put online sales at the forefront of its business plan with a few stores open.

Sephora, a Moët Hennessy Louis Vuitton brand  (LVMHF) , has been forced to rework the company’s business plan since the beginning of the pandemic with its exit from JCPenney. Kohl’s has been working hard to increase its relevance to the consumer market, began a partnership with Sephora in 2021. 

Kohl's and Sephora are Expanding on Their Partnership

Kohl’s has been partnered with Sephora since August 2021. The partnership started online at Kohls.com and started opening within existing Kohl’s stores. The retail partnership had expected to open 200 Sephora locations within Kohl’s by fall of 2021. Sephora sections of Kohl’s take up about 2,500 square feet of the retailer’s floorplan.

Kohl’s added 400 more locations this summer and now Sephora currently operates out of nearly 600 Kohl’s retail stores. The expansion will bring Sephora into all of Kohl’s 1,000+ store fronts. The expansion is the result of both retailers benefiting from the existing partnership and is only expected to grow with more locations.

Both Kohl's and Target are looking to build corporate growth through expanding the beauty brand partnerships. The growth is expected to be taking away from the large departments stores like JCPenney.