Starting in August, Target customers will be able to visit select big box stores and purchase premium brands of mascara, lipstick, and hairspray that they typically only find in specialty stores or in the center. commercial.
Ulta Beauty announced on Wednesday that it will be opening its first beauty stores inside Target next month. The mini-shops will carry an assortment of products from over 50 premium brands for makeup, skin care and hair, including Clinique, Urban Decay, Tarte, MAC Cosmetics, Drybar, Jack Black and Ariana Grande.
Target will also sell the mix of products on their website.
Retailers said they would open more than 100 stores by the end of the year, with plans to reach a total of 800 stores over the next few years. This means that more than a third of Target stores across the country could potentially include an Ulta mini store. Each store will be approximately 1,000 square feet, or about a tenth the size of a typical Ulta store.
By installing a scaled-down, brightly colored beauty store inside Target, the two retailers hope to attract new shoppers, build customer loyalty, and encourage in-store trips.
Target must prove that it can continue to grow – even after gaining billions in market share during the pandemic – as it faces tough year-to-year comparisons. Ulta Beauty, on the other hand, is keen to introduce itself to new customers and enjoy the return of socializing, traveling and working in the office as more and more people are swapping face masks for lip gloss.
Target’s comparable sales, a key metric that tracks sales in stores open at least 13 months and online, increased 19.3% in the fiscal year ended Jan. 30 compared to the previous year. Ulta’s comparable sales fell 17.9% in the year ended Jan. 30 compared to the previous year.
Shares of Target have risen 44% so far this year and hit an all-time high on Tuesday. Ulta is up 16% so far this year.
Target’s chief growth officer Christina Hennington said in an interview that she believes both companies will benefit and gain market share in the beauty industry by opening stores. She said the big box retailer has a history with other “stores in stores” inside its stores, including one for Levi’s and Disney.
“We are confident that this will be incremental and in fact drive traffic to Target as well as traffic to Ulta as they introduce more guests to their brands and experience,” she said.
Target announced the deal with Ulta in November, but declined to share the terms of the deal. Retailers on Wednesday shared the list of star brands, initial locations and fresh renderings, which feature backlit makeup displays and prominent orange and pink signs.
In each store, Target employees will be specially trained by Ulta to recommend beauty products. Customers can also try makeup products with testers – a feature that may be temporarily suspended, depending on the state of the pandemic.
Ulta Beauty COO Kecia Steelman said the mini-shops will have special displays and seasonal deals, such as lotions or skin care products in the winter.
However, they are not the only ones to bet on beauty. Target’s rival, Kohl’s, has partnered with Sephora to open at least 850 stores in its stores by 2023. Target and Kohl’s are also trying to steal shares from beauty counters, makeup shops, and retail brands direct from department stores. They often compete in other categories in suburban malls.
Steph Wissink, Retail Analyst for Jefferies, said Ulta Beauty at Target is designed as “an appetizer-sized experience for Target shoppers” that aims to inspire a desire to experience the full Ulta experience. .
However, she said working together would be “a delicate balance”. Instead of renting out premises like Sephora from Kohl’s, Target basically paid royalties to Ulta. She builds the boutiques, equips them and relies on the beauty brand’s relationships with prestigious brands.
For the deal to work, she said three different parties need to feel like they’ve won: Target needs to use the high merchandise to drive sales in their beauty department and beyond. Ulta must appeal to customers who buy from Target’s mini-store to its much larger stores. And premium brands need to feel like they’re being discovered by new buyers who become loyal fans.
She said these relationships could be jeopardized if one appeared to be the clear winner. For example, she said many Target shoppers might never make it to Ulta’s stores or her website – or they might find a beauty product they like and start buying it directly from that. Mark.
She said replenishment purchases and where they occur will determine the success of the partnership.
“The three can win together, but I don’t think it will be equal,” she said. “There are natural points of tension that will emerge and the consumer will ultimately dictate who wins.”