Sephora is continuing its move away from malls with the announcement of the largest store expansion in its 21-year history in the U.S. More than 260 new stores are slated to open this year, including 60 freestanding locations and 200 shop-in-shops inside Kohl’s department stores.
The LVMH-owned beauty retailer said in a statement that the new store openings were a sign of its confidence in brick-and-mortar retail: “Beauty is one of the most interactive retail experiences and the in-store experience specifically is a critical part of a shopper’s journey.”
It’s all part of Sephora’s larger omnichannel strategy, which also includes the debut this week of a buy online, pick up in-store (BOPIS) offering that will be available at all freestanding stores by April 2021. The move follows the retailer’s launch of a reserve online, pick up in-store service several months ago, which allowed customers to reserve products for up to 48 hours. In 2020, Sephora also began offering direct shopping on Instagram and same-day delivery through Instacart, as well as a buy now-pay later option in partnership with Klarna.
Sephora at Kohl’s shoppers also will have access to similar omnichannel services through the department store’s existing offerings, which include in-store pickup and free drive-up ordering.
The new standalone Sephora locations will begin to open in March in markets including Dallas, Houston, Austin, Texas, Los Angeles and Nashville. These stores will feature a “sleek architectural and visual design that focuses on the classic Sephora DNA” as well as new lighting to enhance the shopper experience.
Sephora and Kohl’s also have revealed the 29 states that will be the first to get the 200 Sephora at Kohl’s stores opening later this year. Markets include Greater Los Angeles, Greater New York, New Jersey, Greater Chicago, Minneapolis, Ohio and Wisconsin. The 2,500-square-foot Sephora at Kohl’s shops will replace Kohl’s current in-store beauty departments and feature a unique assortment of 100+ makeup, skincare, hair and fragrance brands. The retailers plan to expand the concept to at least 850 stores by 2023.
The rollout of Sephora at Kohl’s comes as the beauty retailer winds down its shop-in-shop operation with beleaguered JCPenney, which exited bankruptcy at the end of 2020 after being bought by mall operators Simon Property Group and Brookfield Asset Management. The relationship grew contentious last year when Sephora tried to terminate the multi-year partnership early, prompting a legal standoff that ended with the retailers agreeing to continue the existing arrangement for several more years.
The beauty industry as a whole experienced significant declines in 2020 as the COVID-19 pandemic shifted the priorities of homebound consumers away from style and glamour in favor of hygiene and self-care. McKinsey & Co estimated beauty industry sales fell by 30% in 2020, but innovation by beauty brands and consumers’ newfound willingness to try DIY solutions helped boost ecommerce revenue by 20% to 30%.
Sephora, which reported record online sales in 2020, is clearly betting that some of that digital traffic will come back to stores as the pandemic wanes. For its part, so is competitor Ulta Beauty, which will launch its own network of shop-in-shops this year at Target.