Why Are JCPenney-Sephora Stores-Within-Stores Successful?

Store-within-a-store partnerships are designed to be a “win-win” for both brands, but they can be tricky to execute well in the real world of retailing. If the host retailer’s foot traffic dwindles, the shops miss the chance to show their wares to a sufficient number of consumers. If the “mini-stores” are too successful, the host retailer may feel like its own sales are being stolen.

The numerous possible pitfalls in such relationships makes the success of the JCPenney-Sephora partnership, which began in 2006, all the more remarkable. After opening 60 shops in 2016, the department store retailer recently announced it would add 70 more Sephora shops this year and expand another 32. By the end of 2017, nearly 650 Sephora shops will be operating inside JCPenney stores.

The retailers also are strengthening their digital connections. Online JCPenney shoppers can now browse an expanded array of Sephora products and order them online for same-day pickup in-store. JCPenney is also planning to add a feature enabling customers to book makeovers with Sephora beauty consultants in its stores.


Experts Analyze A Retail Success Story

The RetailWire Brain Trust recently explored what has made the partnership work so far, and whether the retailers’ omnichannel moves will extend the winning streak. Excerpts from the discussion follow.

Dave Wendland, VP, Hamacher Resource Group
“Beauty and the Best,” that’s what Sephora and JCPenney have been able to achieve. Department store rivals have been unable to effectively knock this combo off their perch. Why? 1. Adequate space has been devoted to the environment. 2. Placement of the store-within-a-store is front-and-center. 3. Management believes in and supports the model. Will a more concerted omnichannel approach grow the business? Yes. Expanded reach, ubiquity of messaging and convenience will surely drive results.

Dick Seesel, Principal, Retailing In Focus
Certainly omnichannel is another opportunity for JCPenney as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for JCPenney is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

Adrian Weidmann, Principal, StoreStream Metrics
The successful collaboration between JCPenney and Sephora is a harbinger of brick-and-mortar retail. Both reap the benefits of supporting each other’s shoppers while focusing on their core competencies. Others should pay close attention to this collaboration and explore this type of arrangement wherever possible. Best Buy has been pursuing this tack with their in-store brand pods with equal success. One key element that Sephora (and the broader cosmetic category participants) must address is out-of-stocks. Addressing the supply chain inefficiencies will dramatically enhance both Sephora’s and JCPenney’s brand and customer experience — both of which will optimize return visits!

Jasmine Glasheen, Writer & Retail Strategist
Sephora already has a fantastic omnichannel presence, so I don’t see how offering an online component through JCPenney will make either brand more successful. Why wouldn’t a beauty customer prefer to go to the Sephora web site for the deals, online makeovers and add-ons, instead of shopping through JCPenney’s web site? The only way I see omnichannel increasing profits is through impulse cosmetic buys to reach free shipping minimums.

Mark Ryski, Founder, CEO & Author, HeadCount Corp.
Sephora is a category winner and it was a brilliant move by JCPenney to forge a relationship with them. This is a classic example of “cool by association.” JCPenney’s omnichannel approach is helpful but probably not revolutionary. However, JCPenney’s stores get an enormous amount of traffic (even in an environment of declining traffic), so additional exposure to new customers is good for Sephora and traditional Sephora customers have many more locations to buy the products they love. The only caution for Sephora is that a close affiliation with JCPenney could hurt their image — as cool as Sephora makes JCPenney, the flip side is that JCPenney may make Sephora seem less cool.

Ken Morris, Principal, Boston Retail Partners
The Sephora brand appeals to the right demographic (18- to 45-year-olds) which is a segment JCPenney needs to attract: new, younger shoppers that wouldn’t normally shop there. This is a great way to extend their customer base and drive more traffic to their stores. BOPIS services and online appointment setting for makeovers are added conveniences that are now becoming services customers expect. JCPenney is making smart choices to better position itself for today’s consumers and they need to continue to innovate.

Craig Sundstrom, CFO, Weisner Steel
While I’m sure the hope is online shopper’s habits will mimic in-store behavior, it should be kept in mind that an online shopper is in a sense “in” every store in the world (or at least every one that has an online presence), so I wouldn’t necessarily expect the same synergy to develop. Of course there’s no reason NOT to do this, just to temper one’s expectations.

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