The primary Ulta Magnificence mini-shops will open in Goal in August

Starting in August, Target customers will be able to go to select big box stores and buy premium brands of mascara, lipstick and hairspray that they normally only find in specialty stores or the mall.

Ulta Beauty said Wednesday that it will be opening its first beauty stores in Target next month. The mini-shops will offer an assortment of more than 50 prestige brands for make-up, skin care and hair, including Clinique, Urban Decay, Tarte, MAC Cosmetics, Drybar, Jack Black and Ariana Grande.

Target will also sell the curated product mix on its website.

The retailers want to open more than 100 stores by the end of the year and grow to a total of 800 stores over the next few years. That means more than a third of Target stores across the country could at some point have a mini-Ulta shop. Each store will be about 1,000 square feet – about one-tenth the size of a typical Ulta store.

By setting up a scaled-down, colorful beauty shop in Target, both retailers are hoping to attract new shoppers, build customer loyalty, and drive store visits.

Target must prove it can continue to grow – even after gaining billions in market share during the pandemic – as it faces challenging year-on-year comparisons. Ulta Beauty, on the other hand, wants to introduce itself to a new customer base and take advantage of the return of socializing, traveling and working in the office as more and more people swap face masks for lip gloss.

Target’s like-for-like sales, a key metric tracking sales in stores that have been open for at least 13 months and online, increased 19.3% year over year for the fiscal year ended Jan. 30. Ulta like-for-like sales for the fiscal year ended January 30th decreased 17.9% year over year.

Target’s shares are up 44% so far this year, hitting an all-time high on Tuesday. Ulta is up 16% so far this year.

Christina Hennington, Target’s Chief Growth Officer, said in an interview that she is confident that both companies will benefit from the store opening and gain market share in the beauty space. She said the big box retailer has a track record with other “shop-in-shops” in its stores, including one for Levi’s and Disney.

“We strongly believe that this will be incremental and will actually increase traffic to both Target and Ulta as they introduce their brands and experience to more guests,” she said.

Target announced the deal with Ulta in November but declined to share the terms of the deal. On Wednesday, retailers shared the list of featured brands, first-time locations, and fresh renders that feature backlit makeup displays and eye-catching orange and pink signs.

In each store, Target employees are specially trained by Ulta to recommend beauty products. Customers can also try on makeup products with testers – a feature that can be temporarily suspended depending on the status of the pandemic.

Kecia Steelman, chief operating officer of Ulta Beauty, said the minishops will have special displays and seasonal offerings like lotions or skin care products during the winter.

But they’re not the only retailers looking for 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 in beauty counters, makeup boutiques, and direct-sale brands from department stores. In suburban malls, they often go head-to-head in other categories.

Steph Wissink, retail analyst at Jefferies, said Ulta Beauty at Target was designed to be “an appetizer experience for Target shoppers,” designed to evoke the desire for the full Ulta experience.

However, the cooperation is “a delicate balancing act,” she said. Rather than renting spaces like Sephora from Kohl, Target Ulta essentially paid for license fees. It builds the stores, occupies them, and draws on the beauty retailer’s relationships with prestige brands.

For the deal to work, three different parties need to feel they have won: Target needs to use the upscale merchandise to increase sales in its beauty department and beyond. Ulta has to woo customers who shop at Target’s mini-store to its much larger stores. And prestige brands need to feel like they are being discovered by new buyers who become loyal fans.

She said those relationships could be at risk if you emerge as the clear winner. For example, she said that many Target shoppers could never go to Ulta stores or their website – or they could find a beauty product they love and buy it direct from that brand.

She said the replenishment purchases and where they take place will determine the success of the partnership.

“The three can win together – but I don’t think it will be the same,” she said. “There are natural points of tension that will arise and the consumer will ultimately determine who wins.”

Comments are closed.