Brand Founders And Execs Weigh In On Sephora’s And Ulta Beauty’s Big Retail Partnerships
In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask 28 founders and executives: What do you think of the recently revealed partnerships between Ulta Beauty and Target, and Sephora and Kohl’s? How do you predict they will change the retail landscape and the beauty industry?
- Janelle Friedman Founder, Good Janes
The partnerships between the major chains and the big beauty retailers are a sign of the times. While the sales in the big beauty retailers have declined, the partnerships with the major chains gives them more exposure to more customers and an opportunity to sell more product. It can be very beneficial. It can also give new customers a new experience and give the beauty retailers more brand awareness.
It is what the big cosmetic companies have been doing in major department stores for years. We think the retail landscape is in the process of changing for the better. As a result of these partnerships, beauty products will become more accessible and less expensive. More women and men will enjoy the products that companies like ours have to offer.
- MEHIR SETHI Founder, True + Luscious
I think it's a good strategic move by both retailers to extend their reach into high-traffic chains like Target and Kohl's. However, having closely observed the now defunct Sephora in J.C. Penney model over several years, the key to success will be well-planned, imaginative merchandising tailored to visitor demographics and purchase behavior metrics. Price points will be important and assortments like Scouted by Sephora, indie brands and mid-range beauty with less emphasis on prestige like Christian Dior, La Mer, et al.
- Claudia Rosa Co-Founder, Fācit
In my opinion, this is a win across the board for the consumer, not only from a convenience perspective, but also from an accessibility and awareness standpoint. Those who may not have had access to a brick-and-mortar Ulta or Sephora now have an opportunity to try (a huge part of conversion) and explore new brands and products in store versus being limited to guessing online.
The other major piece here is education. The level of knowledge that Sephora and Ulta employees have for their products in store is very high and, assuming that the Target and Kohl’s employees can match that level of education, the customers will no doubt benefit. As for the brands, awareness and education are two major KPIs and an increase in either is good for business.
- Lauren Haynes Founder and CEO, Wooden Spoon Herbs
Recently Jaime Schmidt, founder of Schmidt's Naturals, said, "Don't assume you know where your customers shop." I'm a big fan of meeting our customers wherever they shop, and this is an extension of that. As long as the customer is still getting the product education that our products require, I am for these store-in-store concepts. It makes the shopping experience more special overall.
- Shubhangini Prakash CEO and Founder, Feather & Bone
Given the current COVID environment, and many beauty retailers struggling to keep their own physical doors open, the partnerships seem logical. Plus, these major chains already have existing beauty sections, so an expansion makes sense. However, these partnerships/companies have polar opposite branding and customer bases. Historically, beauty retailers such as Sephora prize themselves on being upmarket and do not keep brands that are also available at major chains. The price point of those brands is a lot higher than the beauty brands at major chains. With companies such as Sephora entering chains such as Kohl's, it will be interesting to see whether or not Sephora sticks with their traditional brand mix or evolves, whether it sticks with its price points or evolves.
How the brand value of the beauty company is affected and perceived will also be important to watch. For example, I recently saw Crabtree & Evelyn at Costco. I wondered if Crabtree’s brand value lowered from being at Costco. Or did Costco elevate its brand? So, if a high-end brand can sell successfully at Costco and do so without losing its brand value, the need for beauty retailers could cease. Would Target/Kohl’s need Sephora or Ulta in the end? It would then seem that a high-end brand and mass-market brand could sit on the same shelf and perform successfully. It also tells us that customer bases are merging. The whole industry’s competitiveness could reach new heights.
- Moumita Sahoo Founder, ZAILA
The recent partnerships between Ulta/Target and Sephora/Kohl's are smart moves for the beauty giants. Due to COVID-19, consumers are cutting down on how many shopping trips they make. The casual trips to Sephora and Ulta just for fun are over. Having the opportunity to shop for your favorite beauty products while also picking up clothing and other necessities is amazing.
The partnership between Ulta and Target feels right in relation to pricing and overall brand compatibility. However, the Sephora/Kohl's partnership surprised me a little. I don’t personally view Sephora as being compatible with Kohl’s. To me, it would have made more sense in terms of price points, product offering, and branding if Sephora had partnered with a store like Nordstrom or Macy’s.
The future of retail is now more efficient, but I think the magical experience of walking into a giant Sephora or Ulta is hard to replace. As a beauty lover, I would still prefer to go to Ulta or Sephora stores instead of combining my beauty shopping experience with clothes or necessities.
- Lisa Richards Co-Founder, RPZL
I think that these partnerships are the next step in partnerships that have been happening in the beauty industry for several years. For example, boutique beauty brands entered partnerships with renown national retailers for beauty counter space. One that comes to mind is Mario Bedescu. [The brand] started out as an elite niche beauty spa in New York City and grew to national recognition by its partnership with Macy's. Now, Mario Bedescu's products are used by tweens, teens and women across the country!
The Ulta/Target and Sephora/Kohl's partnerships will bring the shop-in-shop concept to a very wide clientele. We have also used this model when we partnered with Warren Tricomi to be the in-house extension expert. My hope would be that the big beauty retailers are able to maintain sufficient independence to continue to introduce women to new emerging brands to support the growth of the beauty industry at large.
Overall, I think the partnerships between big beauty retailers and major chains will be a net positive for the beauty industry as it will expose products to a wider net of consumers. While this might transfer some sales from the beauty retailers to the major chains, it will ultimately grow beauty sales. This will lead to stronger companies and products for all retailers to take advantage of.
- Ada Polla CEO, Alchimie Forever
I am loving these partnerships as they are validation of the multichannel distribution model. More specifically, I think the Sephora/Kohl's partnership is a way for Sephora to reach more customers, specifically in middle America, where Sephora is not present, yet Ulta is. This is a way for Sephora to open a lot of stores near Ulta quickly and take market share. Kohl's fills a white space for Sephora.
The Ulta/Target partnership is different. This is more like “buying your competition.” Ulta and Target seem to have more overlap in terms of customer base and geographical presence. It is less about filling white space and more about joining forces instead of competing against each other.
- Galina Achkasov-Portianoi Founder, The Curiosity Gap
I think, in many cases, it is a blind attempt to remain relevant in the face of vast changes brought forward by the pandemic while trying to forge partnerships that might attract a different customer base. In order for partnerships to work, there needs to be synergy and harmony in the customer service and brand promotion strategies going forward as well as the complementing strengths that will be unified.
If skill sets are too similar, then such partnerships are more likely to fail. It would be a mistake to run head-on into a partnership just because others are doing it without examining the merits of alliance from short to long term. Partnerships need to help reinvent beauty retail, bringing along services that will attract new customers while retaining existing ones.
- ANNE BEAL Founder, AbsoluteJOI
One challenge for these partnerships for brands is managing brand reputation for luxury brands that will now be available in mass market venues. This may require that we provide a different set of offerings that give a luxe experience to the customer, but at a mass market price point. Since Sephora plans to bring most of its SKUs to the new locations, it isn’t clear if brands will have control over where our products are being placed. Over time, we’ll see if we have any input into our product placements.
- Dara Levy Founder and CEO, Dermaflash
I think these partnerships are pure genius, what a brilliant way to expose a whole new group of people to the world of upscale beauty. To me, these partnerships represent an exciting marriage between stores that have high customer loyalty, engagement and, dare I say, foot traffic? I think this cross-pollination will ultimately be very positive. Every woman deserves gorgeous skin, and many might be completely unaware of the myriad of options available to them through a beauty-centric store.
It also represents an opportunity to surprise, delight, and engage with the consumer that before now might have felt she did not have access to the world of beauty outside of drugstore brands. Ultimately, I think this will translate positively for brands as far as reach and sales. For the stores, it could provide exponential lift in sales and return customers, while promoting customer engagement, both online and in store.
- THAI-ANH HOANG Co-Founder and CEO, EmBeba
I think this is a combination of cost strategy and trying to broaden the footprint for the retailers while reaching a new demographic. The store-within-store format is not new, but is definitely more appealing now as a discovery destination rather than a shopping destination.
Uncommon Goods is a good example of this format. I do think this trend will continue to expand as retailers seek to strike a balance of appealing to a new set of consumers that they couldn't tap into before. It's a win-win for independent brands because this might open the door for more opportunities in these channels. To me, it's mall 2.0.
- JULISSA PRADO Founder and CEO, Rizos Curls
I think this is a really interesting major change in the retail landscape and lots of people are eager to see how it will play out. We’re seeing this more and more. Ulta Beauty at Target, Sephora at Kohl’s, and even major department store Barneys has now shut down and is reemerging as a shop-in-shop inside Saks. Ultimately, there is a major shift in how consumers shop triggered by the rapid growth of e-commerce and the customer demand that retail spaces do not just house stuff, but offer a unique and engaging customer experience. The key both online and in-store will be that customer experience factor that both brands and retailers are able to provide.
Ulta Beauty at Target feels like a very synergistic move, and the overall response from customers and social media has been overwhelmingly positive. It expands Ulta’s retail footprint and elevates the customer experience at Target, which has been key to jump onto beauty trends and customer demands to be more inclusive in their offering. Early this year in 2020, Target began carrying our line Rizos Curls and has had tremendous success for its ability to successfully resonate with customers by offering a clean and natural ingredients Latina-owned textured haircare line. Ulta likewise has been very keen to connect with gen Z customers both in their retail approach and assortment.
Sephora at Kohl’s doesn’t seem to be set up for success. We already saw what happened with a similar concept with J.C, Penney, and the Kohl’s move feels like an odd couple. Having looked through customer responses on social media, they are overwhelmingly negative. It does not feel like a synergistic move, and it will be interesting to watch if Sephora is able to revive the lost footprint at Kohl’s.
As an industry, we are constantly evolving and catching up to the rapid shift in consumer trends. Today, customers don’t want to have to just go to one place to get what they want. We live in an instant gratification society where customers want to be able to purchase what they want wherever it is most convenient, whether online on a brand’s website, Amazon or in-store at a department store or specialty. Retail partnerships are a key move that I believe will cement a strong mark on the retail landscape, but they have to be the right partnerships that will resonate with customers.
- YOKI KIVA HANLEY Owner and President, Itiba Beauty
As we continue to move through this pandemic and our movement continues to be restricted for the greater health and safety of us all, I feel we will see even more partnerships like this over time. People want to have the ability to travel and get their shopping done with as few trips as possible, so this makes sense to happen.
I know we will soon see partnerships with grocery store chains soon. Personally, I do feel this may begin to make it just a little bit harder for smaller indie brands to get through in the market. With the big beauty retailers joining with the major chains, shelf space is going to be reduced and the focus will be on guaranteed movers, and I feel the chains that may have been willing to take a chance on a new up and coming will be less inclined to do so moving forward.
- SHALOM LLOYD Founder, Naturally Tribal Skincare
The retail landscape is rapidly changing and facing an incredibly tough time with critical decisions needing to be made to ensure survival beyond 2020. The commercial landscape is undergoing rapid transformation, and the future looks to be centered around human connection.
Let us be clear, as we operate in an industry where growth is forecasted, an industry where in-store sales are declining and online sales on the increase, change and evolution are inevitable to truly realize this growth. Growth and transformation through partnerships (sometimes very unlikely partnerships) can help foster innovation, particularly if the partnership goal has the consumer experience at the core of it. These marriages have played to each partners strength, and I believe that we can expect more partnerships between the big beauty retailers and major chains in the future.
There are concerns around brand dilution however, trust, convenience, alignment on brand values and cost will facilitate such partnerships in my opinion. There are three things that come to mind for any partnership in our sector:
1). Value to the consumer. In addition to speed, convenience and choice, consumers are going back to basics, making us aware of their preferences, making experience a priority and forcing companies and brands in the beauty sector to reposition. Repositioning, having purpose and impact is a sure call retailers (large and small) are responding to by ensuring that sustainability [and] ethical practices mean more than just words.
2). Value to independent brands. This is the funnel for innovation where larger retailers are now working to bring in nimble, quirky and value-led brands into the mainstream market. This will be a value-add for larger retailers that will facilitate the drive towards changing the retail landscape. These partnerships provide the experience that is unattainable online and will bring innovative brands to life for the consumer, an approach that will also provide an opportunity for indie brands to expand.
3). Value to the industry. Consolidation and saving retail through well thought through partnerships will be welcomed by the market. The coming together of large retailers is the beginning of the change and insight into what is to come where consolidation and collaboration of luxury outlets and that of the mainstream outlets seems to be a new norm.
Will the marriage of big beauty retailers change the retail landscape and industry as a whole Absolutely! The changes are just beginning. We will see more investment, more partnerships, all geared towards bringing beauty back.
- MK MENIKHEIM Founder, The Well Organics
The shop-in-shop concept is wonderful for customers, beauty retailers and major chains. In the case of Ulta and Target, they will both benefit by expanding their loyal customer base. These types of partnerships are beneficial to customers as they allow for increased product offerings. Smaller beauty brands have a great opportunity to reach a larger audience in a major chain store, and I think that customers will appreciate the introduction as well as the access to new beauty products. A Target run for necessities now becomes a shopping and sensory opportunity to explore and experience smaller beauty brands, a win for all.
- JUE WONG CEO, Olaplex
These partnerships are a response to what consumers want: convenience. I see this as a win for everyone: consumers, brands and retailers. Consumers will have better access to products, brands will reach a wider audience, and retailers are expanding their footprint faster than they otherwise would than going on their own.
- Lan Belinky Co-Creator, Boscia
It is a very clever move We are in the middle of a retail evolution. Beauty specialty brick-and-mortar business took a huge hit with COVID-19 because these stores were simply not allowed to be open. With this new partnership and strategy, it allows these retailers to be open at some brick-and-mortar capacity. While digital will continue to grow, it is critical to revitalize the brick-and-mortar business piece. I feel we will continue to see shifts in the retail space, and we will see more unpredicted partnerships.
- Christopher Merkle Founder, Mime
If we look at Sephora in J.C. Penney a few years ago and now Sephora in Kohl's, you'll see these brand partnerships are going to continue to grow. In the Sephora partnerships, the beauty brand gets retail space at a discount to increase store count, while the retailer has yet another last chance to bring a younger, more modern customer into their store.
Conversely, when Ulta partnered with Target, this appears as a very good benefit for both since they share a common customer persona. Additionally, as we've seen during COVID-19, Target has been able to remain open as an essential business where other beauty retail stores have not. This positions Ulta to be an always-open beauty retailer, future-proofing itself for additional government-mandated shutdowns or things outside their control, an investors dream.
- Lindsay Holden Co-Founder, Odele
I think they are great. These partnerships are making more brands more accessible to more people and aiding in the discovery of new brands to new audiences. If done right, protecting/adding to the customer experience, it’s a win all around for the brands, for the retailers and for the consumer. I personally love the idea of more prestige at mass! Beauty routines often include a wide range of price points. I’m just as loyal to my $6 mascara as I am to my $100 c-serum. I can’t wait to shop them both in one spot.
- Jonathan Shapiro CEO and Founder, Mindset Wellness CBD
I think collaborations or partnerships of big and small are the future. I did them in fashion, and I am now rolling them out in CBD. I think you'll continue to see a wave of celebrity, influencer and brand collaborations. That's why creating a brand with fans, not just a product with customers, is crucial to success in today's landscape.
- Dimitra Davidson President and COO, Indeed Laboratories
When we launched our brand 10 years ago, our idea was to make quality skincare available and accessible to consumers everywhere. Personally, I wanted to buy good quality and affordable skincare where I bought my everyday staples. This is just another step in the direction of accessibility, and I think it’s exciting for both brands and consumers!
- CHARLOTTE KNIGHT Founder, Ciaté London
The beauty landscape is constantly changing and evolving. Over the past few years, we were seeing many experiential beauty shopping destinations, which now due to COVID have closed. I think a lot of brands and retailers understand that they need to diversify in the ways they reach the consumer as a result and this is the latest iteration of that. Beauty has always been part of a full look, feel and lifestyle. To partner with these major chains makes sense. For the consumer, they can not only shop for all in store, but also combine shipping costs online. For the brands and beauty retailers, it’s a great way to reach another consumer group. It’s a win-win for all.
- Kelsey Bucci Founder, Paris Laundry
I don’t think it is anything new, especially when it comes to Target. They have created successful partnerships with other brands and retailers before (hello, Starbucks). I think it’s a very strategic move for Ulta, especially after this year and a pandemic. Going from a nonessential business and being able to open up select storefronts inside of a major retailer that is considered essential is smart. As far as smaller beauty retailers and e-commerce, I don’t think it will change too much for us. We rely heavily on that one-on-one customer experience and offering brands that you can’t always find at larger retailers.
- KE JUN QIN Founder, Baseblue Cosmetics
Right now, there is definitely room to elevate the in-store shopping experience for consumers, especially during the beauty purchase process. These partnerships are exciting as I think they offer buyers more access to a wider range of products than they have had available to them in the past. As beauty and makeup products become increasingly more personal, the availability of more all-inclusive collections delivers a more robust shopping experience. It also gives consumers the opportunity to learn more about the genesis of the product, as well as a brand's story.
I find that in the long run, these interactions lead to enhanced and more positive customer relationships. In addition, these partnerships can lead to more focus on optimizing a brand's digital/technological experience, allowing them to adapt even more to the beauty consumer's needs.
Even though online purchasing and e-commerce is a huge piece of beauty revenue, I believe there is still a significant percentage of shoppers who look forward to and seek out in-store engagement. No amount of AI, or online chats, or reading of reviews can fully replace face-to-face conversation and the tactile nature of sampling, testing, and trying in the customer relationship-building phrase. It is so important to allow customers to experience products in person, before they make the purchase. When a potential customer touches our products, they can truly see, touch, and feel how much effort our team has put into the research, development, and execution of that item- and that carries weight, ultimately connecting the consumer with our true brand value.
With more store locations, I imagine there will be opportunities for a more dynamic store environment, with faster product movement, and larger touch points of a brand's portfolio and offering. The one-stop shopping solution can potentially boost traffic to the store and to their website. For many reasons, I am excited for this new chapter and evolution in beauty buying.
- DONAGH QUIGLEY Founder, The Handmade Soap Company
Ultimately I think it will be a good thing. Retail is in a state of flux, as the saying goes “Change is the only constant in life” so I think new formats are vital in this next stage of retail and both those partnerships “feel” right, there is nothing incongruent about them. The danger is, though, further homogenisation of the retail space, but I would hope that these partnerships are mindful enough to avoid that pitfall. Personally, I believe that the big movement in the future of retail will be the rise of the independent store, which showcase experiential offerings and that celebrate craft and expertise.
- ROMAIN GAILLARD Founder, The Detox Market
Retail partnerships are always interesting and have been happening for a long time. The proper approach is getting clear on the problems you are trying to solve, whether it’s determining the number of stores, types of clients, or overall strategy plan. With these types of partnerships, it seems companies are often trying to solve a short-term problem, rather than approaching it as a long-term opportunity. Clear, cohesive alignment is what makes a successful partnership.
This year, COVID-19 has provided a chance to step back, recalibrate, and think about potential partnerships from an upstream vantage point. We have been approached quite a few times, and our reasons for passing on such opportunities has to do with lack of mutual alignment and goals. I think these big-brand partnerships are still in the trial phase and ultimately will not reshape the entire retail landscape, though without a doubt, 2020 has transformed it on its own.
These are incredibly exciting developments for the beauty industry as it signals a real democratising of the beauty industry and recognises the broad demographic it serves. Whilst we hope there will always be room for the experience of buying beauty in a luxury environment it also makes sense that consumers want to be able to pick up their beauty products whilst going about their daily business as opposed to their favourite brand only being available at niche or department stores.
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