Kohl’s is going all in with national beauty retail giant Sephora as the companies’ year-old partnership yields promising results.
The Menomonee Falls-based retailer plans to put Paris-based Sephora shop-in-shops in all 1,100 Kohl’s store locations, expanding from its original target of 850 stores total by 2023. Kohl’s is ultimately working to grow the partnership into a $2 billion line of business by 2025 as part of its long-term growth strategy.
Since August 2021, Sephora has opened 2,500-square-foot shops at nearly 600 Kohl’s stores and online, driving incremental sales growth and more than 1 million new customers to the chain, said Kohl’s chief executive officer Michelle Gass Thursday during the company’s quarterly earnings call.
The retailer is now working with Sephora to design a smaller-format concept to put in the remaining 300 locations, bringing the initiative across its entire store base.
“We are still in the early stages of this concept and will keep you posted on this exciting development,” said Gass on Thursday.
In the 200 Kohl’s stores that got Sephora shops last year, sales have maintained a high-single digit increase relative to the balance of the chain. In the nearly 400 stores that have opened this year, sales have increased in the mid-single digits, according to Kohl’s.
With the Sephora partnership, Kohl’s is tapping into a new customer segment that is younger, more diverse and shops more frequently than the average Kohl’s customer.
As their partnership grows, the companies are experimenting with ways to improve the customer experience, including a cross-company “Buy Online, Pick-Up In Store” service – allowing shoppers to buy on Sephora.com and pick up at Kohl’s stores – and the ability to purchase and redeem Sephora gift cards at Kohl’s stores, regardless of where the gift cards were purchased.
“We are excited about all that is ahead for Sephora and the impact this partnership will have on our business,” said Gass. “We are just completing the build-out of this year’s 400 stores, so the vast majority of Sephora’s impact is still in front of us.”
Kohl’s net sales dropped 8.5% in the second quarter of fiscal 2022, with earnings down 63% from the same period last year.
