Just two weeks into the rollout of the initial 200 Sephora in-store shops, Michelle Gass, Kohl’s CEO, said the partnership is showing the potential to offer benefits in a myriad of ways.

According to Ms. Gass, the Sephora in Kohl’s shops are driving “extraordinary growth” in Kohl’s beauty business and boosting average unit retails (AURs) in the category.

“This is prestige beauty into categories that we’ve really never offered to this level,” said Ms. Gass on Kohl’s third-quarter analyst call. Early standout sellers include Fenty, Too Faced, NARS and the entry price point Sephora collection in makeup, Tatcha in skincare, Olaplex in hair care and Gucci and Armani fragrance.

Across the store, Sephora is supporting a mid single-digit sales lift to sales in stores where in-store shops were introduced and that’s expected to build in the months ahead as more customers learn about the shops.

Ms. Gass said Sephora customers are purchasing across a wide range of beauty categories and price points and tend to shop across the store. Roughly half are making purchases in at least one other category.

How big a win is Sephora for Kohl’s?
Source: Kohl’s

Kohl’s is positioning the 2,500-square-foot shops at the front of its locations, and placing growth categories, including active, alongside the shops.

In addition, over 25 percent of those shopping Sephora are new to Kohl’s. Ms. Gass said, “They are younger and more diverse, and we are successfully driving loyalty signups.”

Asked by an analyst if Kohl’s expected a similar sales uplift as when Amazon Returns were introduced to stores, Ms. Gass said both moves support traffic but described the comparison as “a little apples and oranges” because the Sephora partnership is “fundamentally transforming our brand and our business.”

“We’re finally in the beauty business,” she added. “It’s prestige. It’s making us an even more relevant, useful retailer. And then on top of that, we’re going to build a very big beauty business. So there’s a lot to like with this partnership — the traffic, getting into beauty and relevancy.”

Management plans to have an additional 400 Sephora shops open by late spring 2022 and 250 in 2023. Kohl’s owns the Sephora inventory and the two retailers share profits generated by the shops.



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