At Smaller Stores, Kohl’s Will Open Scaled-down Sephora Shops
Kohl’s Corp. is creating scaled-down Sephora shops to fit into its smaller locations.
For fall 2023, the plan is to have 750-square-foot Sephora shops operating at 50 Kohl’s locations which are on average 35,000 square feet and would be unable to accommodate the typical 2,500-square-foot Sephora shop-in-shop. Kohl’s full-size stores average 80,000 square feet.
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The small-format Sephora shops will merchandise products by category rather than by brand, as seen in traditional Sephora stores and at the Kohl’s Sephora shops-in-shop. “Think best of foundation, best of fragrance, etcetera,” a Kohl’s spokeswoman explained.
Among the brands being merchandised in the smaller formats are, in makeup, Rare Beauty, Fenty Beauty, NARS, Charlotte Tilbury, Sephora Collection, Ilia, Lancôme and Too Faced.
The skin care/body care category offers Dr. Dennis Gross, Sol de Janeiro, Biossance, Dr. Jart and Supergoop.
In hair, the Briogeo, Amika and Drybar brands are displayed and the fragrance category includes Giorgio Armani, Prada and YSL.
While 50 scaled-down Sephora shops are in the works, “We haven’t shared the total number of small-format Sephora shops,” said the spokeswoman. “By the end of 2023, we will have a Sephora presence in more than 900 of our stores, including more than 850 of the 2,500-square-foot shops and 50 of the 750-square-foot shops. We are on track to have a Sephora presence in all stores by 2025.” Kohl’s operates 1,100 stores.
Customizing its Sephora shops to fit into additional Kohl’s locations reflects how confident Kohl’s is with its Sephora strategy and how critical it is to the retailer’s turnaround efforts.
“Sephora at Kohl’s continues to be a bright spot for the business as the partnership outperforms expectations,” Nick Jones, Kohl’s chief merchandising and digital officer, said in a statement. “Opening these small-format Sephora at Kohl’s shops is allowing us to deliver a prestige beauty experience to even more shoppers across the country, further enhancing the customer experience. Additionally, the expertly curated assortment of Sephora’s bestselling products in these small shops are merchandised in a way that makes it easy to find popular favorites, and discover new brands and products.”
According to the Menomonee Falls, Wisconsin-based Kohl’s, total beauty sales were up 150 percent year-over-year in the first quarter of 2023. The company also said it continues to gain market share in beauty. The company also indicated in its first-quarter report that comparable beauty sales were up in the midteens in the 200 shops opened in 2021, and the sales trends in the 400 shops opened in 2022 continued to exceed the plan.
However for the company overall, sales decreased 3.3 percent to $3.36 billion, from $3.47 billion, and comparable sales decreased 4.3 percent for the quarter ended April 29. Net income was flat at $14 million.
The Sephora rollout has also been expensive, requiring a lot of cash. Installing the Sephora shops leads to further changes on the selling floors to better position bestselling categories and brands. From an expense and capital perspective, the smaller Sephora shops will add some incremental capital spend and expense in the third quarter relative to last year, the company said. But cash is a concern, considering at the end of the first quarter of 2023, Kohl’s had $286 million in cash compared to $646 million at the end of the first quarter of 2022. Kohl’s ended 2022 with $153 million in cash versus $1.59 million at the end of 2021.
Just like the 2,500-square-foot Sephora shops, the small-format shops are located at the front of the store. Most often women’s, young women’s and handbags are adjacent to Sephora at Kohl’s. “That said, given the unique layouts and architecture of our stores, the adjacent departments do vary,” the spokeswoman added.
Kohl’s in January began testing five small-format Sephora locations in West Jordan, Utah; North Phoenix, Arizona; Lake Wales, Florida, and Sussex and Delavan, Wisconsin. “These stores drove solid beauty sales and exceeded expectations, giving us confidence in the wider rollout to 45 additional stores by the end of 2023,” the spokeswoman indicated. “The smaller footprint allows us to bring the Sephora at Kohl’s experience to our small-format Kohl’s stores that may not have been able to accommodate a full-sized shop.”
In the 750-square-foot shops, merchandising by category rather than by brand “creates a simplified shopping experience for customers that may be unfamiliar with Sephora or the brands we carry and leads to efficient stores as the overall assortment is the curated best of the best within Sephora.”
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