Is Kohl’s putting too many of its eggs in Sephora’s basket?
The Sephora @ Kohl’s store-within-a-store concept is working really well for both retailers one year after its debut. The numbers seem to support that. So, why hasn’t all the good news surrounding this partnership done more for Kohl’s results — or is that simply too much to ask?
Kohl’s last week said that it is rolling out Sephora @ Kohl’s shops in all remaining stores that do not already have one. Current plans call to have 850 of the shops operational by next year before moving the concept into the rest of Kohl’s stores.
The retailer said that the remaining 300 or so stores (Kohl’s has more than 1,100 nationwide) will get Sephora shops designed with a footprint smaller than the typical 2,500-square-foot configuration currently in its stores.
“We are incredibly proud of how our companies have come together so seamlessly to create a truly unprecedented and unique in-store experience,” Michelle Gass, Kohl’s CEO, said in a statement. “We couldn’t be happier with how our partnership with Sephora continues to perform and achieve the goals we set out to accomplish. Our success to date proves that this partnership is working, and this expansion is the next, exciting chapter in our history together.”
Sephora @ Kohl’s has been a success story with the first 200 shops that opened in 2021 maintaining high single-digit percentage sales gains. The nearly 400 shops opened this year have produced mid-single gains. The concept is expected to produce $2 billion in annual sales by 2025.
Customers who shop Sephora @ Kohl’s tend to be new to the chain, younger and more diverse than its typical customers. Kohl’s says that it has acquired more than one million new customers since launching the in-store beauty concept and that these customers visit more frequently than Kohl’s-only shoppers. Roughly half of the beauty customers attracted to Kohl’s also buy from at least one other category in the store.
Ms. Gass, speaking last week on Kohl’s second quarter earnings call, said Sephora @ Kohl’s is “a key cornerstone” in her company’s strategy to become “the leading destination for the active and casual lifestyle.”
Kohl’s CEO said the two companies are looking for other opportunities to work together.
“We’re currently testing cross-company BOPIS, where purchases made on Sephora’s website, sephora.com, can be picked up at Kohl’s stores, creating an incredibly seamless and convenient experience for our customers,” she said.
- Kohl’s and Sephora Announce Planned Expansion of Sephora Presence to All Kohl’s Stores – Kohl’s
- Kohl’s Reports Second Quarter Fiscal 2022 Financial Results – Kohl’s
- Kohl’s (KSS) Q2 2022 Earnings Call Transcript – The Motley Fool
- Will smaller, more localized stores work for Kohl’s? – RetailWire
DISCUSSION QUESTIONS: Is Kohl’s betting too heavily on its relationship with Sephora to lift results? What are the other cornerstones that Kohl’s is building its business in addition to Sephora?