Kohl’s CEO Michelle Gass On ‘Game-Changing’ Sephora Tie-Up And Its Big Bet On Beauty

“Game-changing” is how Kohl’s CEO Michelle Gass characterized the partnership with Sephora it announced today, and the impact it will have on the retailer’s beauty business.

“It’s a massive deal,” Gass said in an interview. “We’ve been looking at the beauty opportunity for a long time. We’ve put a greater emphasis on beauty. We were doing [nicely.] We wanted to make much bigger, bolder progress.”

Sephora at Kohl’s, the 2,600-square-foot beauty destinations, are designed to look like Sephora’s own stores. At Kohl’s units with two doors – about 80% of the fleet – Sephora will have a dedicated entrance, its logo on the facade. “That’s how much we believe in this partnership,” said Gass.

The shops will be prominently located at the front of stores, with the first 200 Sephora at Kohl’s shops-in-shop bowing in fall 2021. Kohls.com’s online beauty selection will exclusively showcase an expanded Sephora assortment. The concept by 2023 will expand to at least 850 stores, Kohl’s said.

Sephora at Kohl’s will provide immersive and elevated experiences combining Kohl’s customer reach and omnichannel convenience with Sephora’s prestige service and selection of premium products.

“Beauty is expected to grow over the next five years,” Gass said. “We’re significantly under-represented. We’ll tap into that.” While beauty is only a modest low single-digit penetration of the business, Kohl’s has driven steady growth of nearly 40% over the past five years, Gass said during the retailer’s third-quarter earnings call last week. Gass also made the bullish pronouncement that Kohl’s has its sights on tripling sales and driving incremental traffic.

“As you would imagine, with a deal of this magnitude, we’ve been in conversations for a long time, many months,” Gass said.

Gass said Sephora at Kohl’s aims to make aspirational beauty products accessible to more consumers. “This is an extraordinary time of change,” said Gass. “I’m thrilled to partner with Sephora, a brand that shares our values and passion for innovation and reinvention. This is a perfect illustration of the bold moves Kohl’s is making to accelerate our growth and reimagine our future for the next era of retail.”

The new deal will allow both retailers to grow their respective customer bases. Sephora, which operates 500 stores in the Americas, will gain access to most of Kohl’s 65 million consumers who shop its 1,150-plus locations, with limited overlap between the two retail networks. Gass said, “We’re absolutely expecting younger customers.”

Kohl’s has been on a mission to attract younger consumers for several years, launching new brands such as LC Lauren Conrad, PopSugar, and creating the Pinterest-inspired, trend-oriented Outfit Bar. The retailer has also shown its propensity for innovation and taste for risk. Case in point, Kohl’s deal with Amazon
AMZN
to accept returns on behalf of the digital behemoth.

“This is not a pop-up collaboration, but an investment our brand partners can rely on for the long-term,” said Jean-André Rougeot, president

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