Ulta to Open Hundreds of Shops Inside Target Stores

Target and Ulta Beauty announced a deal Tuesday to open makeup and skincare shops inside of hundreds of Target stores across the country. Target CEO Brian Cornell said starting in the second half of next year, shoppers will find a smaller version of an Ulta store in more than 100 of Target’s stores and on its website. Each “shop-in-shop” will be about 1,000 square feet with more than 40 beauty brands and a rotating assortment of products, from hair care and fragrances to lip gloss. Customers can shop in person or use Target’s same-day services, such as curbside pickup or home delivery by Shipt, to get their online beauty purchases. Ulta will train Target employees as beauty consultants.

Total Retail's Take: The partnering of two of the industry's strongest performers is big news for not only Target and Ulta, but also their competitors. While Target has seen its fortunes rise during the pandemic, helped by its designation as an essential business that allowed its stores to remain open, Ulta hasn't been as fortunate. The beauty retailer was forced to temporarily close its stores, leading to a nearly 27 percent year-over-year drop in same-store sales during the second quarter. In fact, with consumers going out less, beauty sales have been negatively impacted. About 70 percent of consumers scaled back their use of makeup this year, according to the NPD Group.

By partnering with Target to place shops within its stores, Ulta gains access to the retailer's growing audience in prime real estate. Furthermore, Ulta's products will be featured on Target's website, a fast-growing part of the big-box retailer's business. In return, Target aligns itself with a leading retailer in the fast-growing beauty category, building upon its own investments in the category. This looks to be a win-win scenario for Target and Ulta, with business benefits available to both parties — and a potential blow to competitors such as Walmart and Amazon.com (Target) and Sephora (Ulta).