J.C. Penney to add and expand Sephora shops in stores

Dive Brief:

J.C. Penney and Sephora on Monday announced they will add 70 new Sephora shop-in-shops and expand 32 existing concession spaces by 50%. That will bring the total number of Sephora shops in J.C. Penney locations to 650 by the end of the year, according to a company press release.
The larger spaces will accommodate more services, like Benefit Brow Bars, which will be introduced to 25 new and existing Sephora shop-in-shops. The discount department store will hire an additional 800 beauty consultants nationwide to provide other consulting services.
J.C. Penney has also expanded its online Sephora offering to include a broader assortment of products, tools, shades, colors and fragrances. J.C. Penney will also introduce a new online feature that will enable clients to book a comprehensive custom makeover with a Sephora beauty consultant.

Dive Insight:

The over 10-year-old partnership with Sephora represents one of the best moves J.C. Penney has made in recent years, leveraging concession retailing or a “store-within-a-store” approach that works well for both companies: J.C. Penney gets a boost from Sephora’s reputation and traffic, and the beauty retailer elevates its brand visibility.

The concessions typically offer fragrance and beauty products from close to 50 prestigious brands, including Lancôme, Marc Jacobs Beauty, NARS and Kate Somerville, as well as the Sephora Collection private label. Last year, J. C. Penney tested an expansion of new smaller formats that forgo that merchandise assortment in favor of solely promoting Sephora’s private label products.

But Monday’s announcement indicates that the retailer is going big. While last month J. C. Penney announced an assertive plan to shutter 138 underperforming stores nationwide (some 14% of its fleet), many of the remaining stores will see a boost to their Sephora operations, which have consistently been a bright spot in the company’s earnings reports. While the discount department store has struggled a bit in its turnaround, especially with apparel sales, the company turned a profit in the fourth quarter, supported by strong sales in home, its Sephora beauty concessions, salons and fine jewelry. Profit climbed to $192 million, or 61 cents per share, up from a loss of $131 million, or 43 cents per share, in the year-ago period. Q4 net sales dropped 0.9% to $3.96 billion from $4 billion a year ago, while same-store sales fell 0.7%.

Sephora helped revolutionize beauty retailing, removing the aloofness of the department-store beauty counter and bringing more freedom to try and buy. And an expansion of the partnership seems natural, considering it gives the mid-tier department store a major differentiator compared to rivals Kohl’s, Sears and Macy’s. With research showing that beauty consultation and beauty sales online are growing, J. C. Penney is also making sure that the partnership expands on its website.

"We are also taking an omnichannel approach to shopping Sephora inside J.C. Penney by strengthening our technology and infrastructure to reach new beauty customers through JCPenney.com,” CEO Marvin R. Ellison said in a statement. “We've launched the ability for customers to purchase Sephora online and pick up their order at a J.C. Penney store the same day. This is one example of how we're delivering on the customer's expectations for accessibility and convenience.”