Dive Brief:

• Just a few weeks after Ulta's blockbuster deal with Target, Sephora has announced its own new partnership — with department store Kohl's. The deal plans for "at least" 850 Sephora shop-in-shop locations in Kohl's stores by 2023, and will eventually replace its partnership with J.C. Penney, a company spokesperson confirmed.

• Dubbed "Sephora at Kohl's," 200 of the stores will be open by fall of 2021, and the beauty retailer will also launch an online store on Kohls.com at the same time. The shop-in-shop experience will measure 2,500 square feet and will be located at the front of the store, according to a joint press release.

• The beauty retailer will offer over 100 brands as part of its Kohl's shop-in-shop experience, which replaces Kohl's current assortment. For Sephora, the goal is to grow its customer base and provide a convenient option for current customers, while for Kohl's, it's to draw in new and younger customers.

Dive Insight:

Beauty observers may be feeling a dose of déjà vu this week as another major player announces a shop-in-shop experience at a major retailer. Sephora's deal with Kohl's comes just a few weeks after Ulta announced a similar one with Target, set to begin around the same time frame and expand to hundreds of locations in the future.

For Sephora, the Kohl's partnership will eventually replace its current deal with bankrupt department store J.C. Penney. Sephora and J.C. Penney argued in court over the terms of their partnership in May, with the department store claiming Sephora tried to back out of their deal. The two settled the dispute with revisions to the deal, which left room for both to pursue other opportunities, a spokesperson said.

"Both Sephora and JCPenney jointly agreed earlier this year to added flexibility in our partnership agreement to pursue other opportunities, while continuing to work together to operate our installations responsibly until our scheduled partnership wind down in early 2023," a Sephora spokesperson told Retail Dive in an email.

The spokesperson also said that despite its newly inked retail partnership, Sephora still plans to open some 60 to 70 standalone stores next year, adding, however, that it "will continue to reevaluate future store openings, as well as our broader real estate strategy, based on our new partnership with Kohl's." The retailer had previously announced plans to open 100 North American stores in 2020 before the pandemic hit the U.S. in force. 

"This is not a pop-up collaboration, but an investment our brand partners can rely on for the long-term; as a company with a history of sustained decades-long partnerships, Sephora has every confidence in the future of this collaboration and the unique experiences it will bring to consumers across the U.S.," Jean-André Rougeot, president and CEO of Sephora Americas, said in a statement.

The company noted that it will bring convenience to current customers by serving them where they are, while bringing Kohl's a new consumer. Target and Ulta said much the same things in announcing their own partnership, with Ulta hoping to both deepen loyalty with current customers and acquire new ones through the deal. Ulta's shop-in-shops at Target have a smaller footprint, at 1,000 square feet each, compared to Sephora's 2,500 at Kohl's. Both plan for hundreds of eventual locations.

For Kohl's, the Sephora shop-in-shops bring an "elevated beauty experience" to stores and build on a years-long turnaround effort.

"Today's announcement is a perfect illustration of the bold moves we are making at Kohl's to accelerate our growth and reimagine our future for the next era of retail," Kohl's CEO Michelle Gass said in a statement.