Ulta Will Open Mini-Stores in 100+ Target Locations

Target saw rivals like Walmart and CVS signing deals with beloved beauty and wellness brands and raised them an entire retailer.

Ulta will open 100+ mini-stores within Target locations by the end of 2021, the retailers shared in a joint statement yesterday.

• Ulta will provide a rotating roster of 40+ “established and emerging prestige beauty brands.”
• Target will also stock Ulta products on its website—allowing Ulta to access Target’s curbside pickup and same-day delivery services.

In the eye of the shareholder, the tie-up’s beautiful. Yesterday, Ulta shares hit their highest level since before the pandemic, per the WSJ.

Blending experiences

Ulta and Target epitomize a trend spotted early in quarantine: Beauty brands need an essential presence for in-store survival. Target’s beauty sales increased by more than 20% in Q2 while its stores remained open; Ulta’s sales were still 10% below pre-pandemic levels after its stores reopened in July.

One blemish? Since 2019, Target has renovated hundreds of beauty sections and courted new brands. But its efforts to boost more affordable brands and private label offerings could be outshined by a glossy new neighbor.

• Sucharita Kodali, VP and principal analyst at Forrester Research, told Retail Brew that price point, product type, and location of the shop-in-shops will determine whether Target’s private labels or existing partners can compete with Ulta-lite.
• Kodali also noted that Target still benefits in that scenario, since the partnership could provide access to “brands it never had,” like the Estée Lauder portfolio.

Another angle: Together, Target and Ulta’s loyalty programs boast 100+ million combined members. But Kodali notes that “double dipping,” aka combining loyalty benefits, could backfire on Ulta. If shoppers are choosing between storefronts for points, they’ll pick the one with products in several categories.

Bottom line: In the Covid-19 economy, even category leaders like Ulta need to hitch their carts to an essential retailer.