J.C. Penney Co. and Sephora teamed up in October to create a new approach to American beauty retailing with the first of five new store prototypes that could spawn a new merchandising dynamic.
It was a marriage between a giant midtier department store boasting more than 1,000 doors and 50 million customers and a highly innovative retailer of hip niche brands.
Clearly, both Penney’s and Sephora view the combination as a way of extending their reach with new groups of customers. Myron E. Ullman III, chairman and chief executive officer of the $18.7 billion Penney’s, talked at the time about the chain’s broader mission of seeking “to build an emotional connection with our current customers and to bring new customers into our stores and onto [our Web site].”
David Suliteanu, president and ceo of the U.S. division of Sephora, views the historic alliance between the retailers as “a brand-enhancement opportunity.” He sees the payoff in being able to reach “many of those women who for one reason or another haven’t been able to visit Sephora.”
On Oct. 2, the first prototype opened in a new off-mall store in northern Fort Worth. It was followed later in the week by units in Queens Center Mall in New York; Glendale Mall in Glendale, Calif.; Aventura Mall in north Miami, and in Arden Fair Mall in Sacramento, Calif.
In each of the stores, Sephora boutiques were installed in prime locations in the heart of the merchandising core. The Fort Worth store boasts a 2,000-square-foot Sephora boutique situated squarely in front of the entrance, surrounded by career and contemporary apparel, jewelry and handbags. The total store measures 103,000 square feet.
In the other stores, the Sephora boutiques contain 1,500 to 1,800 square feet. In the Queens store, an existing unit, the Sephora installation has 3,000 square feet.
Within two weeks of the first openings, Deborah Weinswig, an analyst at Citigroup Global Markets, wrote in a report that the Penney’s-Sephora initiative was “off to a good start.” She drew some conclusions after a meeting with Ullman at the International Council of Shopping Centers Research Conference in Houston. Her overall conclusion was that the Sephora deal was one of a number of initiatives that is enabling Penney’s to go from the turnaround story that it enjoyed under previous ceo Allen Questrom to a future growth trajectory. Penney’s now has more of a brand focus, she wrote, rather than the earlier marketing strategy driven by a price.
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She noted that the Sephora connection could drive sales in fashion jewelry, intimate apparel, handbags and footwear due to increased shopper visits. Weinswig wrote that the average Sephora customer shops the beauty store 12 times a year, compared with four visits annually for the Penney’s consumer.
Penney’s and Sephora continue to move ahead. For next spring, the partners plan to install Sephora units in 19 Penney stores, nine of them new and the rest undergoing renovation. Plans for the fall are being mapped out now.
In the original round of store openings, the Fort Worth unit featured more than 50 brands, ranging from celebrity fragrances to dermatological skin care brands, like N.V. Perricone, to trendy, cool-girl color cosmetics staples like Benefit and Bare Escentuals.
Ullman, who earlier in his career oversaw Sephora as president of the selective retailing division of parent LVMH Moët Hennessy Louis Vuitton, said he chose the French perfumery chain as a partner because it is “the most revolutionary, innovative retailer in the beauty industry.” He added that the pairing was “a clear reflection of the transformation under way at J.C. Penney.”
Sephora’s Suliteanu said his motivation was to tap the opportunities of merging his chain’s beauty-expert persona with the vast audience of one of the biggest and most successful mid-tier retailers in the country. “It’s a big idea,” he said. “It’s not about opening a number of stores.” Another motivation was the lure of Penney’s Web site with its more than $1 billion in sales.
The boutiques in Penney’s are roughly one-third the size of the average, 4,500-square-foot freestanding Sephora store, so the Penney’s units are edited down to “the all-star team, category by category,” Suliteanu noted. According to estimates by sources, the Sephora in Fort Worth contained 3,000 stockkeeping units the day it opened, compared with 8,000 sku’s in the average freestanding store.