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Target (TGT) to Set up Mini Ulta Beauty Shops Inside Stores

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Target Corporation (TGT - Free Report) has entered into a strategic long-term partnership with Ulta Beauty Inc. (ULTA - Free Report) . According to the agreement, Ulta Beauty will open mini cosmetics shops inside Target. This "shop-in-shop" concept will be put in place across select Target stores and online. As a result of the tie-up, Ulta Beauty’s emerging and prestige beauty brands will be available at more than 100 Target stores in 2021.

Markedly, the pandemic has altered consumers’ shopping behavior, directing traffic predominantly toward off-mall locations. This has hindered the performance of several mall retailers. Consequently, players in the space have been teaming up to benefit from each other’s strategic locations, omnichannel capabilities and market presence. Target and Ulta Beauty’s latest alliance reflects the notion.

Markedly, Target’s shares went up 2% during the trading session on Nov 10, while Ulta Beauty’s shares increased around 7.4%. Target, which currently carries a Zacks Rank #2 (Buy), has gained 17.4% in the past three months compared with the Retail-Wholesale sector’s rise of 5%. Meanwhile, Ulta Beauty, which also carries a Zacks Rank #2, has gained 21.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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More on the Ulta Beauty Collaboration

The partnership will help bring Ulta Beauty’s best-in-class offering to millions of customers who prefer the ease and comfort of Target’s one-stop shopping experience. Moreover, the collaboration will help beauty brands to expand on the back of Target’s leading omnichannel services. Also, Target will be able to expand its beauty business.

Markedly, Ulta Beauty’s products will be featured at more than a 100 Target stores from the second-half of 2021, alongside plans to scale higher in time. Target will dedicate nearly 1000 square feet of its retail space for Ulta Beauty mini shops, making it prominently placed next to existing beauty sections. Moreover, the current planned locations are likely to compliment Ulta Beauty’s existing store footprint.

To make this shop-in-shop concept a success, newly-hired Target team members will be trained so that they are able to serve as experts on Ulta Beauty’s prestige collections. The shop-in-shop service will also feature Ulta Beauty’s in-store digital discovery options such as GLAMLab, which is a virtual try-on tool that aids safe trial.

Additionally consumers will also be able to buy Ulta Beauty products from Target’s online platform. In this respect, qualifying online orders will be provided with free shipping services. Moreover online shoppers will also be able to avail Target’s contactless Drive Up and Order Pickup, and same-day delivery with Shipt across selected store locations. Order Pickup and Drive Up services will remain free for all orders. Management also highlighted that and the Target app will reflect the elevated appeal of the Ulta Beauty brand, which transcends to an immersive and engaging experience for exploring beauty products.

The collaboration of the two companies will be particularly beneficial for active loyalty program members. Both the retailers have more than 100 million loyalty program members. In addition to enhanced expertise and offerings, these loyal customers will be provided with exclusive rewards when they purchase Ulta Beauty’s products at Target.

Impressively, both retailers look well poised to take advantage of consumers growing inclination toward skin care products.

Wrapping Up

We note that retailers often adopt the shop-in-shop strategy for reaching out to more customers as well as expand product offerings. Moreover, Target isn’t new to the shop-in-shop concept. Last year, the company launched The Walt Disney Company’s (DIS - Free Report) shop-in-shop services across several Target stores and online. Other big-box retailers, such as Best Buy Co., Inc. (BBY - Free Report) have also been providing store-in-store facilities for leading brands across different categories.

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