Kohl’s just finished adding beauty departments to all its 1,100 stores a couple years ahead of schedule.
Getting into the beauty business with top prestige brands of Lorac, Pür, Bliss and theBalm, is a key part of Kohl’s multi-year turnaround plan. Overall, sales have stalled in recent years following a long run as one of the nation’s fastest growing retailers. Now, as one of the mature chains, it’s looking for sales gains from its existing stores.
Beauty was a category that was “a missing link,” said chief merchandising officer Michelle Gass. She joined Kohl’s in 2013 after 17 years with Starbucks where she cooked up the chain’s hot food strategy.
Skin care and beauty are part of an overall health and wellness focus that Gass said she wants Kohl’s to develop with partners like Under Armour. The fast-growing athletic brand will be in Kohl’s stores next spring.
Kohl’s is investing in its beauty staff, Gass said, and that’s why this week it brought together 1,200 of its store staffers from across the U.S. to the Gaylord Texan to attend classes held by 30 of its beauty vendors.
The expense is justified, she said, comparable store sales got a 2 percent lift as beauty departments were added to Kohl’s stores.
Active and wellness categories, which Gass said includes everything from juicers, wearables and sleep aids to active wear apparel and shoes for the whole family, are a $3 billion a year business for Kohl’s, Gass said. Fitbit fitness trackers and accessories alone are a $100 million business for the chain, she said.
“A customer seeking a healthy life as a trend isn’t going to change,” Gass said. “And it comes full circle back to beauty and leading a fulfilled life.”
Beauty evolves
Kohl’s is playing catch up in the beauty business that for years was the stronghold of upscale department stores who demanded and got distribution exclusives from the big prestige beauty brands such as Estee Lauder and Lancôme.
“We’re trying to reach the customer in the right environments,” said Tim McMeekan, chief executive officer of Lorac Cosmetics. Kohl’s is an important customer for Lorac which had set up 36,000 square feet showroom for the Kohl’s store beauty staff.
Lorac’s largest customer is Ulta Beauty which together with luxury brand company LVMH’s Sephora, Bluemercury and other specialty stores have changed the beauty retail landscape.
Ulta, J.C. Penney and Kohl’s benefit from prestige brands going where the customer is going.
Jeff Askenas, vice president of cosmetics, joined Kohl’s four years ago from Ulta and found “no strategy for beauty” when he arrived. “We thought it would take us six years to be in all the stores, we did it in three and a half years.”
The Lorac brand had just left Sephora inside J.C. Penney and Askenas picked it up and used his relationships to add a few more: Pür, Cargo and last year, spa brand Bliss. The Kohl’s beauty departments range in size from 670 to 1,000 square feet. For impulse buying, Kohl’s has added displays near the checkout lines for travel and trial size skin care and cosmetics.
It’s moved hair dryers and irons from the home section into beauty departments and sales of those items have increased, Askenas said.
Starting with the holiday shopping season, Kohl’s will be adding gift sets and limited assortments from new brands, he said. Lorac’s showroom featured rose-gold packaging for new holiday merchandise that will be in stores in October. TheBalm, a family-run brand with clever retro marketing has new color palette kits for the holiday season.
Kohl’s steps in
At the beauty event this week, store staffers are being challenged to create their own in-store customer events when they go home for a chance to win prizes.
Kohl’s expansion into the beauty business is an acknowledgement that its customer were buying cosmetics, but from someplace else.
“Our customers love Kohl’s and Kohl’s cash and many brands needed an alternative option,” he said. “It’s also an acknowledgement of a department store downturn.”
When Estee Lauder is putting its namesake brand into Ulta that’s a big change, Askenas said. Macy’s closing 100 stores is a blow to the prestige brands.
Estee Lauder told analysts earlier this month that it’s putting a selection of products into 30 Ulta stores and on Ulta’s website.
And Estee Lauder’s Clinique brand will be added to Sephora shops inside J.C. Penney stores.
There are 574 Sephora shops in Penney stores, and the Plano-based retailer plans to open 60 more this year. Penney has a 5 percent market share in prestige cosmetics and for now a big lead over Kohl’s in the beauty aisles.
Beauty grows
Penney CEO Marvin Ellison told analysts this month that while baby boomers continue to spend, millennials and Hispanic consumers will drive growth. That’s why Penney has been investing in services like salon and beauty. Penney’s partnership with InStyle magazine has added more hair care brands to its salons. So far, 120 of its 800 salons have been remodeled to feature the InStyle brand. Penney is trying to increase annual sales by another $400 million to $500 million from Sephora and salons.
Ulta is also in the salon business. It was founded in 1990 and has grown to a national chain of 907 stores with sales last year of $4.13 billion. It’s the largest beauty retailer in the U.S. and considered the disruptor in the beauty business, also taking market share from drug stores and discounters.
Even though Macy’s has been a major player in the prestige beauty business forever, it too has sought out a newer, hipper beauty concept.
Cosmetics retailer Bluemercury was Macy’s first acquisition in 10 years. Macy’s paid $210 million for it in March 2015. By the end of 2017, Macy’s plans to have 115 free-standing stores upscale neighborhoods and 18 shops inside Macy’s stores.
At Kohl’s fourth annual beauty expo on Tuesday, store staffers were eager to pose for photos with Askenas who personally answers all emails from the stores unless he said, “I’m on a vacation overseas.”
He organized the first beauty expo in a conference room in Kohl’s Menomonee Falls, Wisc., headquarters with four people, he said. “Now we have 1,200 people in from the stores.”
Twitter: @MariaHalkias
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