Will omnichannel make the J.C. Penney and Sephora partnership more successful?

Discussion
Photo: JCPenney
Apr 25, 2017
George Anderson

Store-within-a-store concepts are not uncommon today, but few can claim to have achieved the success of Sephora’s presence at J.C. Penney. The concept, which debuted in 2006, has grown steadily over the years, and yesterday the two retailers announced that 70 new shops would be opened inside Penney locations this year while 32 others would be expanded. By the end of 2017, there will be nearly 650 Sephora inside J.C. Penney shops in operation.

Marvin Ellison, chairman and CEO of the department store chain, called the Sephora shops “one of our biggest advantages over the competition,” in a statement.

“We are also taking an omnichannel approach to shopping Sephora inside J.C. Penney by strengthening our technology and infrastructure to reach new beauty customers through JCPenney.com,” Mr. Ellison said. “We’ve launched the ability for customers to purchase Sephora online and pick up their order at a JCPenney store the same day. This is one example of how we’re delivering on the customer’s expectations for accessibility and convenience.”

Penney announced it has “significantly expanded” the assortment of Sephora products it carries online. The department store also revealed that it would soon add a feature that would enable customers to book makeovers with Sephora beauty consultants in its stores. Currently, Sephora shoppers have access to content on makeup trends, gift ideas and upcoming events at the beauty brand’s shops inside Penney stores.

Last year, Penney and Sephora introduced a new, larger concept inside the department store. The beauty flagship covered about 3,000-square-feet — the typical Sephora inside J.C. Penney shop is 2,000-square-feet — to offer a larger assortment of brands, merchandising displays and space for service offerings. Penney opened 60 new Sephora shops inside its stores in 2016.

Mr. Ellison has called the chain’s beauty strategy, built largely on its association with Sephora, one of the pillars of his strategic plan for growing Penney’s business. On the chain’s fourth quarter earnings call, Mr. Ellison said his company had pulled off “one of the greatest financial turnarounds in retail history,” although many had predicted its demise just a few years earlier.

DISCUSSION QUESTIONS: Why has the J.C. Penney and Sephora partnership succeeded to the degree to which it has? Will Penney’s omnichannel approach to grow the Sephora business prove successful?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Expanded reach, ubiquity of messaging and convenience will surely drive results."
"The only way I see omnichannel increasing profits is through impulse cosmetic buys to reach free shipping minimums."
"...it still appears to me that J.C. Penney is making Sephora more and more successful and not the other way around."

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17 Comments on "Will omnichannel make the J.C. Penney and Sephora partnership more successful?"


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Charles Dimov
Guest

This is a great example of two brands coming together for a truly positive relationship.
J.C. Penney’s omnichannel approach will definitely help Sephora. In fact, the vast majority of omnichannel retailers are only truly giving shoppers one pickup option. You can pickup in-store. With this move, Sephora shoppers can pickup their order at a Sephora location or at a J.C. Penney store.

This is the type of innovation that will help turn around J.C. Penney’s fortunes and keep this duo at the forefront of the retail pack.

Dave Wendland
BrainTrust

“Beauty and the Best,” that’s what Sephora and J.C. Penney have been able to achieve. Department store rivals have been unable to effectively knock this combo off their perch. Why? 1.) Adequate space has been devoted to the environment. 2.) Placement of the store-within-a-store is front-and-center. 3.) Management believes in and supports the model.

Will a more concerted omnichannel approach grow the business? Yes. Expanded reach, ubiquity of messaging and convenience will surely drive results.

Speaking of stores-within-a-store, here’s a recent article I penned on the topic for Chain Drug Review.

Dick Seesel
BrainTrust

When Mike Ullman (formerly of LVMH) partnered with Sephora (owned by LVMH), he realized that J.C. Penney needed a critical mass of cosmetics even though the legacy department store brands like Clinique, Estee Lauder and Lancome wouldn’t sell J.C. Penney. (Lancome is now part of the Sephora assortment.) At the same time, Sephora was growing as a mall-based alternative to the anchor stores’ beauty departments with a unique approach to open-sell layout and fresh assortments. It’s turned out to be a win for both companies, especially as those traditional department store anchors lose share and traffic.

Certainly omnichannel is another opportunity for J.C. Penney as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for J.C. Penney is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

Lee Kent
BrainTrust

I would not have believed it until I saw it. Sephora and J.C. Penney? But it has been a true success story. Will this omnichannel approach make a difference? Absolutely! As long as J.C. Penney can deliver. I’m not saying they can’t but we have seen many retailers who just haven’t. J.C. Penney has become scrappy in recent years and that scrappy-ness, IMHO, is what is keeping them in the game. I think they’ll do it again with this concept.

For my 2 cents.

Adrian Weidmann
BrainTrust

The successful collaboration between J.C. Penney and Sephora is a harbinger of brick-and-mortar retail. Both reap the benefits of supporting each other’s shoppers while focusing on their core competencies. Others should pay close attention to this collaboration and explore this type of arrangement wherever possible. Best Buy has been pursuing this tack with their in-store brand pods with equal success. One key element that Sephora (and the broader cosmetic category participants) must address is out-of-stocks. Addressing the supply chain inefficiencies will dramatically enhance both Sephora’s and J.C. Penney’s brand and customer experience — both of which will optimize return visits!

Jasmine Glasheen
BrainTrust

Sephora already has a fantastic omnichannel presence, so I don’t see how offering an online component through J.C. Penney will make either brand more successful. Why wouldn’t a beauty customer prefer to go to the Sephora website for the deals, online makeovers and add-ons, instead of shopping through J.C. Penney’s website? The only way I see omnichannel increasing profits is through impulse cosmetic buys to reach free shipping minimums.

Mark Ryski
BrainTrust

Sephora is a category winner and it was a brilliant move by J.C. Penney to forge a relationship with them. This is a classic example of “cool by association.” J.C. Penney’s omnichannel approach is helpful but probably not revolutionary. However, J.C. Penney’s stores get an enormous amount of traffic (even in an environment of declining traffic), so additional exposure to new customers is good for Sephora and traditional Sephora customers have many more locations to buy the products they love. The only caution for Sephora is that a close affiliation with J.C. Penney could hurt their image — as cool as Sephora makes J.C. Penney, the flip side is that J.C. Penney may make Sephora seem less cool.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
2 years 6 months ago

The Sephora brand appeals to the right demographic (18 to 45 year olds) which is a segment J.C. Penney needs to attract: new, younger shoppers that wouldn’t normally shop there. This is a great way to extend their customer base and drive more traffic to their stores.

BOPIS services and online appointment setting for makeovers are added conveniences that are now becoming services customers expect. J.C. Penney is making smart choices to better position itself for today’s consumers and they need to continue to innovate. They are adding to the “Theater of Shopping” that I have frequently referred to when discussing how brick-and-mortar retail can appeal to the right demographic. Innovate or die! What will they do next?

Jeff Miller
Guest
I think it is key to acknowledge that many of these large, anchor style department stores are as much real estate management companies as they are retailers. In this case, J.C. Penney, like so many over saturated retailers, has too many stores that are all too large for the modern shopper. By choosing to partner with Sephora — who is doing a great job of focusing efforts on their customer through a mix of customer service, technology and experiences — Penney is able to turn low performing real estate into sales that also lifts their brand a bit from the halo effect. Sephora, I imagine, is getting ridiculous low cost and more importantly low risk per square foot to expand their footprint. Check out Sephora President Calvin McDonald’s recent keynote at Shoptalk on YouTube to learn why they are succeeding. I am not sure about the long term success of this for Penney. If shoppers start to think of Sephora as the only reason to walk into a J.C. Penney store, then what value are… Read more »
Bill Hanifin
BrainTrust

The idea of co-locating brands and developing “store-in-store” concepts has gone through at least 2 cycles of expansion and contraction. With renewed pressure on brick and mortar retailers to maximize sales dollars from the precious real estate they occupy, partnerships like the one illustrated here hold tremendous promise.

I’ve been reading several articles lately suggesting that a “retail apocalypse” is around the corner. The threats are real, but the outcome is not inevitable. Complimentary partnerships can draw people into a brick and mortar store and provide the opportunity to consolidate shopping trips for multiple products into a more convenient “one-stop” shop.

The marketing of these partnerships and the products they promote should be enabled in multiple marketing channels. In addition to the online order/offline pickup model, J.C. Penney could think about promoting Sephora on Facebook, Snapchat, and Instagram to test for potential new customer engagement.

Naomi K. Shapiro
BrainTrust

Sounded like an “odd couple” initially, but this is a great example of two entities coming together for the mutual benefit of each. And yes, the omnichannel plays a critical role in the successful combination.

Craig Sundstrom
Guest

While I’m sure the hope is online shopper’s habits will mimic in-store behavior, it should be kept in mind that an online shopper is in a sense “in” every store in the world (or at least every one that has an online presence), so I wouldn’t necessarily expect the same synergy to develop. Of course there’s no reason NOT to do this, just to temper one’s expectations.

Ricardo Belmar
BrainTrust

There’s no question J.C. Penney made a brilliant move partnering with Sephora. Let’s face it — Sephora shoppers are rabid fans of the brand and store experience and if they have to go to J.C. Penney to get that experience, they won’t hesitate. Now, will those shoppers then turn around and buy apparel (or a washing machine) after their beauty purchase?

While this seems to be working for J.C. Penney’s turnaround, it still appears to me they are making Sephora more and more successful and not the other way around. Using omnichannel services like BOPIS are a great idea, but, why can’t Sephora do this without J.C. Penney and their online presence? What’s the value-add to the shopper to do this via jcpenney.com vs sephora.com?

Guy Mucklow
Guest
Guy Mucklow
President and Co-Founder, PCA Predict
2 years 6 months ago
Sephora and J.C. Penney’s decision to enhance and strengthen their omnichannel approach will prove to be a smart move for both businesses. In today’s digital age, retailers can no longer compete and maintain large customer bases without creating an online presence. Those that are able to establish themselves both online and in stores are positioning themselves for long-term success—omnichannel is the clear path to high sales and customer satisfaction rates. With their new omnichannel strategy, Sephora and J.C. Penney are making their products more accessible while expanding their customer base. Today’s consumer demands a shopping experience that is convenient and tailored to their preferences. Many prefer to only shop online, which requires a streamlined and comprehensive online store. Sephora and J.C. Penney are appealing to those customers by increasing the Sephora inventory on J.C. Penney’s website. Others prefer to order products online and pick them up in stores—something J.C. Penney and Sephora are now implementing. Companies that are able to master the omnichannel approach will have the greatest success. Sephora and J.C. Penney’s partnership serves… Read more »
Retailfan
Guest
2 years 6 months ago

When there is wide scale use of a product, and a product that is successful to begin with, it can only help the host which is Penney in this case. I think this, coupled with the service side of Sephora, and them also upgrading their salons will only increase foot traffic more. A woman can go in, get her hair done and makeup as well, and pick up a nice dress on the way.

Stefan Weitz
Guest

I admit I am a bit perplexed at the success. I don’t have the audience demos for each, but the overlap seems tenuous. Maybe that is why it’s succeeded — Sephora gets relatively inexpensive access to a demo that they didn’t otherwise have in their B&M and JCP taps into a younger, non-core JCP audience by offering these products in a more locations that just Sephora stores.

The omnichannel expansion just seems obvious — offer more engagement with the brand inside of JCP and drive more foot traffic (which can be cross-monetized) as a result of that higher engagement. Super smart IMHO.

Pavlo Khliust
Guest

J.C. Penney and Sephora represent an excellent example of a win-win omnichannel collaboration in its essence. Combining their strengths allows them to create a truly unified shopping experience and expand their customer base. Sephora attracts a younger generation to J.C. Penney stores, while J.C. Penney allows Sephora to build its B&M presence nationwide. While the idea of co-location isn’t new, it has proved to be an efficient way for companies to increase their profits.

wpDiscuz
Braintrust
"Expanded reach, ubiquity of messaging and convenience will surely drive results."
"The only way I see omnichannel increasing profits is through impulse cosmetic buys to reach free shipping minimums."
"...it still appears to me that J.C. Penney is making Sephora more and more successful and not the other way around."

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