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Mintel Senior Global Beauty Analyst Lauren Goodsitt and Mintel Senior Retail and eCommerce Analyst Alexis DeSalva examine the recent announcement of Ulta striking a deal to open hundreds of shops at Target locations and what it means for beauty retailing.

Lauren Goodsitt, Senior Global Beauty Analyst

The pandemic has placed emphasis on essential retailers, like Target, as consumers look for ways to maximize each shopping trip. Accessibility and convenience are imperative for today’s brand to survive. Ulta‘s partnership with Target, both in brick-and-mortar locations as well as online, streamlines the buying process. It is mutually beneficial for both companies, increasing foot traffic for Ulta and bringing prestige beauty offerings to Target’s expansive beauty and personal care sector. According to Mintel data, three in five US consumers have made no change to prioritizing their appearance throughout the pandemic, signifying the importance and relevance of beauty, according to Mintel’s Global COVID-19 Tracker. While the way consumers shop is shifting, the need for beauty offerings remains.

Alexis DeSalva, Senior Retail and eCommerce Analyst

The news of the partnership between the beauty specialist and the mass merchandiser came as a bit of a surprise, but it shouldn’t. Target has prioritized beauty as a category of focus for the past few years, after seeing success from consumers who appreciate the chance to shop for beauty while also fulfilling their other shopping needs and having access to affordable, on-trend beauty products. This latest announcement, including the plan to carve out a 1,000 square foot Ulta beauty space alongside Target’s beauty department, is another indication of Target’s belief in the future of the beauty market and Ulta’s acknowledgment of how many consumers are already shopping the mass merchandiser.

It’s also a sign of how the market is and will change as a result of the pandemic and a way for Ulta and Target to benefit from each other’s reputation and existing customer base to protect them from the competition. Consumers are shifting more purchases online, something that the pandemic accelerated. Yet the emotional, sensory experience of shopping for beauty, including product trial and discovery, isn’t easily recreated digitally, making it challenging for non-essential retailers, such as Ulta, that struggle with consumers’ hesitation to shop in stores. Mass merchandisers, including Target, are a top destination for beauty shoppers, and will continue to benefit from the increased foot-traffic of those shopping for essentials, according to Mintel research on beauty retailing. What’s more, beauty consumers will be seeking more affordable and accessible beauty products, especially during the recession, putting Target at an advantage to continue to steal share.

For Ulta, this partnership means more chances to benefit from Target’s growth, which relieves some pressure from the beauty specialist. For Target, this means a chance to drive incremental sales among shoppers, who may make more impulsive beauty purchases because of the Ulta presence. Even if a beauty item isn’t needed, it may be easier for shoppers to rationalize if it’s done as part of their essential shopping trip. Essentially, it’s a “strength in numbers” scenario.

What we think

What will be interesting to watch is how this partnership impacts or changes each retailer’s future growth plans. The brands that will be carried in the Ulta Beauty at Target have yet to be disclosed but have been described as a curation of brands ranging from emerging to established. For Target, the question will be how the Ulta brands impact sales of Target’s other beauty offerings, since the Ulta shop will be in addition to Target’s beauty department. For Ulta, the question is how, if at all, this partnership will impact the retailer’s plans for brick-and-mortar expansion. With more physical locations inside Target, it’s possible Ulta may eventually change its store count. Regardless, this partnership will evolve beauty retailing for consumers.