Department Stores Betting on New Beauty Products to Drive Sales

After years of falling traffic and struggling sales that culminated in last year’s bankruptcy filing, JCPenney is embarking on a massive push into the prestige beauty space, hoping to bring back customers and replace its former in-store partnership with Sephora.

Unlike other retailers, such as Kohl’s and Target, which have partnered with well-known beauty brands to bolster their beauty offerings, JCPenney has opted instead to place its own name at the top of the effort — JCPenney Beauty — while collaborating with Thirteen Lune, an eCommerce site focused on beauty brands created by Black and Brown founders. Of the over 170 brands available through JCPenney Beauty, 39 are from Thirteen Lune.

Customers will be able to shop JCPenney Beauty online starting Oct. 15 and at 10 JCPenney locations across the country later this month.

“JCPenney Beauty grew out of direct feedback from our customers,” Michelle Wlazlo, executive vice president and chief merchandising officer at JCPenney, said in a statement. “Together with our brand partners, we have reimagined every aspect of our beauty experience — from the highly curated assortment and welcoming space to the integrated loyalty program and all-new eCommerce experience.”

Since people began returning to everyday life earlier this year, beauty sales have rebounded after falling 19% in 2020, according to The NPD Group. Net sales at Ulta Beauty, for example, rose 60% year over year in the second quarter after a 27% decline in the same period last year, and Sally Beauty had net sales of over $1 billion in the three months ending June 30, with same-store sales up 45% year over year.

See also: Ulta ‘Focused on Playing Offense’ as Beauty Industry Recovers

It’s likely not a surprise to see JCPenney trying its hand at curating a branded beauty experience, especially as it tries to steady itself after emerging from a Chapter 11 bankruptcy process that led to the loss of its partnership with Sephora. But the department store reportedly hasn’t turned a profit since 2010, and its annual sales have fallen every year since 2016.

Mark Cohen, a Columbia Business School professor and former CEO of Sears Canada, Bradlees and the Lazarus department store chain, told PYMNTS earlier this year that he sees JCPenney as “a failed state,” with mall owners Simon Property Group and Brookfield Asset Management buying the chain mostly to keep the lights on at the anchor tenant of many shopping centers.

Read more: JCPenney Is Getting a New Start in 2021, But Its Old Problems Remain

Sephora’s New Home

Meanwhile, beauty brand Sephora, which had been tied to JCPenney since 2006, is settling into its new home at Kohl’s, opening shop-in-shops at nearly 100 of the department stores locations since August. Kohl’s CEO Michelle Gass has said the partnership is “game-changing” for the retailer, with the potential to “transform Kohl’s into a leading beauty destination.”

“The customer response has been overwhelmingly positive, and we are gaining great insight into how customers are shopping and what they’re purchasing,” she told analysts on a conference call in August.

According to Placer.ai, the first four Kohl’s locations to open the Sephora shop-in-shops saw a 16.6% rise in traffic the week after the partnership launched, compared to a 29% increase at Kohl’s locations nationwide. But in the subsequent weeks, traffic at those four stores grew even faster than the national rate, ending the last week of August with a 12.5% increase in traffic as Kohl’s nationally saw a 3.5% decline.

JCPenney and other retailers are also facing the fact that an increasing number of cosmetics brands are focusing more on D2C sales, cutting out the department or box store altogether.

See also: Retailers Embrace Post-Pandemic Beauty Trend, But Cosmetics Have Gone D2C

Still, Nyakio Grieco and Patrick Herning, co-founders of Thirteen Lune, told PYMNTS that their partnership with JCPenney actually complements the company’s D2C business “and allows us to scale quickly and reach more customers.”

“It is important for us to amplify the discovery of beauty brands created by Black and Brown founders that resonate with people of all backgrounds,” Grieco and Herning said in an email.