Sephora will open 100 small-format stores in 2020, a worthwhile move as long as the retailer does not lose focus on its existing mall locations.

WHAT HAPPENED: Sephora’s new stand-alone stores will open in smaller cities like Charlotte, North Carolina and Nashville, Tennessee and will focus on services, fragrance and hair care.

WHY IT MATTERS

Sephora needs to ensure in-store services will stand out among its extensive product offerings. Nearly every inch of an average Sephora store (5,500 sq ft.) contains a product of some kind and stores typically have around six to ten beauty stations where customers can have their make-up done or try products more thoroughly. But as of now, most shoppers flock to Sephora to replenish items or discover new brands. Sephora needs to introduce services that directly coincide with its product offering and will be both convenient and exclusive. Bluemercury (owned by Macy’s) offers facials, waxing and massages, but it built these services into its infrastructure from its inception—signifying luxury and expertise from the beginning.

While moving away from the mall is beneficial, 100 new stores won’t improve Sephora’s existing mall locations and its 660 JCPenney shop-in-shops. Opening new stores in smaller cities is a worthwhile move for Sephora, but the retailer needs to keep focusing on the bulk of its stores that have notably uncertain futures—JCPenney already closed six of its stores in 2020. Not only will Sephora suffer from a decline in mall foot traffic, but a continued presence in these struggling retail formats can negatively impact the brand’s image, which could hamper its quest to reposition itself as an all-inclusive beauty destination. 78% of Sephora Inside JCPenney shops are within a ten minute drive from an Ulta store—making presence in JCPenney more harmful than helpful for Sephora.