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Ulta Beauty Strikes New Deal With Target

By Howard Smith – Nov 10, 2020 at 10:11AM

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The partnership will put scaled-down Ulta stores in more than 100 Target locations beginning late next year.

Beauty retailer Ulta Beauty (ULTA -0.33%) and Target (TGT -1.70%) announced Tuesday a new strategic partnership that will create "Ulta Beauty at Target" shops inside select Target locations and on Target's website beginning next year. 

The "shop-in-shop" concept will place scaled-down versions of the Ulta store adjacent to the existing beauty section of the Target stores. At approximately 1,000 square feet of retail space, the Ulta Beauty at Target shops will be about 10% the size of typical stand-alone Ulta stores. 

woman working with customer at beauty products area of store

Image source: Getty Images.

In a joint announcement, the companies said the new store concept will be at approximately 100 Target locations, and available at Target.com, beginning in the second half of 2021. Longer term, the companies plan to expand to hundreds more Target locations. 

Ulta will utilize its subject matter expertise to train newly hired Target workers to help enhance the customer experience. The spaces will contain Ulta's digital GLAMlab virtual try-on beauty tool that allows customers to test products virtually. 

Customers that shop at the concept store online will be able to utilize Target's array of pickup and delivery offerings, including its Shipt same-day delivery service where available, and free drive-up or pickup options. 

For Ulta, the partnership brings a new option for customers to access its products and expertise. Ulta Beauty CEO Mary Dillon called it "a new channel to delight and deepen loyalty with our existing guests and introduce Ulta Beauty to new guests."

Target has seen strong sales growth this year, including its most recently reported second quarter where store comp sales increased 10.9% and digital sales increased almost 200%. The new partnership allows it to add on to its growing beauty sales with new product offerings. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ulta Beauty. The Motley Fool has a disclosure policy.

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