Can Sephora Save J.C. Penney and Drive More Brand Loyalty?

J.C. Penney has partnered with beauty retailer Sephora since 2006, leveraging the Sephora Inside J.C. Penney to drive more traffic and, ultimately, brand loyalty.

That partnership has created considerable impact on the company’s customer engagement levels and J.C. Penney CEO Marvin Ellison plans more expansion of this specific business model this year. But, can a stronger focus on Sephora stores inside J.C. Penney be enough to catapult the venerable retailer to the forefront of consumers’ minds?

“We’ve made some specific initiatives to address the decline in apparel,” Ellison said at the annual Piper Jaffray Consumer Conference. “And we’re still planning apparel down, but the decline is going to be reduced, based on some of the key initiatives we’ve put in place. And in addition to that, I mean we opened 100 new appliance show rooms in the month of May. We are expanding 70 new Sephora locations in the year 2017, so a combination of home refresh, beauty is just helping us offset the declines in apparel and our goal is to reduce those declines in apparel over the course of the year.”

Ellison said J.C. Penney has a great partnership with Sephora cosmetics.

“Sephora has taken a pretty very disciplined approach around not being in a promotionally driven environment” he explained. “And we think that is the right business model for us. So, you’re not going to see us go out and start discounting our brands in cosmetics, that’s not the strategy for that partnership. Instead, we’re just going to continue to communicate the fact that we have new brand introductions coming throughout the year. We’re going to continue to enhance environment.”

Ellison noted that 32 of its “really large” flagship locations will expand space this year, in addition to opening 70 new Sephora locations.

“What most don’t understand is that 10 years ago, we started this relationship with Sephora with the expectation to just open a couple of hundred stores,” he said. “We’re going to end this year with Sephora cosmetic locations in 75 percent of our stores. That’s a significant, significant improvement. And this is a great business for us; it drives an enormous amount of traffic within a customer demographic that we need. And as we improve the adjacent areas around Sephora, we’re seeing that business grow as well. So, from a promotional perspective, we have a strategy; we’re not going to kind of change that because of what’s happening in the marketplace. And we’re going to just execute on the growth that we have in place in the new brands. We’re going to continue to make this a unique environment that drives traffic in the store.”

Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that J.C. Penney’s relationship with Sephora is one of the few bright spots for the department store these days. 

“While I understand the incentive to enhance and expand that relationship, J.C. Penney is still an apparel-driven store,” Magliocca explained. “New relationships similar to Sephora in the apparel market will help, but J.C. Penney needs to take a step back and figure out what its identity is moving forward. It’s not that it can find apparel retailers to sell exclusively through them, what matters is which ones and what does that brand bring to its identity? Customers today shop because they either align with the craftsmanship and brand, or because product is cheap. If J.C. Penney doesn’t want to be a discount store, it’ll need to figure out who its customer is and what product is going to resonate and bring a rich experience to them in the long-run.”

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