News Article | 10/2/2006

Penney unveils first Sephora

FORT WORTH – The first Sephora inside a J.C. Penney department store opened Sunday, and it looks just like the real thing.

The shop that catapults Penney back into the beauty business is located front and center of the store and opens to fine jewelry. It has its own four signature black and white striped walls and black tile floor.

The music playing is Sephora’s. So is the lighting and the famous self-serve fixtures. Purchases are put in the same black bags with red tissue paper. The beauty consultants are dressed in Sephora black uniforms, and they’ve completed the same Sephora training.

More importantly, they sell the same cult cosmetic brands, including Bare Escentuals, Stila and Smashbox and designer label fragrances of Dior, Escada and Salvatore Ferragamo. Skin care brands include Bliss, which W Hotels puts in its guest rooms.

Plano-based Penney scored a coup in April when it announced a partnership with the European beauty chain. It had a built-in connection through J.C. Penney chairman and chief executive Mike Ullman, who had headed Paris-based LVMH Moet Hennessy Louis Vuitton when it first opened Sephora stores in the U.S. in 1998.

Penney had been blocked from the top-brand beauty business for decades by exclusive agreements held by other mall department stores. And although some of the big department store brands, such as Clinique and Lancôme, aren’t in the mix, the store doesn’t suffer from lack of selection.

“I’m a Sephora shopper. I like it and now I won’t have to go to the mall as often,” said Suzanne Riley, a young mother shopping in the new Penney store with her toddler on Sunday. “It’s so much more convenient for me. It’s one-stop shopping.”

The free-standing store is the first to open in Alliance Town Center, in the fast-growing Alliance Airport area on the north side of Fort Worth.

It’s the first of five Sephora shops that Penney is opening this week and will serve as the learning labs for next year’s bigger rollout, said Jennifer Hipskind, director of Penney’s Sephora implementation.

“Our long-range strategy is to make an emotional connection with our customer, and there’s nothing more emotional than beauty,” she said. “You can have a makeover on the spot from trained consultants, and they don’t have allegiances to one brand.”

Other shops open Friday inside Penney stores in Aventura Mall near Miami, Queens Center in New York, Glendale Galleria near Los Angeles and Arden Fair Mall in Sacramento, Calif. All but Queens Center have free-standing Sephora stores already in the mall.

Penney’s shopping Web site has had a Sephora link on its homepage since early September.

“While we cannot comment on sales performance, we can say that we are very pleased with the order flow that we have seen coming through to from,” said Betsy Olum, senior vice president of marketing at Sephora’s 134-store U.S. chain.

Ms. Hipskind said most of the brands that Penney shoppers are buying on the Sephora site will also be in the stores.

For Sephora, the partnership “has the potential to dramatically raise awareness of our brand, even as we continue to aggressively build our own stores,” Ms. Olum said. Sephora plans to open 30 stores in the U.S. next year, not including a yet-to-be disclosed number of shops inside Penney stores. Penney is building 50 new stores next year.

Liz Sweney, Penney’s executive vice president and general merchandise manager for women’s, shopped in the new store Sunday. Asked what it will do for her merchandise division, she said, “I think it will help our women’s and juniors business.”

“It will be another reason to come to J.C. Penney.” Ms. Sweney said.

At 2,050 square feet, the shop is about one-third the size of a Sephora store and includes almost 50 brands, among them its own Sephora label. Prices are the same as found in Sephora stores – ranging from $4 for an eye pencil to $32 for a jar of skin cream to $47 for a Burberry Brit cologne for men. Some products top $100 such as Fusion Beauty anti-aging creams.

This is Penney’s second recent attempt to sell branded cosmetics. It tried a similar strategy with Avon Products Inc. in 2001. The joint venture ended in 2003. Sears Roebuck and Co. has made similar attempts to sell cosmetics.

In late 2004, Kohl’s Corp. added Estée Lauder cosmetics.