Ulta is opening up mini shops inside Target stores

By Parija Kavilanz, CNN Business

(CNN) -- Ulta Beauty is opening up mini cosmetics shops inside of Target stores starting next year to try to sell makeup and skincare to more shoppers.

The deal is expected to help Ulta, which sells a mix of drugstore beauty andpricey brands that aren't normally found in big box stores, reach younger and more budget-conscious consumers. For Target, it expands the retailer's growing beauty business with new brands it didn't carry before.

The 1,000 square-feet mini shops are expected to open in 2021, launching initially in 100 Target locations and on Target.com, and then ramping up to several hundred Target stores.

"The benefit for Ulta is increased exposure. Ulta has an incredibly successful track record and, before the pandemic, was posting consistently strong growth," said Neil Saunders, retail industry analyst and managing director of GlobalData.

"However, Ulta has a weaker penetration among younger shoppers -- especially compared to Sephora -- and among those who purchase beauty only occasionally. Target is able to deliver both of these audiences to Ulta," he said.

The shops will feature Ulta's virtual makeup try-on called GLAMlab, which offers access to more than 4,000 items. They will be staffed by Target workers trained in high-end cosmetic and skincare brands by Ulta.

Ulta's rival Sephora already has its mini shops inside of JC Penney stores. Sephora first introduced its mini shop inside of the Penney locations in 2006.

The partnership comes at a time when makeup sales have taken a hit in the pandemic as people stay at home more.

To that end, the collaboration between Target and Ulta could help increase visibility for an out-of-mind category for consumers.

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