Does the pandemic spell doom for the shop within a shop?

The pandemic could send Sephora and JCPenney to a messy makeup breakup.


May 7, 2020

Sephora’s cosmetics experts aren’t the only ones who can throw seriously smokey eye shade.

This week, JCPenney went to court to stop Sephora from shutting down locations within JCP department stores, which are slowly reopening. It accused Sephora of trying to back out of an agreement that dates back to 2009.

Sephora disputed those claims and said in court documents that “no part of JCP’s fanciful, one-sided narrative was or is true.”

It could be a messy makeup breakup

And it may cost JCPenney dearly. The one-time mall mainstay was in trouble even before the pandemic blew up the retail sector.

For those with a taste for carnage, Retail Dive is keeping track of dozens of retailers (JCP among them) that are most at risk of a Bad Times bankruptcy.

This scuffle cuts worse than skin deep

One analyst told Modern Retail that the store-within-a-department-store model is “broken.”

The now-rocky JCP-Sephora relationship also highlights an interesting reversal of fortunes:

  • Sephora announced in 2006 that it was coming to JCP — it had just 120 US stores at the time, compared to ~1k for JCP. The deal meant Sephora could tap into a much broader base of potential customers.
  • Fast forward ~15 years, and things look very different. JCP has fewer than 850 stores in the US, while Sephora has ~600 within JCP — plus hundreds of standalone outposts across the Americas.

The 2 sides say publicly they want to kiss and make up quickly.

Retail Dive noted that if the breakup became permanent, it could hurt both parties — JCP would lose a significant driver of foot traffic, and Sephora could cede market share to Ulta, a mid-market beauty competitor.

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