This week saw a flurry of news for beauty retailers, with Sephora revealing plans to open 100 new stores in 2020, while Macy’s has announced a three-year plan to close 125 of its lowest producing units.
In Sephora news, the retailer looks to open 100 stores in 75 cities in North America this year, the largest store expansion to date, more than doubling its openings in 2019. The new store mix will include a smaller 4,000-square foot format to better meld into local centers and neighborhoods. The stores will offer hair care and skin care prominently up front; Sephora Studio for skin and beauty services; Beauty Advisor services; mobile checkout; Find Your Fragrance and Beauty on the Fly.
Jeff Gaul, Senior Vice President of Real Estate and Store Development said, “In looking at where and how today’s beauty lover is shopping, there’s no doubt that there’s a trend toward more local shopping destinations. This year, clients can expect to see more Sephora stores not only in malls and high-traffic shopping centers, but also closer to home. These locations are meant to complement our existing fleet and give clients a more personalized and customized experience.”
Brick and mortar continues to be “a huge opportunity for us to deepen emotional connections with our clients and local communities,” said President and Chief Executive Officer of Sephora Americas, Jean André Rougeot.
The new stores will feature sleek architectural and visual design to support Sephora’s DNA, while using cost-effective materials, and will be powered by 100% renewable energy in keeping with the Sephora Stands sustainability program.
Sephora expects to utilize the savings from the efficient building and power generation for client experiences, services, employee development.
In Macy’s news, the national retailer is implementing a five-part plan over three years in plan called Polaris. One component looks to strengthen customer relationships by accelerating personalization and monetization programs and expanding Macy’s loyalty program. This includes the launch of the next phase of the successful Macy’s Star Rewards Loyalty program later this month. Macy’s will also commit to a more focused approach to its higher-margin private brands business with plans to build four $1 billion brands. In addition, macys.com’s headquarters will relocate from San Francisco to New York City to allow for better coordination, collaboration and access to Macy’s brand partners. To get the turnaround on a fast track, Macy’s plans to close approximately 125 of its least productive stores over the next three years, including approximately 30 stores which are currently in the process of closing. The 125 stores account for an estimated $1.4 billion in annual sales. However, Macy’s said it will upgrade 100 stores in 2020, such as improving physical stores, as well as investing in merchandising strategies, technology talent and local marketing.
New York City will become the company’s sole corporate headquarters. The company will close its San Francisco, downtown Cincinnati and Lorain, OH offices, as well as its Tempe, AZ customer contact center; Macy’s will consolidate customer service work into its Mason, OH and Clearwater, FL facilities.
Beginning in 2020, the company expects the Polaris strategy to generate annual gross savings of approximately $1.5 billion, which will be fully realized by year-end 2022. For 2020, the company anticipates gross savings of approximately $600 million, some of which will flow to the bottom line in order to stabilize operating margin. Macy’s, Inc. is scheduled to report fourth quarter sales and earnings on February 25, 2020.