August 18, 2026
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As Target’s Ulta Partnership Expires, Will its New Beauty Studio Design Be an Adequate Replacement?
Target’s shop-in-shop partnership with Ulta Beauty expired on August 16, with both parties being gracious about the conclusion of the team-up in a shared statement issued last year, as Retail Dive’s Dani James reported.
However, stepping in to fill the gap in about 600 stores across the ~2,000 Target locations across the U.S. will be the new Target Beauty Studio design, which will not only serve as one portion of a greater turnaround effort headed by CEO Michael Fiddelke but will also be integrated via specific beauty-oriented rewards tied to the retailer’s loyalty program.
RetailWire BrainTrust panelist and GlobalData managing director Neil Saunders indicated that Target would likely see a relatively painless pivot away from Ulta:
“Even without Ulta, Target’s beauty business is huge. So, the ending of the partnership is something they will take in their stride — even if it probably did initially come as a bit of a blow,” he told the outlet, underscoring the potential for greater margins as part of the move.
Target’s Beauty Shop Concept Could Have a Strong Foundation
Other data points which might be encouraging news for Target’s plan pulled from James’ report:
- Target itself is showing recent strength on fundamentals: Q1 earnings proved that the turnaround play was displaying signs of traction, with net sales up 6.7% YoY to $25.4 billion and — more specifically — beauty category net sales shooting up by 9.5% to reach ~$3.4 billion.
- Both prestige and mass beauty sales are growing in the U.S.: Concerning prestige beauty products, U.S. sales tied to this segment improved by 7% YoY to hit $17.1 billion throughout the first half of this year, and mass market beauty products saw a similar rate of growth to reach $39.2 billion, per Circana.
- Walmart is also showing confidence in the American beauty market: The blue-and-yellow-branded retailer is likewise interested in capturing a bit of the booming beauty market, having announced in April that it would be doubling-down on a new, specialized beauty store associate role to be implemented across 425 of its stores.
Further, according to Ally McPartland — strategy consultant at Kearney, with expertise in the beauty and luxury business — there’s broad-based opportunity for mass retailers to shoulder into the segment alongside mainstays such as Sephora and Ulta.
“The line between ‘mass retailer’ and ‘beauty specialist’ is getting thinner from both directions at once. The beauty consumer is no longer choosing between mass and specialty. They’re assembling their basket across channels, judging every retailer on the same scorecard: curation, experience, convenience, and community,” McPartland said, noting Kearney data suggested that nearly half (45%) of American beauty consumers purchase via mass channels (and that nearly the same proportion, or 44%, buy through specialty retailers).
“Where that goes next depends less on which channel a shopper ‘belongs’ to than on how each retailer responds to where consumers’ preferences and behaviors are headed,” she added, underscoring that it may be difficult for beauty shoppers to complete their entire list of beauty products while also shopping for household goods and groceries.
BrainTrust
Allison McCabe
Director Retail Technology, enVista
Georganne Bender
Principal, KIZER & BENDER Speaking
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Recent Discussions
Discussion Questions
Do you believe Target’s pivot to back the new Beauty Shop concept will be relatively painless and profitable? Why or why not? What potential obstacles remain?
What can Target do to differentiate its Beauty Shop shop-in-shop from a myriad of competitors? Are there any levers it can pull to gain shopper attention and favor?
What do you think of the suggestion that specialist retailers such as Sephora or Ulta Beauty might be threatened by Target and Walmart’s push into their market territory?
Poll
The fact that Target is looking to replace Ulta with its own Beauty Studio concept is a sign that it is not giving up on more premium, inspirational, and innovative beauty. And why would it given that beauty has been one of Target’s strongest category for a long time? In the long run, Target controlling the experience themselves and using the area as a showcase for interesting beauty products with enhanced service is a good thing as it provides stronger differentiation and significantly better margin than the previous partnership.
Cosmetics is too important to Target to not pivot, and I believe they will successfully. Target has historically been masterful in creating brands that their guests appreciate, and so I think they have the internal expertise to do this in the cosmetics category and truly re-define it for Target, and not merely bolt-on another brand that has their own motivations and interests. Sephora and Ulta Beauty have been dealing with an increasingly competitive landscape, which is part why they partnered with Target and Sephora with Kohl’s in the first place. These partnerships can be tricky, but the alternative is creating a new, bigger and more aggressive competitor and I believe that’s the path Target is on.
Target still excels in store design, and I believe the new shop will be a stunning presence inside the format. I’m eager to see what this means for Target Beauty beyond the 600+ stores that had an Ulta Beauty shop-in-shop since that is roughly only 30% of the chain and they noted this would expand later on. It’s critical that they nail this one because the recent updates in Home and Baby have underwhelmed compared to the promises made. Target must nail the operations to ensure this is the longer-term success it covets. Fully staffed and knowledgeable dedicated beauty team members are the starting point. This means extensive training on the front-end and beyond to ensure the experience doesn’t wane in the coming months. Of course, this also means shelves, great marketing to highlight all of the newness, and a floor plan that makes the experience as seamless for the guest as possible. I see this as a very positive development and I’m happy to see it finally in flight.
I think that Target’s transition from Ulta to the Beauty Shop will be both painless and profitable. Target knows what’s selling, and its buyers are perfectly capable of recreating – and improving – what customers want.
As a consumer, Ulta’s orange and white branding is so subtle I barely clock it.
The “gracious” conclusion framing deserves scrutiny. The Ulta partnership stalled in April 2025 over understaffing, shoplifting, and cannibalization of Ulta’s standalone stores. Those were operational failures, not strategic evolution. Now Target Beauty Studio asks Target’s own staff to deliver what Ulta’s brand could not rescue. The organizational design question nobody is asking: is a general merchandise retailer structured to recruit, train, and retain beauty specialists at scale across 600 stores? Fiddelke’s payroll investment is real but spread too thin. Prestige beauty service demands dedicated specialists, not generalists with more hours. That gap, not the floor plan, determines whether this works.
Launches are typically “best foot forward”. The true test will be 6 months from now for staffing, merchandising etc. If the mix is right, it will ultimately cover the business.
Target Beauty Studio is less about replacing Ulta and more about rebuilding beauty authority inside Target. The format gives Target a chance to make beauty feel more intentional without losing the convenience that brings shoppers into its stores.
The challenge is execution. Prestige beauty needs stronger presentation, better discovery, trained associates, and tighter inventory discipline than a standard mass aisle.
This is where the operating layer matters. The studio can create inspiration, but it will only scale if Target connects merchandising, inventory, fulfillment, and replenishment cleanly behind the scenes.
Target understands the role of owned/proprietary brands better than most retailers. It’s not just the simple math of the margin opportunity. It’s the loyalty opoortunity. It’s the headquarters, go-to, first thought opportunity. It’s the moat it gives them realtive to other retailers. It also turns out that owned brands are difficult to execute. Actually, really difficult. And none of this is new news to Target, so I’m betting they are taking a very eyes-open approach to the difficulties they face for both the launch and the long term.
Target’s pivot would likely be painless, but not automatic. The evidence supports cautious optimism:
- Strong momentum: Beauty net sales up 9.5% YoY to ~$3.4 billion, outpacing Target’s overall 6.7% growth. Beauty is clearly a bright spot in the broader turnaround.
- Margin upside: Neil Saunders’ point is key — owning the concept rather than hosting Ulta’s shop-in-shop should improve margins, since Target keeps more of the economics and controls assortment.
- Existing scale: Target’s beauty business was already “huge” independent of Ulta, so this isn’t building from zero.
But the obstacles are real:
- Prestige gap: Ulta brought prestige/premium brands and specialist credibility. Target’s owned concept must prove it can retain those aspirational shoppers who came specifically for Ulta.
- Execution risk: Allison McCabe’s “6 months from now” comment nails it — staffing and merchandising mix will determine success. A design refresh alone doesn’t retain customers.
- Only ~600 of ~2,000 stores get the studio, leaving inconsistency across the fleet.
Verdict: Painless in the sense of no revenue cliff; profitability depends entirely on execution.
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The fact that Target is looking to replace Ulta with its own Beauty Studio concept is a sign that it is not giving up on more premium, inspirational, and innovative beauty. And why would it given that beauty has been one of Target’s strongest category for a long time? In the long run, Target controlling the experience themselves and using the area as a showcase for interesting beauty products with enhanced service is a good thing as it provides stronger differentiation and significantly better margin than the previous partnership.
Cosmetics is too important to Target to not pivot, and I believe they will successfully. Target has historically been masterful in creating brands that their guests appreciate, and so I think they have the internal expertise to do this in the cosmetics category and truly re-define it for Target, and not merely bolt-on another brand that has their own motivations and interests. Sephora and Ulta Beauty have been dealing with an increasingly competitive landscape, which is part why they partnered with Target and Sephora with Kohl’s in the first place. These partnerships can be tricky, but the alternative is creating a new, bigger and more aggressive competitor and I believe that’s the path Target is on.
Target still excels in store design, and I believe the new shop will be a stunning presence inside the format. I’m eager to see what this means for Target Beauty beyond the 600+ stores that had an Ulta Beauty shop-in-shop since that is roughly only 30% of the chain and they noted this would expand later on. It’s critical that they nail this one because the recent updates in Home and Baby have underwhelmed compared to the promises made. Target must nail the operations to ensure this is the longer-term success it covets. Fully staffed and knowledgeable dedicated beauty team members are the starting point. This means extensive training on the front-end and beyond to ensure the experience doesn’t wane in the coming months. Of course, this also means shelves, great marketing to highlight all of the newness, and a floor plan that makes the experience as seamless for the guest as possible. I see this as a very positive development and I’m happy to see it finally in flight.
I think that Target’s transition from Ulta to the Beauty Shop will be both painless and profitable. Target knows what’s selling, and its buyers are perfectly capable of recreating – and improving – what customers want.
As a consumer, Ulta’s orange and white branding is so subtle I barely clock it.
The “gracious” conclusion framing deserves scrutiny. The Ulta partnership stalled in April 2025 over understaffing, shoplifting, and cannibalization of Ulta’s standalone stores. Those were operational failures, not strategic evolution. Now Target Beauty Studio asks Target’s own staff to deliver what Ulta’s brand could not rescue. The organizational design question nobody is asking: is a general merchandise retailer structured to recruit, train, and retain beauty specialists at scale across 600 stores? Fiddelke’s payroll investment is real but spread too thin. Prestige beauty service demands dedicated specialists, not generalists with more hours. That gap, not the floor plan, determines whether this works.
Launches are typically “best foot forward”. The true test will be 6 months from now for staffing, merchandising etc. If the mix is right, it will ultimately cover the business.
Target Beauty Studio is less about replacing Ulta and more about rebuilding beauty authority inside Target. The format gives Target a chance to make beauty feel more intentional without losing the convenience that brings shoppers into its stores.
The challenge is execution. Prestige beauty needs stronger presentation, better discovery, trained associates, and tighter inventory discipline than a standard mass aisle.
This is where the operating layer matters. The studio can create inspiration, but it will only scale if Target connects merchandising, inventory, fulfillment, and replenishment cleanly behind the scenes.
Target understands the role of owned/proprietary brands better than most retailers. It’s not just the simple math of the margin opportunity. It’s the loyalty opoortunity. It’s the headquarters, go-to, first thought opportunity. It’s the moat it gives them realtive to other retailers. It also turns out that owned brands are difficult to execute. Actually, really difficult. And none of this is new news to Target, so I’m betting they are taking a very eyes-open approach to the difficulties they face for both the launch and the long term.
Target’s pivot would likely be painless, but not automatic. The evidence supports cautious optimism:
But the obstacles are real:
Verdict: Painless in the sense of no revenue cliff; profitability depends entirely on execution.