Tanger, which owns and operates 38 outlet centers across the U.S. and Canada, announced Monday that Sephora will be opening its first locations within five of its U.S. off-price properties later this year, including locations in Phoenix and Palm Beach.
This new expansion — which also includes locations in Charleston, South Carolina; Deer Park, New York; and National Harbor, Maryland; as well as Arizona and Florida — marks Sephora’s first foray into Tanger’s outlet locations.
Tanger’s first and only Sephora location ahead of this news was acquired during the company’s November 2023 purchase of Bridge Street Town Centre, Tanger’s first full-price outdoor lifestyle shopping and dining destination in Huntsville, Alabama. But Justin Stein, evp of leasing at Tanger, told Glossy the company has been in talks with Sephora for some time.
“Sometimes [retailers] aren’t ready for our channel yet … but [the timing worked and it] was a perfect marriage at this point in time for our companies,” Stein told Glossy. “What we like about Sephora entering our world is that we know it’s going to encourage longer visits and increase basket sizes, and we know it’s going to satisfy our customers who shop with us day in and day out.”
To determine each community’s desire for a Sephora location, Stein’s team looks at local surveys and feedback from general managers, retailer and wholesaler analytics including e-tail shopper locations, and other metrics. The new locations will be placed next to stores that draw a similar customer, like Victoria’s Secret, Coach and Kate Spade, and will feature dedicated parking for online orders picked up curbside.
Sephora, like many of Tanger’s newest beauty retailers, like Ulta Beauty, Bath & Body Works and Lush, will operate a full-price retail model.
“We had to evolve since Covid, and so we’ve been blurring the lines [between off-price and full price] in leasing our centers for quite some time now, and now what you’ll find in our portfolio is a mix,” Stein said. “[But our shoppers] love their brands and they love their value, and so you don’t want to disappoint them by not providing some type of value, and so that’s where the Tanger Loyalty program and TangerClub comes into play.”
Tanger’s tiered rewards program works across many stores in Tanger centers and includes access to discounts, free gifts, gifts with purchase, VIP parking, birthday freebies and sale access. As of now, Sephora and Tanger are in discussion about the retailer joining the Loyalty program.
These five new Sephora locations are part of Tanger’s ongoing investment in replenishment businesses, which drive more regular shoppers into Tanger’s shopping centers than holiday shoppers, as well as restaurants and entertainment. Stein told Glossy that Tanger’s cosmetics business, not including fragrance, currently does $200 million in yearly sales.
For many years, the outlet beauty category was dominated by fragrance and clearance retailers that resisted advertising for fear of diluting brand value. Estée Lauder Companies’ The Cosmetic Company Store, which currently has more than 250 global locations including 29 in Tanger-owned properties, has kept a low profile without advertising its brands. But Stephen Yalof, president and CEO of Tanger, told Glossy in February that a vital part of Tanger’s evolution lies in bold OOH and digital advertising, not retailers that prefer their deals to travel by word of mouth.
For example, Tanger negotiated a large, visible Sephora sign for each center. “Part of our deal is we worked on an appropriate signage package. Whether it be on monument signs, pylon signs or backs of buildings, we worked on an individual basis with the local teams to figure out where the best, visible spots are for this brand,” he said. “It’s very important for us to promote [Sephora] and drive traffic to the center.”
On the call for its first-quarter 2024 earnings report in April, Tanger executives reported the company’s ninth consecutive quarter of positive rent spreads and raised its full-year 2024 guidance.
The five new Sephora locations, each averaging approximately 5,000 square feet, will open later this year. Tanger’s team declined to share what businesses are being replaced, but said the transition is part of a large initiative to replace under-performing businesses with new, fresh retailers. Previous tenants will either be moved to smaller locations within the center to boost sales-per-visitor or removed from the centers altogether.
This isn’t Sephora’s first expansion into off-price centers. The beauty retailer currently operates at least eight Sephoras within Simon properties’ outlet franchise called Mills. As previously reported by Glossy, Tanger’s Yalof served as CEO of Simon, which has 69 outlet centers in the U.S., prior to joining Tanger four years ago.
Sephora’s other less-expected retail plays include a shop-in-shop within Kohl’s stores that launched in August 2021 and has proven to be a bright spot for the department store, as Glossy previously reported. Sephora had a similar arrangement with JCPenney, which included mini Sephora locations within the department store chain, from 2006 to 2022.
Sephora’s team failed to provide commentary ahead of this story’s publication.
According to Placer.ai, a location analytics firm, foot traffic to malls has continued to rebound year-over-year from pandemic lows, with open-air shopping centers rebounding faster than indoor malls and outlet malls. Ethan Chernofsky, svp of marketing at Placer.ai, told Glossy that diversifying tenants and adding restaurants, entertainment and replenishment businesses are key factors in the evolution of the outlet mall.
“An outlet center that demands a farther journey is not going to effectively compete on convenience, but it can leverage the value and a strong tenant mix to drive longer, high-intent visits that lead to greater sales,” Chernofsky told Glossy. “The retail landscape is large and diverse, and focusing attention on delivering for a specific purpose or audience creates more opportunity across the ecosystem.”
