Before Ulta Beauty halted its Target expansion, Target employees saw problems first

When Ulta Beauty CEO Kecia Steelman revealed on April 3 the retailer would halt plans to expand the number of its store-in-stores in Target, it may have come as a surprise. After all, the partnership between Ulta and Target was widely lauded as symbiotic when it was first announced in 2020, and when the first shop-in-shops opened in 2021.

Steelman, who was speaking at a JPMorgan retail conference, said that the expansion was on hold—both retailers had set a goal of opening 800 Ulta Beauty at Target mini-stores; they’ve stopped at 610—and that the decision was mutual.

“We’ve made the decision to really lean into the 600-plus stores that are open this next year and really look at, ‘How do we continue to drive efficiencies and leverage the learnings that we’ve had to really unlock value for both of us collectively together?’” Steelman said.

But weeks before the analysts learned that Ulta and Target were hitting pause, some Target employees were reportedly claiming that the partnership had grown contentious—and why.

Beauty secrets: The 1,000-square-foot stores are situated in Target’s beauty section with distinct Ulta branding. They’re staffed by dedicated employees who are hired by Target and sport black Ulta Beauty at Target aprons.

Many have opinions about the partnership.

“No more Ulta in Target,” a commenter wrote on a subreddit for Target employees, which is not affiliated with the company, on March 20—two weeks before the halting of expansion plans was announced. “My understanding is that any future remodels will not have the separate Ulta section due to the amount of theft they have had so far with the existing locations.”

“The amount of theft is fucking insane,” wrote another commenter who claims to work at an Ulta in Target. “I could be wrong but at least 10k a month in theft.” While many Target locations have locked up products to foil shoplifters, Ulta Beauty in Target’s offerings typically are not, and can be purchased alongside Target inventory at checkout (including self-checkout). Some Reddit and TikTok posts have documented, however, stanchion barricades at some stores that limit consumers moving in and out, presumably to curb theft.

Target has made no secret of its shoplifting challenges, but some Redditors said shoplifting was only part of the problem.

“Ulta isn’t very happy with how the partnership is going with Target,” wrote another commenter, who reported a recent store visit by what they called “my regional Ulta manager.” Along with theft, they said the Ulta executive was dismayed by “staffing issues,” namely that Target employees who were supposed to be staffing the stores-in-stores were pulled away by team leaders to cover the beauty department or another department altogether.

One Redditor wrote the store they worked at was so short staffed that “we would all get scheduled under Ulta hours and none of us would actually be in there.”

Assessing other employees’ contention that Target was in “breach” of its contract with Ulta over staffing requires a look at how store-in-store partnerships work generally, and how the deal between Target and Ulta worked specifically.

Merch madness? When Ulta Beauty in Target was announced in 2020, Ulta’s then-CEO Mary Dillon said the deal would boost the retailer’s reach to new consumers and grow loyalty program sign-ups. Target, which mostly sells lower-priced mass cosmetic and personal care items, would benefit by offering higher-priced prestige cosmetic products.

Target owns all inventory, Dillon said in 2020, meaning they follow a royalty structure with Ulta receiving royalties from Target. Ulta reports it as “other revenue,” alongside credit card income and loyalty point redemptions in earnings reports; that budget line has declined for the past two quarters.

Ulta Beauty Rewards members can earn loyalty points on their Ulta Beauty in Target purchases by linking their account to their Target Circle rewards account. A current promotion from Target offers shoppers 20% off Ulta Beauty at Target purchases when they sign up for Ulta’s loyalty program and link it to their Target Circle accounts. While Steelman said last August that 4 million shoppers had linked accounts, several Reddit users suggested lagging loyalty sign-ups were a factor in the expansion pause.

“Loyalty metrics are ridiculous,” one poster said. “We have to stop people from exiting and use a MCO [MyCheckout] device which annoys guests. Apparently our MCO usage was extremely low but most days ONE person is balancing beauty and Ulta.”

If customers can’t connect their loyalty accounts at Target’s standard checkout, that’s “a big miss,” as Ulta loses out on that shopper data, Liza Amlani, principal and founder of Retail Strategy Group, told Retail Brew. Amlani formerly worked as a merchant for Ralph Lauren, including working on the brand’s shop-in-shops at retailers across the UK, Ireland, and Europe.

“I don’t think all customers are that savvy or will take that time to go online and link their loyalty programs,” she said. “That’s a lot of work for the customer.”

Several Redditors also noted that some Ulta Beauty in Target stores were very close to standalone Ulta stores, even in the same shopping centers. For example, the Ulta Beauty in Target at 200 Passaic Avenue in Kearny, New Jersey is just a five-minute walk from the standalone Ulta store at 175 Passaic Avenue. This could be cannibalizing sales at Ulta standalones, a factor Placer.ai reported last month. As Ulta’s foot traffic has decelerated, Placer.ai found that Ulta visitors who also visited Target rose from 86.9% in 2022 to 90.1% in 2024, which could mean the shop-in-shops at Target are drawing shoppers away from Ulta stores.

Retail Brew sent both Ulta and Target detailed questions about our findings. Ulta declined to comment, while Brian Harper-Tibaldo, director of corporate media relations at Target who previously served as its senior manager of crisis communications, sent a statement that didn’t respond to any of our questions directly.

“Our plans for stores and remodels evolve over time, and we’re working in close partnership with Ulta Beauty on future plans,” Harper-Tibaldo said.

“99 problems”: Staffing issues plagued a similar shop-in-shop partnership between Sephora and JCPenney, leading to a legal dispute and ending in an amended agreement as Sephora eventually pursued its current partnership with Kohl’s.

“Target has 99 problems…and one of Target’s biggest problems is just staffing in general,” Glenn McMahon, founder and managing partner of Mac McMahon Advisory Consultants, told Retail Brew, adding that having too few employees in stores also is at the heart of its shoplifting problem.

Although Target locks up many less expensive beauty and personal care products elsewhere in its stores, McMahon lauded Ulta for apparently insisting that Target not put Ulta products in locked display cases, “because that’s bad customer experience.”

However, the “flip side of that is…huge shrink because there is no staff, there’s no sales associates on the floor in Target,” McMahon said, echoing numerous Target employees on Reddit who said they get pulled out of Ultas within Target to cover in other departments.

For customers, the contrast between the two shopping experiences can be as dramatic as a smokey eye, where customers at a regular Ulta store can hunker down with a beauty advisor for a makeover, or simply ask for help swatching foundation shades, but at an Ulta Beauty at Target, they’re lucky to find a consultant.

“If you don’t have staff to help customers, especially with beauty, you’re gonna have a hard time selling beauty,” Amlani said. “It is a high-touch category, unless you know exactly what you want and you’re just buying repeats.”

McMahon added that US retailers are increasingly emulating their European counterparts, where within department stores branded shop-in-shops are essentially consignment businesses, with the brands entirely staffing and managing their sections, and those brands paying the retailers a royalty—in other words, the inverse of the Target-Ulta deal.

Ulta deferring to Target to hire and staff their shops-in-shops “is a red flag right there,” McMahon said. “That is one of the reasons that [the partnership is] probably not successful.”

In Ulta’s defense, though, McMahon pointed out that the deal was inked when Target seemingly could do no wrong in 2021, when its stock was at a five-year high, as opposed to today’s five-year low.

“Target’s not a desirable place to work anymore,” said McMahon. “It used to be, but it’s not anymore, and Ulta is feeling the effects of that.”