When Target and Ulta Beauty decided to end their five-year partnership, the department store put out a terse statement about the impending divorce.
“Ulta Beauty and Target Corporation announced that they have mutually agreed not to renew the Ulta Beauty at Target shop-in-shop partnership when the current agreement concludes in August 2026. Until then, the Ulta Beauty at Target experience will continue in Target stores and on Target.com,” Target shared in a press release.
At the time, Target explained what would happen during the year before the breakup, but offered no detail on what comes next.
“Since launching in 2021, Ulta Beauty at Target has expanded access to prestige beauty and offered beauty enthusiasts the benefit of linking their Ulta Beauty Rewards and Target Circle accounts for added convenience and value. Guests with linked rewards accounts will continue to earn Ulta Beauty Rewards on eligible Ulta Beauty at Target purchases until August 2026,” the chain shared.
Now, just a few weeks before the partnership ends, Target’s Chief Merchandising Officer Cara Sylvester has shared what will happen in the space once occupied by Ulta in the more than 600 locations that featured the brand.
Target doubles down on beauty
Each Ulta Beauty mini-shop was roughly 1,000 square feet and offered a curated assortment of Ulta products and brands. Target owned the inventory and staffed the spaces.
While Target could have used the end of its relationship with Ulta to welcome another partner or pivot that section of the impacted stores into another area, it has opted to stick with beauty.
Sylvester described what Target sees as its customer, or at least the customer base that can drive the most growth going forward, during the retailer’s first-quarter earnings call.
She sees the chain as “centered on serving busy families, guests who are managing a lot and are highly choiceful about where they spend their valuable time and money.”
She noted that Target already has disproportionate wallet share from this consumer segment, but sees an opportunity to deepen that relationship further.
“So while maintaining a strong core assortment across our categories, we’re intentionally leaning in more aggressively behind a set of prioritized assortments and guest needs, areas where we can lead the market by being bold, distinctive and affordable. These focus areas represent about half of our sales today and are expected to drive roughly 3/4 of our growth going forward,” she added.
That includes, Sylvester continued “building a leading beauty destination.”
Target Beauty Studio replaced Ulta Beauty
Target plans to replace Ulta with its own Target Beauty Studio. It’s going to start with the roughly 600 stores that currently feature Ulta, but expects to expand the rollout to more locations in the future.
“And in Beauty, we’re preparing for this fall’s launch of our Target Beauty Studio in more than 600 stores, building on the momentum we’ve been seeing in the Beauty category. This includes working to minimize the disruption that these changes will cause, cultivating an assortment of trending beauty products, and building out robust plans to support an efficient transition,” the CMO shared.
Replacing Ulta Beauty with Target Beauty Studio also gives the retailer something it never had under the partnership, complete control over its beauty assortment, merchandising strategy and customer experience. Instead of sharing space with another retailer, Target can now build a prestige beauty business that strengthens its own brand while keeping all of the sales.
The new section will is being designed to “spotlight prestige beauty brands,” according to a press release. “The new space will be curated with more than 60 new-to-Target brands that meet growing guest demand for elevated, prestige products and trend-driven innovation across skincare, haircare, fragrance and cosmetics.”
Why did Ulta and Target break up?
David Bellinger, a retail analyst for Mizuho Securities, said in a research note at the time the separation was announced that Target’s “messy in-store operations” as well as retail theft and insufficient staffing likely contributed to the end of the partnership.
“Overall, we see losing the Ulta shop-in-shop relationship as a negative development and something else Target’s next CEO will have to grapple with,” Bellinger wrote.
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Now Target has a new CEO in Michael Fiddelke, and he has an opportunity make a statement with the changes.
Jefferies Analyst Ashley Helgans told WWD.com that the collaboration helped Ulta’s margins and brand reach, flagging that Target now becomes an Ulta rival.
“We see the possibility of Target becoming a greater competitor to Ulta as they continue to build out and improve their own beauty assortment, and currently have a 74% store overlap. We believe that Target has been able to leverage its learnings from the Ulta partnership to enhance its beauty offering across its fleet, not just stores with Ulta.”
Beauty spending faces headwinds
In addition to the fierce competition in the space, McKinsey’s June 2026 State of Beauty report shares signs that consumers might cut their spending.
The data show two trends that will continue: more value-based purchases and overall industry growth.
“Last year, we described a beauty industry that faced rising pressure from value-conscious consumers, intensifying competition, and higher marketing costs. But the industry’s growth outlook has remained steady: The global beauty market is again expected to grow by 5% annually, reaching $590 billion by 2030,” the research company shared.
Stacey Ramstedt, CMO at Church & Dwight, shared why consumers have been leaning toward value brands.
“Inflationary price increases have been plaguing us since as early as about 2022. We now have the additional tariff-induced price increases. And even more recently, in the last few months or so, we’ve started to see a tough job market. All of these things have collectively driven the consumer to pull back their spend,” she told Glossy.
The McKinsey report showed this trend playing out in consumer choices.
“In skin care, the long-standing rule that ‘premium equals performance’ no longer holds true. Consumers are embracing lower-priced brands — especially those from dermatologist-backed and K-beauty players—that deliver visible results and clinical credibility without luxury price tags,” according to McKinsey.
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