Target beauty expansion pause unveils major retail problem | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

There’s a reason so many of us walk into Target for a handful of grocery items and come out with a loaded shopping cart and a $200 receipt.

Target carries an extensive and impressive range of inventory. You can buy everything from cleaning supplies to toys to small furniture pieces, all under the same roof.

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One thing that sets Target apart from competitors is its reputation for being a hipper, trendier version of Walmart. You can buy apparel at both stores, but Target’s clothing lineup may be more appealing to fashion-minded consumers.

The one thing Target doesn’t necessarily have going for it is boasting the lowest prices in town. That’s where Walmart tends to shine.

But Target does a good job of making up for it by introducing fun, interesting products that, for better or worse, tempt shoppers to spend (or overspend). And at a time when consumers are being more careful with their money due to lingering inflation, that’s a pretty impressive feat.

Target is pausing its beauty expansion for key reasons.

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Target goes all-in on beauty

Target, like many other retailers, is aware of recent consumer trends. And management knows full well that consumers have been curbing their spending due to sticky inflation and general economic uncertainty.

Spending could decline even more in the coming months as the impact of tariff policies becomes more clear. To this end, Target has been taking strategic steps to position itself as a go-to source for beauty products.

Even when economic times are tough, consumers tend to prioritize beauty products.

Let’s remember that the days of logging into work in pajamas from home are long gone for many people.

Now, many companies are back to office life, which means employees need to look their best. So betting on beauty makes sense for Target, since it’s one category that’s likely to see consistent spending even as economic conditions force consumers to make changes.

Earlier this year, Target announced plans to expand its lineup of beauty products. Customers can expect to see an additional 2,000 items pop up on store shelves and online.

Target pauses Ulta expansion for key reasons

At the end of 2024, Target had more than 600 shop-in-shop Ulta stores. Those stores have been a huge draw for customers and have helped Target solidify its reputation as a beauty giant.

But Target recently announced that it won’t be moving forward with additional shop-in-shop Ulta stores. And that’s surprising, given that Target has repeatedly called its relationship with Ulta an overwhelmingly positive one.

At an investor meeting earlier this year, Rick Gomez, Target’s EVP and chief commercial officer, said Target’s beauty business has “nearly doubled” since 2019. And he credited the store’s partnership with Ulta as a big driver.

“Amazing in-store presentation and a great digital experience, our partnership with Ulta Beauty, and our assortment that includes some of the leading brands in the industry have combined to make Target an undisputed beauty destination,” he said.

But there may be a couple of reasons Target isn’t forging ahead with more Ulta shops within its stores.

For one thing, with recession fears abounding, consumers may opt to conserve funds even more in the coming months until economic conditions stabilize. Since Ulta products tend to come with higher price tags, Target may be opting to focus its efforts on sourcing beauty products at lower price points.

In fact, of the 2,000 new beauty products Target is introducing this year, 90% will be priced at under $20.

The second reason for Target’s Ulta pause, however, may boil down to concerns about high shoplifting rates.

More Retail:

Ulta’s higher-end products may be more of a target — no pun intended — than the other beauty items the store carries. And Target workers have been quick to point out that theft is an issue at the store in general, but particularly with Ulta products.

Of course, Target employees were also quick to point a finger at their employer and blame higher levels of theft on a lack of staffing. But between both concerns, it’s easy to see why Target is hitting pause on opening more Ulta shops and instead focusing on less expensive products.

Maurie Backman owns shares of Target.