Sephora Finds Another Path for Expansion – Tanger Outlet and Open-air Shopping Centers (2024)

Tanger will bring five Sephora stores to its shopping centers this year, reflecting the shopping center operator’s efforts to diversify its offerings and services, and attract younger and more affluent shoppers.

The Sephora partnership also reflects an openness by Tanger — primarily an operator of outlet centers — to bring regular-priced stores into the mix, when it senses that the customer demand is there.

The five new Sephora stores, ranging in size from 5,000 to 6,000 square feet each, are expected to all open within the next three to four months at Tanger’s outlet centers in Charleston, S.C.; Deer Park, N.Y.; National Harbor, Md.; Palm Beach, Fla., and Phoenix/Glendale, Ariz.

Sephora already has one store at Tanger’s Bridge Street Town Centre, in Huntsville, Ala. Tanger acquired the lifestyle center in late 2023.

“We are not just filling our space with pure-play outlet retailers. We are diversifying our mix and assortment and creating a lot more variety in the centers,” said Stephen J. Yalof, president and chief executive officer of Tanger, in an interiew with WWD. “Our customers are saying, ‘We love the pure outlet, but we are looking for more service-oriented businesses, better sit-down restaurants, entertainment, and shopping may not be our first priority.”

Tanger’s rollout of Sephora stores, Yalof said, “goes back to the narrative of rethinking the use of these centers.…We are out there talking and listening to customers about what they want. We’re bringing them a variety of uses to grow sales and traffic through engaging more local customers and making sure tourists know we are there, without alienating our core customer.”

Sephora, owned by LVMH Moët Hennessy Louis Vuitton, has grown enormously in the Americas to more than 500 stores since opening its first U.S. store in Manhattan’s SoHo neighborhood in 1998, according to the prestige beauty brand’s website. That does not include the approximately 1,000 Sephora shops operating inside Kohl’s department stores in the U.S. Worldwide, Sephora has 2,700 stores in 35 countries.

Yalof added that in recent seasons, “We have leaned into beauty heavily,” citing Sephora, as well as Ulta. There are Ulta stores in Tanger’s Huntsville; Rehoboth Beach, Del.; Nashville, and Myrtle Beach, S.C., properties, with a fifth coming soon to Tanger’s Fort Worth, Tex., outlet center. Ulta and Sephora operate regular-priced stores rather than outlets.

Tanger properties house certain other regular-priced stores, including Bath & Body Works, Victoria’s Secret and H&M, though Yalof noted these brands along with their full-price offerings also offer promotional items, on a slightly different cadence from their stores outside of outlet centers. As Yalof explained, their stores in Tanger centers include some merchandise “consolidated” into the Tanger center because it didn’t sell at their mall or street locations which need to make room for newer full-price merchandise.

“Most of our centers are in geographies where a lot of our customers are moving to, or have second homes,” Yalof said, citing smaller markets, beach communities and suburban areas. The outlet centers, he added, while traditionally drawing a heavy percent of tourists, are increasingly attracting “a new, local population springing up around a lot of our centers.” According to the company, 120 million people visit Tanger centers annually.

Tanger’s overall strategy to diversify its portfolio with new brands and categories outside of apparel and footwear includes home furnishings, food and beverage and entertainment, Yalof said. Tanger has leased nearly 200,000 square feet of new-to-portfolio brands since January 2023, including other nonapparel, elevated, and digitally native brands. Tanger has a portfolio of 38 outlet centers, one open-air center (Bridge Street Town Centre) and one adjacent managed center, which is a strip center with Whole Foods in West Palm Beach. Currently, less than 20 percent of Tanger’s square footage is non-outlet, excluding restaurants. Tanger has in recent seasons been adding casual dining establishments such as Mission BBQ in Rohoboth Beach, Tailgate Brewery in Nashville, as well as Texas Roadhouse and Shake Shack in a number of the outlet centers. In addition, a few grocery stores have been added, including Nantucket Meat and Fish Market in Tanger’s Hilton Head, S.C., outlet center.