Sephora, Ulta and the operational choices behind expansion

The Ops Engine was invited by Beauty Independent to share its perspective on the Sephora–Ulta UK expansion battle. Below are the views we shared, expanded with the operational lens behind them.

Sephora's new partnership with Marks and Spencer is the latest sign of an intensifying battle for the British beauty shopper. Next spring, the LVMH-owned beauty specialty retailer will begin opening shop-in-shops at M&S, with the partnership slated to reach 100 stores, dramatically expanding its physical reach as Ulta Beauty continues to build its presence in the United Kingdom through its acquisition of Space NK.

The two global beauty giants are taking different routes to scale in a nearly $6.9 billion market where beauty retail specialists like Boots UK and Superdrug account for nearly half of beauty and personal care spending.

As we were finalising this piece, the UK beauty market moved again. On 6 October 2026, Canada's Weston family, through their Wittington Investments holding company and in partnership with Fairfax Financial Holdings, agreed to acquire Boots from Sycamore Partners for £6.7 billion, with completion expected in Q1 2027 (Pharmacy Business). Sycamore had only owned Boots for a year, having acquired it as part of its take-private of parent Walgreens Boots Alliance.

That changes the shape of the UK beauty market one more time. Within nine months, three of the UK's largest beauty retailers have made structural moves: Sephora's distribution partnership with M&S, Ulta's platform acquisition of Space NK, and now Boots' change of ownership. All three are operating-model decisions in different costumes.

The news is being read as a story about market share and format choice. Our view is that it's also a story about operating models, several of them, in direct comparison. Expansion is also an operating model choice, not only a go-to-market strategy. The route a business takes into (or through) a new market shapes what it has to build, what it has to share, and what it ends up owning once it gets there.

Two deals, two operating models

Sephora is gaining access to distribution. Ulta has bought an operating business. The question is how effectively each turns that advantage into profitable growth while protecting the customer experience.

Ulta has taken a classic acquisition route, buying an established local business with customers, brand relationships, and operating infrastructure already in place. Space NK continued as a standalone subsidiary following the acquisition, preserving its identity and local expertise. That reduces some of the uncertainty of entering a new market, although an acquisition still carries financial and integration risks.

Sephora is building through several routes. Its current UK expansion began with the acquisition of Feelunique in 2021, followed by its online relaunch in 2022 and physical return at Westfield London in 2023. So this is not simply a contrast between acquisition and partnership. Sephora has used both. The M&S deal adds reach and speed through existing retail infrastructure. The trade-off is more shared decision-making and the complexity of delivering within another retailer's environment.

Sephora's earlier UK business exited in 2005. Today's approach is more diversified rather than automatically safer. It has several ways to reach customers, but each format still needs to justify its economics.

Does the Sephora–M&S partnership make sense for both?

The partnership has a clear strategic rationale for both businesses. Sephora gets access to established footfall and a broader customer base through a planned 100 M&S stores, while M&S gains specialist beauty expertise and a compelling reason for customers to visit more frequently. There is potential for customer crossover, but also for each business to reach people it might not otherwise attract.

The condition is that these spaces feel like a credible Sephora experience. They can be an entry point into the brand without replicating a flagship, but the advice, discovery, and service need to meet the same standard. The format can change; the customer promise should remain consistent.

At The Ops Engine™, we see that growth creates value when the business can deliver on it operationally. Accessing footfall quickly is attractive; turning that footfall into profitable, repeat customers is the real test.

Is one strategy more effective than the other?

It depends on the objective, the capital available, and the capabilities each business already has. An acquisition buys an operating platform; a partnership provides access to another business's infrastructure and audience. Neither guarantees profitable growth.

We wouldn't frame Sephora's strategy as awareness over sales volume. Our reading is that it is building both: destination stores establish the experience, while smaller formats, digital, and concessions make it easier for customers to discover and buy from the brand. Ulta starts with an established local platform that it can support and develop.

Sephora has the more interesting mix of expansion formats; Ulta has the advantage of owning the business through which it entered the market. But neither is an obvious winner yet, and counting concessions against standalone stores tells us very little. A concession and a standalone specialist store have different assortments, costs, and customer journeys. The numbers don't compare like-for-like.

From an operating perspective, we would look at customer acquisition costs, repeat purchasing, stock productivity, and profitability by location, and whether expansion creates additional demand or shifts sales between channels. The strongest strategy is the one the business can execute consistently and profitably.

Who's best positioned to challenge them in the UK?

Boots is the incumbent we would watch most closely, and the recent acquisition by the Weston family only sharpens that. It is strengthening its premium offer, including Charlotte Tilbury in 31 stores from July 2026 and Jo Malone London in 39 stores from August 2026. It also has substantial reach and an established loyalty programme. That combination makes it a serious competitor, provided the shopping experience keeps pace with the product offer. The ownership change itself is now a live operating-model decision: what the new owners retain, restructure, or invest in across Boots UK, Boots Opticians, and No7 Beauty Company will shape how the business competes with Sephora and Ulta over the next three years.

We would also watch John Lewis for its combination of beauty, service, and loyalty, and Lookfantastic and Cult Beauty for competition online. John Lewis offers in-store beauty services and a dedicated beauty community; Lookfantastic and Cult Beauty remain established digital competitors.

These retailers don't all need to win the same shopper or shopping occasion. The competitive advantage comes from being clear about why customers should choose you, then delivering that reliably.

What British beauty shoppers actually value

The British beauty shopper isn't one customer type. Someone discovering a new fragrance wants a different experience from someone replenishing their everyday skincare.

Retailers need to combine discovery with confidence: interesting products, credible advice, clear value, and an easy purchase. Value doesn't necessarily mean the lowest price. It can mean finding the right product, being able to try it first, or receiving useful rewards.

Exclusives and social buzz can bring customers through the door, but availability, knowledgeable staff, and reliable service give them reasons to return. Customers also need to move easily between browsing online, trying in store, and purchasing through their preferred channel.

That is where the operating model matters. Marketing creates expectations; the business has to fulfil them. The retailers that win will make beauty exciting to discover and dependable to shop.

What this means for scaling brands at £2M–£20M

Most of our work isn't with businesses the size of Sephora, Ulta, or Boots. It's with consumer and tech businesses scaling from £2M to £20M making the same category of decision at smaller scale: new market, new channel, new category, with far less capital to spend on the choice. The framework is the same.

Three questions worth holding before an expansion decision.

What are you actually buying? An acquisition buys an operating platform, customers, suppliers, team, local expertise, infrastructure, plus the risks of integrating it. A partnership buys access to another business's infrastructure and audience, with shared decision-making as the trade-off. An organic build buys full control, with time and capital as the trade-off. Each is a different operating model from the start.

What can your operating model actually deliver? The strongest strategy is the one the business can execute. A brand without strong retail operations shouldn't take a wholesale push on the back of a trade-show win. A business without a repeatable onboarding motion shouldn't buy a company whose customers expect one. The expansion decision is downstream of the operating capability underneath it.

Where does the test sit? Opening numbers tell you nothing. Does the new market create additional demand or just shift existing sales between channels? Does repeat purchasing justify the acquisition cost? Are stock and staffing commercially sustainable in each location? These are the questions that separate growth that compounds from growth that stalls.

The through-line

Expansion is an operating model choice. The three UK beauty retailers currently reshaping the market are illustrating very different operating paths, one acquired, one partnered, one restructured. Each has a case. None has an obvious advantage yet.

Sephora is gaining access to distribution. Ulta has bought an operating business. Boots has new owners deciding what to do with the operating platform they just acquired. The question for each is the same question every scaling brand faces at some point: whether the operating model it has, or the one it builds, can actually deliver the growth the strategy promises.

Where to start

If you're heading into an expansion decision, new market, new channel, new category, acquisition on the table, and the operating model implications aren't clear, these are the conversations we have with founders every week. Let's start one.

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