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Ulta Beauty Stays In Step With Consumer Demand

Ulta Beauty is growing rapidly with a mix of prestige, mass and services.

Ulta Beauty is a symbol of just how much beauty retailing has changed, but also how consumers’ wishes remain the same.

“If you asked a consumer 20 years ago about things that motivated her, you’d hear feeling good about herself or expressing her individuality. Fast-forward and those drivers are pretty much the same,” said David Kimbell, chief merchandising and marketing officer for Ulta Beauty.

But a quarter of century ago when Ulta Beauty debuted, consumers didn’t have a choice like Ulta Beauty. The company founders saw opportunities to go into convenient strip shopping centers where they could have a large footprint to bring a huge assortment of beauty and services under one roof. “They wanted to give her a place to immerse herself in a world of beauty and a selection she couldn’t find anywhere else,” said Kimbell. “She can come in and curate her own experience in an environment that is set up specifically for beauty. What they found then is still true today.”

Over the years, Ulta Beauty has burnished its stores and attracted premium brands such as Benefit, Clinique, IT Cosmetics and Dermalogica. “It took us a while to get to the mix we got to today,” admitted Kimbell. But he added it is a format in tune with the shift in how consumers prefer to buy beauty, including products at varying price points. “We’re always on the hunt for new brands,” he added, noting how the partnerships with IT cosmetics resulted in an exclusive brush launch. Hot categories include personal care, especially body and hair care.

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Ulta Beauty finds itself in the enviable position as consumers seek experiences and in-store services. “We see services as certainly a revenue opportunity, but even more importantly, bringing engagement into beauty. When you walk into one of our stores and the services are really humming those people feel a sense of beauty happening. They can hear it, see it and smell it,” Kimbell said. “Beauty is happening because of the services we provide in the stores.”

Eighteen months ago Ulta Beauty rolled out a strategic framework to guide it into the future. A refreshed beauty reward program is helping drive loyalty — there are currently 18 million members. Another pillar is the guest experience — both in the store and online. And then there is the assortment where Ulta Beauty is always on the hunt for exclusives available only at Ulta. More than 20 brands were added to the portfolio last year, bringing to 550 the number of brands encompassing 20,000 items.

There are ambitious expansion plans. Ulta Beauty now operates about 900 stores in 48 states and the District of Columbia.

One hundred stores are slated to open this year on top of 100 new last year, which is expected to total 970 units by year-end. Markets vary from urban in Los Angeles and Chicago to smaller, rural settings. “Last year we had our largest grand opening in our history in Fairbanks, Alaska — not normally what you would think of as a beauty mecca.”

Additionally, Ulta Beauty frequently updates existing stores to keep them “fresh.” Online is also earmarked for expansion to open up more access, so we are reaching her when and where she wants to be reached, Kimbell said. “What we are seeing is that our guests that shop us both online and in store are our very best guests. They spend two and a half times more than those who shop only in stores.” Mobile is well over 60 percent of the traffic, he added. “We are making it as seamless as possible not only to buy but the play and explore the wonderful world of beauty.”

Within the past year, Ulta Beauty invested in a national advertising campaign. “We launched the first-ever national communications campaign. Awareness of Ulta has increased very significantly over the past 18 months,” he said.