Ulta Beauty is teaming with Alliance Data Systems Corp. to launch Ulta cobranded credit cards.
The program is designed to increase the benefits of Ulta’s Ultamate Rewards loyalty program and increase overall engagement.
“Customers were asking for it,” said Ulta chief marketing and merchandising officer David Kimbell. “They showed interest in it, and I think it’s in large part because of the engagement that many of our guests have with our loyalty program. They were interested in ways to participate more, to get more points, to be more involved.”
By using both the credit card and the loyalty program, customers essentially reap double the points, Kimbell said. “It’s another way to deepen engagement,” he continued. “It’s really important for us to find new ways to innovate [the loyalty] program and new opportunities for guests to participate in it, so this credit card launch is a key element of our overall innovation plan.”
The retailer is offering two options — the Ultamate Rewards MasterCard, which can be used at Ulta and other places, and the Ultamate Rewards Credit Card, which can be used only at Ulta. Both cards offer a onetime 20 percent off discount and one point for every dollar spent at Ulta. The MasterCard version also gives customers one point for every $3 spent outside of Ulta, and 500 bonus points for spending $500 in the first 90 days.
Alliance Data plans to use in-store, online and mobile channels to acquire card users. Consumers must be part of Ulta’s loyalty program in order to sign up for either card.
“From the in-store experience to the immensely popular Ultamate Rewards program, Ulta Beauty has fostered a passionate, loyal customer base,” said Melisa Miller, president of Alliance Data’s card services business. “We will employ our lifecycle marketing approach to deliver on our promise of being a valued partner for the entire customer journey. We look forward to the possibility of existing Ulta Beauty guests becoming lifelong card members with even deeper brand affinity and engagement.”
Ulta, which has been growing quickly, has 886 stores in the U.S. The size of the retailer’s loyalty program is also increasing, and was up 25 percent year-over-year to 19.4 million members in the first quarter of 2016. “Over 80 percent of our sales are driven by the loyalty program members,” Ulta chief executive officer Mary Dillon said at the time.
The business posted a 23.7 percent gain in net sales for the first quarter of 2016, to $1.07 billion, and expects net sales for the second quarter to be between $1.04 billion and $1.06 billion. Ulta is also investing in retail, with plans to remodel 12 locations and grow square footage by 11 percent. The business also said it will invest $390 million on the retail endeavors, including $80 million on brand boutiques and fragrance fixtures enhancements.