Ulta has turned into the ultimate beauty launching pad.
That’s welcome news to the many indie brands still reeling from Henri Bendel’s withdrawal from beauty and the shuttering of retailers such as Woodley & Bunny.
And it validates Ulta’s initiative over the years to shake off its mass-market roots in order to entice indie and prestige brands. Now the 696-store powerhouse is the place for brick-and-mortar launches for brands across the spectrum, from professional to prestige to mass.
In the last six months alone, Ulta launched Mally Beauty, Karora Cosmetics, Altchek MD skin care, Nails Inc. and Vichy’s Idealia Life Serum. Based on shopper demand, It Cosmetics’ space was expanded within months of its launch in September and Urban Decay’s footage was doubled, according to Ulta’s chief financial officer, Scott Settersten. Speaking last month before the Oppenheimer Annual Consumer conference, he said Ulta has a “pipeline of newness.”
With its expanding stable of stores, Ulta is proving attractive as a showcase for up-and-coming lines, as well as mature brands in need of distribution. With 100 more stores opening this year, Ulta is on its stated goal of having 1,200 units in the U.S.
In an effort to delve into previously untapped territory, Ulta will experiment with two smaller, 5,000-square-foot units in rural markets later this year. Typically its stores measure about 10,000 square feet with some 500 brands and 20,000 stockkeeping units. Ulta executives estimate the chain, which had fiscal sales exceeding $2.6 billion, has 2 percent of the $113 billion U.S. beauty market.
Even as Ulta adds more prestige brands like Clinique, which admittedly compresses available space for fledgling lines, marketers said the retailer has maintained its interest in emerging brands and is willing to give them time to prove themselves.
The chain’s buyers are particularly interested in securing a first-to-market exclusive to drive shoppers to their stores. “Sure, they have investors to report to, but they don’t toss you out after a few months,” said one supplier. In fact, Ulta helps “tweak” brands they launch as exclusives to help prepare them for further rollout to other retailers.
Ulta has been a great fit for Mally Beauty, according to the makeup artist line’s chief executive officer, Don Pettit. “Ulta is a great launch partner. They guide you to the right tools and efforts to optimize your presence,” he said. Recently, Mally teamed with Ulta for an in-store selfie contest where shoppers posed with a cutout of the vivacious celebrity makeup artist. During the launch, the real-life Mally Roncal also made numerous store appearances. Mally’s acceptance at Ulta was perfect timing, as Bendel’s, which was selling the brand, exited from beauty.
Last year, Ulta put its product power behind devices, becoming a top destination for hair removal, power cleansers and other tools. This year, skin care has gone into overdrive. “We like products with a problem and solution [positioning],” said Settersten. “What does this do for her? How [can a product] improve her life?” He added Ulta will put the spotlight on nurturing customers’ emotional connections with the store, while providing more point-of-sale education — a catalyst for skin-care sales.
The popularity of dermatological skin-care brands hasn’t gone unnoticed, either, with the retailer scoring an exclusive as the launchpad for a new line from New York dermatologist Douglas Altchek. Altchek has sold his own products in his practice for years, but had the opportunity to expand. Ulta seized it. The Altchek MD line ranges in price from $14 for Gycolic Renewal Pads to $30 for a Night Treatment Restorative Serum. Key ingredients include alpha hydroxy acid, resveratrol, vitamin C and a host of antioxidants.
According to Jerry Rauchwerger, president, FSA Beauty, who is marketing the line, Altchek is sold as a regimen and attracts a segment of the market that “might not be visiting a dermatologist,” but isn’t getting the results they need from existing products. He lauded Ulta’s efforts to bolster its offerings. “They are the titans of beauty. Their stores look amazing. They stay in stock and their customers love shopping there,” he said. “Ulta is receptive to ideas.”
Often, Ulta partners with vendors to be the exclusive launch site for a specific product. That’s the case with Vichy’s Idealia Life Serum, aimed at treating “behavioral aging.” Vichy has identified four aggressors that manifest on the skin, including UV overexposure that creates uneven tone; pollution, which leads to increased dullness; stress, which manifests as fatigued features, and poor diet, affecting the complexion. Ulta has the exclusive on the line from July 15 until September.
In a subsegment of skin care, self-tanning, Ulta found huge success in 2013 with St. Tropez. At last year’s Cosmoprof North America, Ulta executives encountered a bronzing line from Ireland. Karora Cosmetics, bronzing products for the face and body, retails for between $25 and $40. Karora is merchandised in the prestige section of Ulta’s stores.
In addition to getting a new company on a positive sales path, Ulta has become adept at boosting the fortunes of existing lines, as witnessed by the attention NYX garnered once Ulta merchandised it. The retailer almost single-handedly boosted the visibility of the edgy mass-color brand, which was recently acquired by industry giant L’Oréal for an estimated $500 million.