ULTA: A RETAIL HYBRID

Byline: Faye Brookman

WILLOW GROVE, Pa. — Entering the new Ulta store here during the grand opening, Kristen Carley looked perplexed. “What kind of store is this? A salon? A drugstore or what,” she questioned as she stepped into the door.
That’s just the type of reaction that Lyn Kirby, Ulta president and chief executive officer likes to hear. Kirby, the former head of Sears’ Circle of Beauty, likes to pique shoppers’ interest. That’s because she feels the latest incarnation of Ulta is like no other beauty store in the world.
Ulta made a brazen entry into the Philadelphia area last month with the opening of five new stores, bringing the total store count for the Romeoville, Ill.-based retailer up to 90 stores in 12 states. The stores, which average 10,000-square-feet are also in Montgomery Square, Pa.; Deptford, N.J.; Reading, Pa.; and Concord, Del. “This is the first market where we opened all four stores in our new store format and we are significantly ahead of plan,” said Kirby, referring to both transactions and customer traffic.
To herald the opening, Ulta tapped singer and fragrance marketer Patti LaBelle, a Philadelphia native. LaBelle helped kick off a promotion called a Celebration of Sisterhood in the City of Brotherly Love. The store here served as the site of a fundraiser on Sept. 8 for the Susan G. Komen Breast Cancer Foundation featuring designer Shoshanna Lonstein. It drew 500 customers.
At the grand opening celebration, LaBelle pledged to return to Ulta to find many of her favorite brands. “I live near here,” she told a group of Manhattan visitors who journeyed on a bus to see the store. The product assortment features her own scents including a new master brand she announced at the event, called Notes. There are two scents – Jazzy and Soulful. The fragrances will bow in 2001.
The first few weeks of promotions featured appearances by the Jaqua Sisters, founders of Jaqua Girls, manufacturers of the Goddess Gathering Kit and other beauty kits packaged in paint cans and demonstrations by creative makeup artist Eddie Funkhauser from Tony & Tina.
Kirby hopes Ulta’s unique blend of mass and class merchandise along with the presence of a full-service salon will make Ulta a hit in the Philadelphia area. The stores here are the latest of the chain’s Level 4 prototype which features fresh flowers dotting the aisles, private massage rooms and even a cafe for a quick pick-me-up cappuccino. Shoppers can surf the Internet and check faxes in a special area near the cafe.
The Ulta team believes that the mass market customer is ready for a more holistic shopping environment, where they find everything from yoga tapes to hair styling advice in the kind of salon that won’t ridicule a woman for attempting at-home hair color. “We don’t want women to be embarrassed to ask in the salon about home haircoloring,” said Adam Broderick, director of salon development for Ulta.
The eight-chair, four-nail station salon offers services such as haircuts, color, manicures, pedicures and massages. In front of the salon Ulta merchandises salon hair care and beauty lines such as Matrix and Sebastian. Mass hair products are sold closer to the front of the store.
In an attempt to help shoppers bring the feeling of a spa to their homes, the store here has a new department for Ulta stocked with holistic merchandise ranging from candles and compact discs to vitamins and health books. There are even soothing waterfalls retailing for $49 and up. “Beauty is an extension of health and we’re tying that all together,” explained Kirby of the new 800-square-foot health and wellness department situated at the very front of the store.
To provide value, Ulta will frequently tout gifts with purchase-a key move at a time when many prestige retailers are backing off the practice. During opening festivities, patrons received a free python print purse with purchases exceeding $30.
What differentiates Ulta from Sephora on the prestige end and from mass merchandisers on the other is the fact it is a true hybrid. Prestige products take a front and center position with mass items displayed in its own separate section off to the side. With the opening of more upscale stores, Ulta has been able to secure brands such as Tony & Tina, Pupa and Elizabeth Arden. In mass, the range includes Revlon, Oil of Olay, Cover Girl, L’Oreal and Maybelline. There are niche brands such as Caboodles and Jane.
But beyond the commitment to both upscale and mass names is the breadth of assortment of items that are hard to find at other retail stores such as the 22 varieties of blow dryers.
Very few merchants can duplicate Ulta’s commitment to fragrances either. Long before Sephora hit the U.S., Ulta was organizing its scents alphabetically including everything from Adidas to Anna Sui. There’s also ample space for a bath department, including The Healing Garden, State of Mind, Calgon Home and Fa.
Another competitive edge, Ulta has the space for commodities women need such as toothpaste and shampoo. Ulta also has ample space for new produce introductions such as the Komb In’s Hot Heads hair color priced $6.99.
Ulta has powerful marketing tool — its Ulta’s Beauty Club that is two million consumers strong. Ulta has collected shoppers’ names, income and buying habits and is starting to use the information for target marketing programs. “We know that the average shopper buys four facial products and three hair items. She spends $300 a year at Ulta,” she said.
Through the club, Kirby said, Ulta has uncovered the fact that the average shopper is 29. To that end, Ulta keeps its mix aimed at shoppers 16 and over.
By the end of 2,000, Ulta plans to have 14 Level 4 stores in operation. For convenience, it prefers locales in power strip shopping centers rather than malls.
Ulta is ramping up for a growth spurt, said Kirby. The chain hopes to open 20 new stores in 2001, including the first in California, and Kirby envisions expanding to anywhere between 500 to 1,000 stores in total.

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