How Ulta Beauty is Thriving Today and Planning for Tomorrow
Amidst challenging times across the retail industry, Ulta Beauty has continued to perform well. The retailer has created long-term relationships with its customers across channels, added new and innovative brands and products to its merchandise mix, and committed to tech investments that it believes will help keep it at the top of the beauty category.
In a keynote session last week at Shoptalk in Las Vegas, Dave Kimbell, CEO of Ulta Beauty, discussed the company's strong results and what has led to them. In addition, Kimbell offered insight into the beauty retailer's strategy for remaining at the top of its category moving forward.
Strength in the Beauty Category
While acknowledging the economic disruption we've seen, Kimbell noted that Ulta feels fortunate that beauty as a product category continues to perform well. That performance has been positively impacted by the evolution we've seen in the category in recent years, according to Kimbell.
"There's a deep connection beauty has with self-care and wellness," Kimbell said. "The connection beauty has to self-care and wellness is so much stronger. We believe that's awesome for the future of the category. It's more than just the superficial of how I look; beauty has expanded to how I feel and my emotional self-care."
Layer on top of this the new brands and innovation in the category as well as the re-emergence of physical retail, and Kimbell is excited about the opportunity for Ulta to grow market share and build upon the positive momentum it has already generated.
"We have a unique and differentiated business model; nobody does what Ulta Beauty does," Kimbell told the audience. "There's a great connection that consumers have with our products and brands — fragrance, skin care, hair care. And as the world has opened back up, we have the emotional connection to wellness and now people are going out a lot more. We will lean into what makes us different and unique.
"We’re the only [beauty] retailer at scale to offer brands at all price points — entry to luxury," added Kimbell. "Consumers can choose and adjust their spending. The emotional connection that beauty plays in consumers’ lives will not alter. We haven’t seen "tradedown" yet. We’re all things beauty, so we're able to prepare for that tradedown if it happens."
Stores and the Connection to Digital
"Stores are the heart of Ulta Beauty," said Kimbell, noting that the retailer's desired shopping experience comes to life in the physical environment. "We create a non-threatening, welcoming experience. For beauty enthusiasts, shopping the category is fun."
And better yet is when those in-store customers start engaging with Ulta Beauty in its digital channels. When an in-store shopper starts buying online from Ulta Beauty, they become 2.5x more valuable to the retailer, according to Kimbell.
"And their trips in-store actually increase," Kimbell noted. "We want shopping Ulta online to be a seamless, intuitive commerce experience."
What's Coming Next
To help it retain its position as the leading retailer in the beauty category, Kimbell identified several investments that Ulta is making. For example, last August Ulta announced the launch of Prisma Ventures, a digital innovation fund set to invest $20 million in emerging technology startups that seek to shape future online and in-store experiences by unlocking new technology that fuels greater discovery, personalization and convenience. Kimbell specifically cited investments in an artificial intelligence-driven skin care analysis tool, as well as a robotics company that applies fake eyelashes.
"We're thinking about the continued expanded definition of beauty and its connection to wellness," noted Kimbell. "We'll introduce new categories and expanded assortment in wellness. People are experimenting more — and that’s what beauty is all about. Make people more confident and feeling better about themselves."
Kimbell also said that Ulta will be working on strengthening the connection between physical and digital. While the retailer has already built real capabilities, such as BOPIS, there’s more coming. He also called out the importance of personalization and engendering customer loyalty to be successful going forward.
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Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.