In a struggling retail industry, Ulta Beauty is a bright spot. The cosmetics and beauty products retail chain reported sales increased 21 percent last year, profits were up 24.5 percent and it opened 100 new stores. That positive momentum has continued in 2016, with sales up 23 percent year to date, net income up 29 percent and 33 new stores having been opened this year. So what’s Ulta’s secret? Making shopping with the brand fresh, fun and real, executed through a seamless omnichannel strategy.
In a session this week at the Shop.org Retail Digital Summit in Dallas, Jeff Hamm, senior director, e-commerce operations at Ulta, discussed how the company has been able to grow into the largest specialty beauty retailer in the U.S. in a relatively short period of time (Ulta was founded in 1990).
All Things Beauty, All in One Place
Ulta offers its customers the full beauty experience when they walk into its stores. From its extensive array of beauty products (20,000 in total) to in-store salon services (hair, skin, eyebrows), the retailer is seeking to deliver exceptional experiences at every turn of the customer journey.
“We want to acquire new guests and deepen relationships with existing ones,” Hamm said.
To help with that goal, Ulta relies heavily on its loyalty program — Ultamate Rewards. The program boasts more than 20 million active members, and is operated in a standard manner: the more a customer spends with Ulta, the more reward points she earns. Those points can be redeemed for products and services. In addition, Ultamate Rewards members get access to top beauty tips and trends, special invites to exclusive events, and members-only offers.
In addition to their purchasing power, Ultamate Rewards members are a powerful source of data for the retailer, said Hamm. That data — e.g., how they engage and interact with Ulta through emails, promotions, surveys; purchase history online and in-store — is assimilated into a single customer profile, which leads to targeted promotions.
Enabling the Art of Discovery
Our guests want to be able to discover new beauty products; it’s our job to be able to provide for that no matter the channel they choose to engage us in, Hamm said. To that end, Ulta has implemented a number of omnichannel initiatives:
- Connected inventory: Ulta’s stores and e-commerce business share the same inventory.
- Debut products online: For new products, Ulta adds them first to its e-commerce site, then typically two weeks later brings them into stores. This provides for discovery online, and drives them into the store, Hamm noted.
- Mobile-first mind-set: Ulta challenges itself to design the digital experience with mobile in mind, not desktop. We build on mobile, and then adapt to other mediums, Hamm said.
- Synced inventory: Much like other retailers, Ulta sees a significant portion of its web traffic — both mobile and desktop — checking to see if the product they’re looking at online is available in-store. Inventory levels are synced to enable Ulta to make stock availability known to web visitors.
- Collaborative leadership: The various teams within the Ulta organization are connected and constantly in communication. It’s one experience for the guest, no matter the department, whether it is a supply chain problem, inventory problem, merchandising problem, said Hamm. And it’s that collaboration between teams that helps to get omnichannel projects green lighted, budgeted and executed.
- Marketing attribution: All marketing efforts, online and offline, are measured to see the impact they have on purchases.
- Shared data: Guests are at the center of Ulta, Hamm said, and this requires shared data within the organization to make their experiences as seamless and easy as possible. For example, store associates are able to make product recommendations to in-store shoppers based on data they have on the customer’s previous online behavior.
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