Beauty is big and growing—this $60.58 billion industry has doubled since 2003. Women are very interested in learning about and trying new techniques and products. On YouTube, Beauty is the #2 channel, after music. Beauty is also democratic—92% of YouTube video views are for individual ‘vloggers,’ not corporate or brand-sponsored content. Women want authentic recommendations.
Few beauty brands are poised for growth like ULTA Beauty, which features posh retail environments offering 20,000 products and a suite of salon services. With its brand promise of “All Things Beauty, All in One Place”, ULTA Beauty has engaged in a successful business strategy that has proven popular with women. In reported first quarter 2015 results, ULTA Beauty’s total sales increased 21.6%, and earnings per share grew 35.1% to $1.04.
Dave Kimbell, Chief Merchandising and Marketing Officer, explains ULTA Beauty’s consumer-centric business strategy at a recent Chicago American Marketing Association breakfast:
“We created a business that reflects the way women actually want to shop for beauty products. Most beauty is separated into two categories: prestige products at department stores or accessible products at mass retailers. We brought prestige and mass together in one coherent environment. To compete with online retailers like Amazon, we added experiential offerings like brow services.”
Understanding ‘Beauty Enthusiasts’ is Key to ULTA Beauty’s Success
Through a strategic planning process, ULTA Beauty identified Beauty Enthusiasts as its prime customer target. This segment is passionate and emotional about beauty and loves learning about new trends. They are nonplussed by commissioned department store salespeople, although they often welcome advice and second opinions.
ULTA Beauty appealed to Beauty Enthusiasts by turning its stores into a “playground of possibilities” where beauty could be explored as a fun adventure for consumers. Creating the ideal guest experience for this segment influences store design and product/service offerings, along with employee training and compensation considerations. Kimbell adds:
“To Beauty Enthusiasts, we offer an unrivaled selection and experience that allows her to discover the fun of beauty. Events and exclusive products elevate the excitement and transform a shopping trip into an adventure.”
Noted retailing industry expert and CEO of Way Point Partners, Judy Harrison, comments:
“I’d expect to see things like brow services, dry bars, and makeup consultations continue to expand at ULTA, reinforcing its strong position with Beauty Enthusiasts.”
With a brand personality focusing on being fresh, modern, youthful and fun, ULTA Beauty also recognizes the desire for authenticity in beauty. The company seeks to enhance its “Beauty Authority” through partnerships with prestige brands and consultative services. View two recent TV commercial spots for examples of strategy execution, ‘Candy Store’ and ‘All Things Beauty.’
ULTA Beauty’s business strategy is affirmed by its extremely successful loyalty program. The 15 million ULTAmate Rewards members represent more than 80% of sales for the brand. The program is positioned with the slogan “Beauty Loves You Back,” and also educates the company in cross-shopping data.
The growth keeps blooming for ULTA Beauty, which just opened its 800th store in Ammon, Idaho, with a goal to reach 1200 stores by 2019. Same-store growth of 8.9% makes the brand’s goal attainable and shows significant customer loyalty for this ‘beauty playground.’ ULTA Beauty is a gorgeous example of turning customer insights into a profitable business strategy and competitive advantage.