America Loves Ulta Beauty, Sales Increase 18% Aided By New Store Design

Ulta Beauty continues to expand its footprint in the U.S. market, and consumers continue to support the beauty retailer, with annual sales in 2022 reaching over $10 billion, a record for the company. Profits were record-setting at over $1 billion, and Ulta BeautyULTA
expanded its loyalty program membership to over 40 million members. “Achieving such meaningful milestones reflects healthy consumer engagement with the beauty category, the power of Ulta Beauty’s highly differentiated model, and the impact of our winning culture and outstanding teams,” said CEO Dave Kimbell in the most recent earnings call.

The company’s successful growth in sales, up 18.3% for the year, and its continued acceptance with the American market is a result of its location strategy, its commitment to varied product assortments reaching a wide range of demographics, and its determination to keep its finger on the pulse of the customer. The company opened 247 stores last year and remodeled 20 with a new floor layout and store design. The new store layout reflects how customers want to shop by leveraging data from its Ultamate Rewards members and listening to customer and brand partner feedback.

Most stores are in neighborhood centers close to its customer base, and the company operates over 300 Ulta Beauty shops within TargetTGT
locations. The strategic partnership with Target includes plans to have up to 800 of these shops within stores eventually.

New store design is welcoming and engaging

In an interview with Ulta Beauty’s chief merchandising officer, Monica Arnaudo, it was clear that the new design comes from listening to its Ultamate Beauty loyalists and its many brand partners. The big takeaway about how shoppers like to explore Ulta Beauty is that they love to explore and discover products and services throughout the store. “We improved the overall navigation of the store and elevated the hierarchy of product categories to make discovery fun and easier to navigate,” said Arnaudo. Shoppers interested in bath and body care will find skin care merchandise next to body care. Wellness products are placed near the bath and body area, a natural flow for shoppers.

“In the new store layout, we wanted to provide the opportunity to showcase inspirational moments for shoppers,” said Arnaudo, adding that the front of the store should be as exciting as entering one’s home. The entrance of the newly remodeled stores showcases two significant factors; Ulta’s Beauty’s unique beauty perspective and beautytainment. The point of view at the front of the store allows the experts at Ulta Beauty and its brand partners to highlight the key trends and essential beauty classifications over various periods. For example, conscious beauty may be a consumer trend highlighted at the front of the store or a new product launch showcasing innovative products. The entrance will be based on company-wide marketing themes but will allow stores flexibility to pull in the local market preferences.

Beautytainment adds excitement to stores

Beatytainment means creating energy and events near the front of the store. Creative activity may include Benefit Brow Service, Mac make-up services, or the Beauty Bar, an event swing space. Every store has a full-service beauty salon behind the beauty bar. “Our guests look to Ulta Beauty for inspiration, newness so it is our responsibility to showcase what we are seeing and provide guests the ability to experience what’s new, what’s trending, and what we are most excited about. Based on the survey of our rewards members, this is what they want from us,” said Arnaudo.

After the newness and beautytainment section, guests can explore skin care which moved near the front of the store and was given more space based on the continued interest and consumer emphasis on this category. ”Skin care delivered the strongest growth this quarter with double-digit increases in both prestige and mass,” stated Kimbell, referring to 2022 fourth-quarter revenue.

Brand partners bring the new layout to life

Pulling off such a remarkable and dramatic change to the store layout is difficult when dealing with over 600 brands. Still, Ulta Beauty worked with each brand to ensure the new store layouts achieved the design goals important to the shopper’s journey.

The future of Ulta Beauty

“Over the last two years, the U.S. beauty category experienced unprecedented growth, reflecting various factors such as product innovation, expanding regimens, new social media platforms, return to work and resumed social activities, and the elevated connection between beauty and overall self-care,” said Kimbell. Price increases in the beauty sector contributed to revenue growth in 2022.

Ulta Beauty plans to open 25 to 30 new stores in 2023 and remodel or relocate another 20 to 30 stores. Over the next two years, the company expects to open about 100 stores. All new and remodeled stores will have the newly designed store layout. The company is focused on buy anywhere, fill anywhere capabilities and plans to continue accelerating growth across its digital platforms and bringing together physical and digital experiences. Ulta Beauty expects net sales to increase by 7% to 8% in 2023.