Intersting article about Ulta

[Laura Palmer]

Saw on my LinkedIn feed today and I thought it was fascinating!

www.fastcompany.com/3068653/how-mary-dillon-turned-ulta-beauty-into-the-leading-cosmetics-retaile




By Jennifer Braunschweiger03.20.17 | 6:00 am

In the past two years, Ulta Beauty, a salon chain and retailer carrying more than 500 cosmetics brands, has surpassed Sephora to become the nation’s largest beauty merchant, opening more than 200 new stores, breaking ground on its first location in Manhattan, and upping its online sales by more than 50%. That’s all good news for CEO Mary Dillon, but one of her biggest accomplishments isn’t as quantifiable. Dillon, a veteran of McDonald’s and Gatorade, summarizes the sorry state of Ulta’s brand awareness when she took the helm in 2013 with a friendly impression of her target customer: “Ultra? What’s that?” Though sales were satisfactory, a long association with tired strip malls and budget shopping had taken its toll. Dillon repositioned the brand, putting new stores closer to urban centers (she expects to open 300 more by 2019) and investing in technology to deliver online orders more efficiently. “We’re a 27-year-old brand that I feel is just getting started,” she says. Here are some of the strategies in her corporate-makeover playbook.
Go Beyond Numbers

Though Dillon is an Ulta shopper herself, she still leans on tactics she honed at other companies, when understanding the consumer didn’t come as easily (she recalls her dogless days marketing for Kibbles ’n Bits). Members of her team go on shop-alongs with customers, asking them about what they like and how they use the products as they move through the store. Dillon couples that intel with data from Ulta’s robust loyalty program, Ultamate Rewards, to complete her picture of the customer. That understanding informs her decisions about how to market Ulta’s more than 20,000 products for maximum impact.
Offer Savings, But Make Them Personal

Before Dillon’s arrival, Ulta was known for its abundance of discounts and coupons. She has edged away from that blunt-force strategy, instead incentivizing customers to join the loyalty program, which allows her to tailor benefits to the shopper. The theory: Thoughtful freebies (some members recently received Urban Decay eye-shadow kits; others, a custom color-matched Clinique foundation) do more to deepen the customer’s emotional connection to the store than a generic 15% off mailer. The strategy appears to be working. The program’s 21.7 million active members now generate more than 90% of Ulta’s overall sales.

ADVERTISING
"“People want to buy online, and they want to come into the store and try things. We have to participate in every channel.”"

Be An Amplifier

About 20 times a year, Dillon makes trips to several stores around the country specifically to talk to associates, listening for what bubbles up. “I kind of collect these ‘ahas,’ ” she says, remembering the time she heard staff members mention how long it took to unpack the boxes that came from distribution centers. She instructed the centers to reorganize the boxes, aligning them with store layout. The move enabled employees to spend more time with shoppers. “That’s the kind of insight within the seams that’s important,” Dillon says.
Meet Customers Where They Are

Dillon believes building physical stores is critical to growth, but she’s equally committed to improving Ulta’s online shopping experience. One of her early triumphs was investing in a pair of distribution centers that dramatically improved Ulta’s e-commerce processing times. “People want to buy online, and they want to come into the store and try things,” she says. But she can also guide them toward new experiences. Last year Ulta debuted Glam Lab, a virtual try-on experience that allows users to upload a selfie and test products against their skin tones.
Keep Culture At The Center

Ulta generates 2,500 new jobs annually, but Dillon isn’t content to just create positions—they have to be fulfilling. During a management meeting early in her tenure, Dillon noticed that no one seemed comfortable asking questions—and the ones that were voiced were often shut down. Today, she encourages open feedback through a quantitative survey that goes out to the company’s 30,000 associates, measuring how engaged they are, how much they trust management, and whether they believe their managers support their career development. The results help Dillon ensure Ulta’s team members continue to uphold a culture of openness. “At the end of the day, especially in retail, you’ve got humans serving humans,” she says. “And really, the more engaged and happier the associates are, the happier our guests are. It’s not complicated.”
Brushing Up

Ulta’s engaging in-store experience helped boost company revenue by more than 20% last year. Here are four ways the company changed its retail formula.
Illustrations: Grace García Salcedo

Salons: Ulta distinguishes itself by offering in-store services, including haircuts and facials. Recognizing that salon guests spend almost three times as much as other customers, Dillon moved the Benefit Brow Bar, a station for eyebrow shaping, to the front of some stores so that shoppers see services when they enter. Salon sales were up 15% in the first nine months of 2016.

Samples: Most beauty retailers provide products for customers to test, but usually only for higher-end brands. In a bid to lure shoppers into stores, Ulta offers samples for a wide range of products, inviting people to try on not just prestige makeup lines such as Estée Lauder and Nars, but also drugstore brands including Maybelline and CoverGirl.

Tools: Walk into an Ulta store and you’ll hear the whir of hair dryers, and not just because of the salons. Many of the electronics the store sells, such as the new Dyson Supersonic hair dryer, are plugged in to encourage play. Even the low-tech tools, like makeup and hair brushes, typically have samples on display for customers to see and feel.

Reviews: As they browse the store’s seemingly unlimited supply of eye shadows, lotions, and nail polishes, shoppers can use the Ulta app to scan any product’s bar code. From there, they can read customer reviews, see similar merchandise, and save items as favorites. The app also tracks loyalty points and displays products and services in an appealing Pinterest-style interface.

[secretlyevil]

Wow, that's really impressive. I know there are mixed reviews about Ulta but I've had only good experiences with them both locally and online. I'd rather go to Ulta than Sephora.

[ESF]

Interesting read. I like reading about women run businesses and their success stories. Awesome that they've been able to grow so quickly.

[litebright]

I think the personalized freebies point is a really good one.

When they intro'd Buxom, Ulta sent me a free, full-sized Buxom gloss, and since Buxom gives their glosses people names, they sent me the one with my name. Since I didn't know Buxom well, my first reaction was that they'd sent me a personalized gloss, lol.

It wasn't actually *quite* that level of personalization, but that's some smart marketing. I'm not going to remember every time they send me a 20% off coupon, but I will definitely remember and have warm fuzzies from that free lip gloss.

[kategm]

I really think their policy of not offering samples to take home is frustrating. I wanted to compare 2 primers, and they told me that it wouldn't be helpful if I put each on half my face. As in, she refused to help me do that. She said I needed to try one a day on my whole face. So of course, to do that I either have to come in 2 days in a row or buy 2 products and return one or both. It seems like such a waste when at Sephora they'd just throw a squirt in a pot and I could do it easily.

For the record, I wound up swatching them half on my face by myself (without the ease of their tools) and I could tell a huge difference. As in, one looked great and I looked like death with the other. I'm not sure their reasoning for not giving out samples, but it makes me prefer Sephora.

[calico]

Interesting article. I have been an Ulta shopper for over 10 years now and I generally enjoy the changes that I've seen the stores make in the last few years. I love that I can get so many more high end brands, as well as some drugstore brands that aren't readily available like MR. While I hate that they don't give samples, that really just makes me feel less guilty about returning a product I've used that doesn't end up working for me.

I'll take no samples and a rewards program that gives me $$ to spend over samples and crappy rewards.

[kittycatlove]

Very interesting article. I've been shopping with them since back when they called themselves Ulta3 (I'm old, LOL). It's been interesting to see how much they've changed since then.

[kategm]

Apr 26, 2017 7:29:32 GMT -5 calico said:

Interesting article. I have been an Ulta shopper for over 10 years now and I generally enjoy the changes that I've seen the stores make in the last few years. I love that I can get so many more high end brands, as well as some drugstore brands that aren't readily available like MR. While I hate that they don't give samples, that really just makes me feel less guilty about returning a product I've used that doesn't end up working for me.

I'll take no samples and a rewards program that gives me $$ to spend over samples and crappy rewards.

True, I should get better about just returning things. When I started shopping for makeup, Sephora was MUCH closer to me than Ulta. I got so used to Sephora that I rarely think of ulta, despite not living near a real Sephora in 5 years. But I don't get emails from Ulta for some reason (signed up a million times and am a perks member), and don't spend enough money to get the good perks, so for me personally, I don't get the advantages of ulta.

[robinsbff]

i want some of these customized freebies they are talking about. i am a platinum member and have been for three years - since i started shopping there. they've never sent me a freebie at all.

[Laura Palmer]

So I've also been shopping with them since they were Ulta3, and have been platinum forever. But I have never received a customized (or hell any kind of) gift from them (not the UD lipsticks they were giving out, etc.). And now I'm kind of salty about it since they act like they do it for everyone. I also hate that their samples when you buy online are shit. I also think their customer service pales to Sephora's - Policies and people.

However - I still prefer Ulta over Sephora. I love the Benefit brow services. More coupons, better reward program ($ over 100 point sample size items), locations are easier for me to get to (driving to one of three within 10 minutes of me vs 15 to the mall and parking, which can take 30 mins at my mall). So if the above items are how they save money to give it back to me in points, so be it.

[Pippin]

I've also never gotten a personalized or any sort of random gift. I find it odd that they bring it up in the article if they aren't going to offer it to everyone. I also think their shipping is still a joke compared to Sephora's which for me is a big deal. It's hard for me to get into a store very often so being able to buy one or two things online and have them arrive in two days is great.

Ulta does have a great rewards system and I like that most of my drugstore products are there. I would love to see them add testers for the drugstore brands though. Trying to find my foundation match for drugstore products is annoying.

[ESF]

I just saw on their website that they are now carrying CoverFX at Ulta. I love them so this is great news. Ulta has been really upping their game with the prestige brands lately.

[persa]

They still need to work on the in store experience. I shop there but I have so many friends what won't go there because you don't get the same luxury, fun makeup experience as you do at Sephora or Nordstrom cosmetics department. And I can't argue with that. It's much more utilitarian.

[Champagne Supernova]

Yeah, my only issue with Ulta is their shipping. Maybe it's because I've been spoiled by Sephora's flash shipping.

Also, the closest Ulta to where I live is a 30 minute drive away so it's not like I can conveniently pop in to pick up some stuff. Sephora is only a 15 min drive away.

I think Ulta has the best rewards program if you don't care to use your rewards to try new stuff. I'd definitely shop more once they start carrying MAC because about half of the stuff I use everyday is by MAC.

[Laura Palmer]

Apr 26, 2017 12:14:11 GMT -5 Champagne Supernova said:

Yeah, my only issue with Ulta is their shipping. Maybe it's because I've been spoiled by Sephora's flash shipping.

Also, the closest Ulta to where I live is a 30 minute drive away so it's not like I can conveniently pop in to pick up some stuff. Sephora is only a 15 min drive away.

I think Ulta has the best rewards program if you don't care to use your rewards to try new stuff. I'd definitely shop more once they start carrying MAC because about half of the stuff I use everyday is by MAC.

I had to goggle -- I did NOT know that Ulta was going to start carrying Mac. Mind blown!!!

The shipping is pretty quick for me -- but I live near their DC, so it only takes two days once they ship (usually a day or two), so not a big deal for me vs. Sephora. (And certainly a lot faster than Sephora w the coupon, which seems to be picked and sent by carrier pigeon these days)

[centralsquare]

Apr 26, 2017 7:29:32 GMT -5 calico said:

I'll take no samples and a rewards program that gives me $$ to spend over samples and crappy rewards.

I hear you -- but then they shouldn't make shitty comments when I return something that didn't work.

[kristie]

Does anyone know what the items that have white price tags on mean at ulta? I know the orange are clearance, but there are multiple sections that have random items with white tags on them. The tags are the full price of the item, but I found a UD b6 spray (old packaging) and took it up front and it rang up as 19 instead of the 31.00 on the tag.

[Laura Palmer]

Apr 26, 2017 13:10:32 GMT -5 centralsquare said:

Apr 26, 2017 7:29:32 GMT -5 calico said:

I'll take no samples and a rewards program that gives me $$ to spend over samples and crappy rewards.

I hear you -- but then they shouldn't make shitty comments when I return something that didn't work.

That's terrible. I've never had them make nasty remarks (to my face).

[carrotsmakemefat]

Another ULTA convert here. I actually hate returning things but quite frankly, I got over that. No sample, I won't feel guilty.

The points and rewards are too good to pass up.

[secretlyevil]

Apr 26, 2017 13:10:32 GMT -5 centralsquare said:

Apr 26, 2017 7:29:32 GMT -5 calico said:

I'll take no samples and a rewards program that gives me $$ to spend over samples and crappy rewards.

I hear you -- but then they shouldn't make shitty comments when I return something that didn't work.

That right there, I don't understand. Back in the original MUT days I regularly buying/returning, rinse and repeat at my Ulta, not a single peep or side eye. So that's the weird thing to me, how he experiences at stores in different locations vary. It sounds like headquarters needs to do a better job at training and articulating the company's philosophy for consistency across the board.

[tacom]

I was excited to read they were opening a store in manhattan, until I realized it was all the way up on 86th street. Meanwhile, I pass two Sephoras on my commute each day.

I agree that it's silly to not offer samples. I hate buying and returning so samples spur business IME. I rarely buy makeup or $$$ skincare I haven't tried first.

[cottoncandy]

That was a interesting read. I use to shop at Sephora 100% of the time and in the last few years I've switched to ulta. It's the rewards program that sucked me in because you can't beat it. I did not even bother to use the 15% off Sephora coupon this year which was a first.

[pixy0stix]

We have two Ultas in town. Both are always half empty of products and trashed. One hasn't even been open a year.

[litebright]

Apr 30, 2017 13:08:42 GMT -5 pixy0stix said:

We have two Ultas in town. Both are always half empty of products and trashed. One hasn't even been open a year.

This is the thing that bugs me about the closest Ulta to me -- they are frequently low on stock, especially when something is not new or of-the-moment. The last few times I've been like, "Oh, maybe I'll go pick up a new UD lipstick", they are out of 3/4 of the Vice line. 

The stores are neat and the testers are not excessively gross, by and large, but the availability of actual product beyond a tester for it is really frustrating sometimes. 

[pantsparty]

I switched over to Ulta once they opened up one in the Target plaza near us. No brainer

I haven't bought anything from Sephora in well over a year. I will probably go back there when I run out of my Fresh lip gloss or my Bite pigments.

It is a bummer they don't do samples. I have been trying to pick out a new perfume forever now and I really can't do it by just smelling the perfumes in-store. Also a bummer for foundation.

I am SO EXCITED they are going to carry MAC! That's the only other brand I shop for outside of Ulta. Forget all the palettes in the world - MAC shadows are the best!