2025 is shaping up to be a transformative year for Ulta Beauty, and according to Inna Larson, the company’s vp of IT strategy, planning and enterprise architecture, technology will be at the core of it all.
In addition to expanding internationally to Mexico, this year will be the first time Ulta will be able to fully realize the operational benefits of its three major foundational platform transformations.
As explained by Larson, Ulta had been working on parallel multi-year transformations that concluded in 2024. Those foundational transformations included a complete rehaul of its digital store platform, with an improved virtual try-on experience and hyper-specific personalization, opening up more opportunities for e-commerce initiatives. Ulta also transformed its enterprise resource planning (ERP) platform to SAP S/4HANA to simplify supply chain, merchandising and inventory management.
Lastly, Ulta upgraded its data platform by combining a number of different data sources and tools into a modern ecosystem, which sets the retailer up for artificial intelligence and machine learning capabilities. With this, Ulta is able to leverage data science to make more data-driven decisions across the enterprise faster.
“As a technologist, what’s top of mind is: Now that we have these incredible foundations that we’ve built, how do we prioritize them in a way that the business can absorb and activate all of this incredible capability that we’ve unlocked,” Larson told Glossy at NRF’s Retail Big Show this week.
To that point, Larson said Ulta will use these new technology advancements to modernize the business and enable future growth, including Ulta’s international expansion ambitions, further digital innovation and personalization, and streamline back-end operations to increase its bottom line.
Ulta’s third-quarter 2024 results, released in December, revealed a year-over-year increase of 1.7% to $2.53 billion. Ulta’s former CEO, David Kimbell, who retired on January 6 and was replaced by Kecia Steelman, credited the company’s growth to its loyalty program, which ended the quarter with 44.4 million active members, 5% more than the year prior. Kimbell also noted Ulta’s marketing strategies and streamlined operational systems as key contributors to the retailer’s growth.
Following her NRF Retail Big Show panel this week, Larson sat down with Glossy to discuss how Ulta is scaling its business using technology, preparing for potential headwinds, and balancing innovation and profitability.
How Ulta Beauty is using emerging technologies to drive and scale business
“We have undergone some foundational transformations … that have set us up for a lot of success to innovate, because in order to innovate, you need really strong foundations. … We have the leading virtual try-on in the industry. We have a unique business model and a value proposition where our merchants are incentivized to be part of our digital catalog for virtual try-on — a digital twin, so to speak, of their product in our virtual catalog. Our library of virtual try-on is the largest, most robust beauty catalog because of our unique, innovative business model there.
We also transformed our marketing platform. We’ve partnered with Adobe, one of the leading engines for marketing and personalization. We have been doing personalization for some time, but now, it’s on a platform that’s super-powered and supercharged, and we can take every aspect of the customer journey and make it personalized. We’re empowered, and we’re enabled with our new platform to personalize every step of the customer journey, which is what they have come to expect in our store.”
Potential challenges
“We underwent a lot of transformation, and transformation is not easy for any organization, especially transformations that touch every store, every associate and every employee. One of the lessons learned for us is, now that the foundation is there, we [need to] make sure that we thoughtfully prioritize. We can unlock so many capabilities, but we want to thoughtfully prioritize and unlock [innovation] in a way that makes sense. We have to prioritize what is going to give immediate value to the customer experience and what is going to give immediate value to the associate productivity in a way that enables them to spend more time with the guests but doesn’t tax them and the rest of the organization with a huge learning curve.
Another challenge, of course, is that we’re all wary of AI. When I’m speaking to a chatbot, I’m like, ‘Oh, are they going to give me the same customer service that an agent would?’ We have to make sure that our technology is graceful in a way that creates trust with our guests, and that we are providing them resolution in exactly what they need in a timely manner, and that they are continuing to get that white glove service even where there is a little bit of technology and automation between the guest and the product.”
Prioritizing both innovation and profitability
“We are fortunate our leadership team is extremely visionary but also pragmatic, so we are always looking at innovation. We’re looking at innovation through our innovation team, we’re looking at innovation through our strategy, and we’re also looking at innovation in every business unit. There are additional innovations that are specific to operational efficiency and operational excellence. Those innovations could be where we use data science and AI/ML to increase employee productivity, increase loss prevention and reduce loss. Those are innovations, but they actually improve the bottom line. Then, there are innovations like personalization, where they grow revenue, or innovations that come out of the innovation group. Some of these bleeding-edge innovations become cutting-edge innovations that then become operational production. … So we do have innovation across the whole ecosystem, but it’s in different stages. … We’re also strategizing how we can do what we’re doing better, cheaper and faster. Or, how can we increase productivity and improve the guest experience? Innovation isn’t always an investment that’s been incremental. Innovation could be an investment that yields optimization and cost savings and a direct positive impact on your bottom line.”
