Since the beginning of the third quarter, Ulta Beauty has introduced a new layout in about 44 stores to better showcase its mass and prestige categories, improve navigation, enhance the services experience and create more opportunities for discovery.
Compared to its last extensive merchandising overhaul, in 2018, Ulta Beauty’s latest update increasingly emphasizes its service offerings. It includes new brow and makeup services, offered in partnership with Benefit and MAC Cosmetics, via new beauty bars located in the center of the store. Every new store and every remodeled store will feature the new layout design. Ulta Beauty has long offered salon hair services through a back-bar program featuring brands like Briogeo. During the retailer’s third-quarter 2022 earnings call in December, Dave Kimball, CEO of Ulta Beauty, remarked on the importance of salon services.
“Our services business accelerated and delivered another quarter of double-digit comparable growth, primarily due to higher stylist retention, increased stylist productivity and increased capacity in our salons, as we lap capacity constraints due to the pandemic,” he said. “Our targeted CRM efforts to drive awareness, trial and frequency are working, increasing salon appointments from existing and new [customers]. Our in-store back-bar events also continued to drive product attachment and new guest acquisition for participating brands.”
Ulta Beauty’s new merchandising strategy comes nearly two years after the retail industry felt the brunt of Covid-19 in 2020. Since brick-and-mortar stores have reopened, retailers have watched temporary effects, including the exclusive focus on e-commerce, give way to more long-term industry trends like omnichannel, wellness and a customer focus on values. According to Monica Arnaudo, chief merchandising officer at Ulta Beauty, the fact that the consumer’s journey is no longer linear informed the new strategy. The Ulta Beauty team considered consumers’ embrace of buy-online, pick-up in-store and curbside pick-up.
Also newly positioned within the center of stores are elevated gondolas housing Estée Lauder, Clinique and Lancôme brands, which Arnaudo called the perfect transition brands between prestige and masstige. They also encompass both makeup and skin-care products, which are categories on opposite sides of the store.
“Beauty services can mean an additional visit, which may result in product purchases beyond the beauty service itself,” said Manola Soler, senior director at Alvarez & Marsal Consumer Retail Group, a professional services firm. “Services have been part of [Ulta’s] long-term strategy and they remain at a relatively low penetration of total revenue, at around 3-4% in recent years. Well-executed services present an opportunity to grow their share of consumers’ beauty wallets and could have a halo effect on their overall spend with the retailer.”
Other noticeable changes at Ulta locations include a repositioning of skin care to the front of the store, driven by the category’s overall growth in the past three years. All of skin care has been brought together, flowing from mass to masstige to prestige brands. In the pre-existing layout, prestige skin care was positioned toward the back of the store on one side, with mass skin care placed in front of the store on the opposite side. On another side of the store is now makeup, also flowing from mass to masstige and prestige. Fragrance has been moved to the back of stores, and there is now dedicated space in the front of the store for brand and product launches across categories. In addition, checkout has been moved closer to the salon. As Glossy reported in 2018, Ulta Beauty’s strategy of offering mass and prestige products is core to its strategy.
“This is a big evolution for us. It was important for us to consider the feedback we were receiving,” said Arnaudo. “We [wanted to] create an experience that was easy for [customers] to navigate, so they could spend their time playing and discovering and being inspired, versus spending time trying to find things.” who said this?
