BY KELSIE CALDERON
Shopping at Ulta Beauty is an experience on par with being a kid walking through a candy store.
The makeup powerhouse is quickly beginning to take over the beauty business since it first opened its doors in 1990. At the end of 2018, the Fortune 500 company’s sales for the year had hit a total of $6.7 billion and continued to grow even higher in 2019 (via Forbes).
With its welcoming retail atmosphere and mighty online presence with over 25,000 products, it’s obvious that Ulta has built a solid foundation to dominate the makeup market — in more ways than just its 3,100 shades of foundation from which to choose (via Women’s Wear Daily). Ulta CEO Mary Dillon told Forbes, “We’re all really focused on what our guests are looking for at the end of the day, and if we can make sure to offer that to them; I think we’re going to continue to be in a good place.” How does Ulta do it? Read on for sneaky ways that this retailer is getting you to open up your wallet.
Ulta fits customers’ beauty budgets
Ulta has always been focused on what customers want. With all types of people visiting their stores daily, it would only make sense to cater to everyone in order to sell more makeup to more people. Ulta prides itself for being the only beauty retailer that carries merchandise at all price points — from mass market items to prestigious products. Whatever a person’s budget may be, there’s something to buy.
On top of that, the senior vice president of merchandising, Monica Arnuado, told Women’s Wear Daily, “We definitely see a lot of guests coming in that are brand new to Ulta start out shopping in mass and they only buy mass. As they continue to shop within Ulta, we see that in year two and year three they begin to enter into the prestige side.” The store’s data has proved this to be true. About 77 percent of its customers eventually purchase both low-end and high-end products.
Shoppers can be drawn into the store to purchase products at a more affordable price, but, after seeing all the options they have surrounding them, this causes most to splurge on higher-end items.
Ulta’s loyalty program has membership perks
The more a person spends, the more a person gets in return from Ulta Beauty. Ulta’s customer loyalty program, appropriately called Ultamate Rewards, is a points-based system that adds up whenever a person purchases products. As of this writing, there are currently almost 32 million active members, according to Forbes.
What’s even better is that it’s available to absolutely anyone, as it’s completely free to sign up for. For every dollar spent, one point is earned, and, when the points add up, so do the perks! They eventually add up to include things like free shipping when ordering online, exclusive coupons available on a customer’s birthday, and yearly reward cards to use at the on-site salon. The catch is that a person can only receive some of these perks if they spend over $450 in a single year and reach “platinum” status. If not, the points will expire after a person has worked so hard to earn them, so customers have to rush with their yearly spending to stock up on points. It’s no wonder that 77 percent of Ulta shoppers own more than 11 lipsticks!
There’s more to spend money on at Ulta than just makeup
Ulta has evolved into a one-stop shop to meet everyone’s beauty needs. It has dominated the U.S. as the top makeup retailer, and, in addition to its beauty products, the retailer provides an on-site salon in every location. If someone is planning a night out on the town and needs more than just to purchase a new tube of lipstick, Ulta can provide its customers with haircuts and coloring, styling and hair extensions, lashes and brows services, waxing, and even makeup lessons so customers can master the art behind buying Ulta products.
Members of Ulta’s rewards program can even accumulate points through their salon services — not just with makeup purchases. That gives customers even more of a reason to get their hair done in-house so they can rack up points to score free stuff. Having a place for all your beauty needs is a sure way to spend $450 quickly. Bring on the platinum status!
Ulta hooks customers with its flash sales
Though Ulta regularly has many deals and sales on their products, the best one they have every year is their 21 Days of Beauty sale. Customers can even receive up to half off on their favorite items at Ulta. The sale discounts specific products for only 24 hours and then moves onto another batch of products the next day until the 21 days are up, as noted by Allure. Because of this, customers have to be quick in purchasing their favorite makeup must-haves by midnight.
What’s even better is that this sale is available both in-store and online, making purchasing a person’s favorite product as easy as clicking a button, which can potentially be dangerous to wallets everywhere. If a customer has only 24 hours to make a decision on purchasing their favorite makeup brand, they are sure to do it. According to a poll by CreditCards.com, 80 percent of younger people have made impulsive purchases online.
Customers can test products before they buy them at Ulta
In an economy where brick-and-mortar stores are disappearing, Ulta’s retail locations are continuing to thrive. “That’s the nature of beauty and why brick and mortar will continue to be strong,” Ulta senior vice president of merchandising, Monica Arnuado, told Retail Dive. “Our guests, both male and female, like to come in and experience the products and try them on.”
Ulta gives customers the opportunity to do just that, which sets it apart from any old department store, and the enormous sales numbers year after year show that this concept works. The company gives customers access to products they normally wouldn’t purchase. After all, people are sure to feel more at ease purchasing an expensive product if they have already tried it themselves. “Sure you can go online and you can replenish your mascara, you can replenish your cleanser if you know that’s what you want,” Arnaudo added. “What we find is many of our guests love to experiment and they like to see what’s new and what’s trending and that’s why they like to come in stores.”
Ulta’s mobile app makes shopping easy
To make matters worse on a beauty guru’s wallet, Ulta’s app makes purchasing even easier. Directly through the app, customers can see the points they’ve accumulated, view current sales and discounts, and purchase items quickly with their account information on file. The app even sends push notifications to users so they can receive immediate updates for sales to their cell phones. Evelyn Wang, senior vice president of Wet ‘n’ Wild’s marketing, told Women’s Wear Daily, “Our consumer is a Millennial, Gen Z, make-up involved consumer who is very much a cosmetics junkie and definitely someone who shops across multiple brands and is, in a way, channel-agnostic. She wants everything at her fingertips. She buys a lot of units, and that’s something we bring to Ulta.”
If the idea of not being able to test out products before buying them seems like enough to stop a customer from purchasing makeup online, think again. Ulta’s app now includes GLAMLab, a virtual way to try on thousands of makeup brands. It’s as easy as clicking “accept” and giving the beauty app access to your smartphone’s camera.
Ulta’s focus on new trends has customers spending to keep up
With social media allowing emerging trends to be delivered to people faster than ever, it can be difficult to keep up with what’s going in and out of style. This is exactly how beauty businesses get customers to come back and spend money. “‘New’ continues to drive traffic and share gains across all categories,” Ulta’s CEO Mary Dillon told Forbes.
Makeup enthusiasts wouldn’t be caught dead wearing last season’s “in” shade, so they trust Ulta to tell them what to buy next. “They have an expectation that we’re bringing newness and relevant brands that are either trend-focused or they’re seeing them on social and digital,” Ulta’s senior vice president of merchandising Monica Arnaudo told Women’s Wear Daily. By changing products every season, people have no choice but to come back to buy more.
“Because beauty is moving so fast, our guests are not as brand loyal and it’s about what’s hot and what’s new, what’s socially relevant,” Arnaudo added. The beauty business, essentially, is telling its customers what they need to buy.
Ulta gives customers free gifts with purchases
When a customer spends money on their favorite things at Ulta, they not only stock up on rewards points for future products, but they can also score a free gift at the time of purchase. “FREE 3 Piece Gift with any $39 Tarte Foundcealer purchase,” one free gift opportunity read on Ulta’s website in November 2019. Essentially, they’re telling customers that if they enjoy the item they bought, they are sure to enjoy this one too!
Free stuff can’t be causing people to spend more money, though, right? Wrong. According to The Atlantic, retailers offer free samples to guests because they can increase their future sale of that item by up to 2,000 percent. It also gives customers the opportunity to try something they normally wouldn’t, especially if they weren’t able to make it into the store to test the product themselves. Instead, they can try out the sample in the comfort of their own homes. The thing is, if a person enjoys the free gift enough, they are sure to come back and buy it.
Ulta partners with celebrities that people look up to
Social media influencers are modern-day celebrities. Millennials seem to be constantly checking their newsfeed to see what these powerful people are up to, and they have a lot more influence on society’s spending habits than people may realize.
Evelyn Wang, senior vice president of marketing at Wet ‘n’ Wild, told Women’s Wear Daily, “Ulta so much has [its] pulse [on what is trending],” noting, “They saw that Wet ‘n’ Wild was gaining traction on social media and popularity with influencers, and that’s what propelled the conversation with them.” Wang added, “We look on the social side. Brands like Morphe and ColourPop have gained a lot of traction. It’s important for us to get these brands. It’s a win-win for us — our guests are looking for them, and it drives traffic in.”
Other notable collaborations with Ulta include one with Kylie Jenner, who has over 150 million Instagram followers. When Kylie Cosmetics launched exclusively in Ulta in November 2018, product demand was so high that the store ran out of stock by the end of that calendar year (via Forbes).
Ulta personalizes the shopping experience
“Our guest is always at the center of everything we do,” Monica Arnaudo, Ulta’s senior vice president of merchandising, told Retail Dive, so it only makes sense that personalization to each customer is the key to keep them spending. When a person is an Ulta rewards member, heading over to the retailer’s website will already be customized specifically to them.
There are even great perks when a customer’s birthday rolls around. By sharing a person’s birth date upon signing up for the free loyalty program, Ulta will send a birthday coupon for a free present when that day arrives each year. Platinum members, who spend more than $450 per year, and Diamond members, who spend more than $1,200 a year at Ulta, get an extra birthday surprise, so there’s all the more reason to buy, buy, buy for their birthdays!
During all customers’ entire birth months, they also receive double the amount of points for each dollar spent on merchandise. In other words, treat yourself!
Ulta offers perks for using its credit card
If receiving double points for every dollar spent sounds appealing, signing up for Ulta’s Ultamate Rewards credit card is the way to go. Users will receive double rewards points every day of the year instead of just during their birth month. By signing up for Ulta’s Mastercard, buying gas and groceries can help a person accumulate even more rewards points to spend on makeup. The credit card can be used anywhere that accepts Mastercard, and, for every $3 that the user spends with it, they will get one point that can go toward rewards to be used in Ulta stores.
Ulta also adds that if a person spends $500 within the first 90 days of receiving the credit card, the customer will receive 500 bonus rewards points, which is redeemable for $17.50 off a purchase at Ulta.
For the makeup mogul that spends a pretty penny on beauty products throughout the year, the idea of racking up more rewards points is enough to keep them spending.
Ulta puts impulse items next to customers as they wait in line to pay
Let’s be honest: There’s usually a long line at Ulta, especially when there’s a sale. As customers are forced to weave around display cases to form an orderly line at the register, they are surrounded with small sample items to keep their attention occupied, or, rather, to their wallets busy.
According to Shopify, most people obviously will think twice about spending $1,000, but can more easily justify spending a smaller amount. That’s why Ulta keeps items near the register that are all under $20. When customers are browsing through the small sample items and realize they are next up to pay, they have only a split second to determine if they want to buy the small product. Realizing it’s not much money at all, they throw it in their basket, deciding that they have to have that travel size makeup remover too. Though it may seem way easier to impulse-buy items online with a single click of a button, 79 percent of impulse buys still take place in retail stores. Beware the checkout line!
Ulta store layouts keep you around
The bright colors, funky music, and rows of products waiting to be tested are all things that set Ulta apart. “The traditional drugstore world is a sea of product with little navigational guidance, and all the product is encased in packaging. That’s not us,” Monica Arnaudo, Ulta’s senior vice president of merchandising, told Glossy.
Each brand within Ulta has its own section, and company policy allows them to create their own light fixtures and displays, according to Women’s Wear Daily. Customers are able to seamlessly flow back and forth between each section, testing products to see exactly what they want to buy. “They’ve really figured out a formula for offering their customers a unique assortment with a unified appearance,” Bruce Teitelbaum, the CEO for retail design firm RPG, told Women’s Wear Daily.
Ulta also puts products it wants to sell in the front of the store and necessities, such as brushes, styling tools, etc., in the back (via Women’s Wear Daily), so, of course, customers must walk through the pretty new lip gloss display, perhaps picking one up to buy, before finding what they really came for.
Ulta has over 1,000 stores in the United States, so shopping is super convenient
When customers are in the mood to test the newest products, Ulta is likely close by to them. As of August 2019, the chain had 1,213 stores across the U.S., and the company continues to grow. Ulta has opened up more than 100 stores every year since 2013. The beauty powerhouse is very strategic with its locations and focuses on the masses. Obviously, the closer the store is to a person, the more likely they are to visit. “We certainly look at convenience as a factor,” Monica Arnaudo, Ulta’s senior vice president of merchandising, told Retail Dive. “We’re located in a lot of the power malls, we’re not in your typical mall environment, so that’s something else that I think is really unique to the beauty space.”
All in all, it’s really no wonder that Ulta’s competitors are struggling to compete. Arnaudo added, “We’ve got something super strong and special that’s unique to Ulta.”