Ulta is making a change in its store merchandising to broaden its customer base.
Cosmetics retail stores are experiencing the return of instore customers, and the top stores are marketing to broader audiences through a number of changes.
Moët Hennessy Louis Vuitton (LVMHF) retailer Sephora will phase out its locations within JCPenney (JCP) – Get J. C. Penney Company, Inc. Report stores by the end of the year, while at the same time ramping up its new partnership with Kohl’s (KSS) – Get Kohl’s Corporation Report stores. Sephora currently operates out of about 600 Kohl’s stores and will eventually operate in over 1,000 of the department store’s locations.
Ulta Beauty (ULTA) – Get Ulta Beauty Inc. Report has been widely accepted as a top retailer for beauty products and accessories. Consumers continued to purchase beauty product lines while at home during the pandemic, and now that customers are returning to the retailer, Ulta is considering what changes need to be made to meet with new consumer demands and desires.
Ulta’s floor plan has always had mass beauty and skin care product lines on one side of the store and more expensive beauty and skin care products on the other side of the store. Hair care and accessories and the Ulta salon have been located toward the back end of each store.
Traditionally, Ulta has designed the store layout format by price points. Ulta’s unique set up is one of the changes being made in new stores and locations that are slated for upcoming remodels. The changes are coming as consumers are changing their purchasing choices due to inflation.
Ulta has seen growth even through the pandemic as self-expression and wellness become increasingly more popular across all consumer demographics. Consumers have continued to make their purchases but may have chosen to downgrade on branding choices.
The life cycle of these beauty and skin care products ranges from a few months to a few years. Daily use makeup like mascara and liquid eyeliners are good for about three months before they should be replaced. Powder products like face powder and blush are good for about 1-3 years before needing to be replaced. Concealers, liquid foundations and cream foundations should be replaced annually.
Beauty and skincare products not replaced regularly can increase risks of break outs and skin infections. Customers return to stores several times a year when they need to purchase new products. Each time a shopper comes into Ulta, they are given a chance to experience new products.
Image source: Ulta Beauty
Ulta Partners With Target
Ulta and Target (TGT) – Get Target Corporation Report launched a partnership in over 180 Target locations, similar to the Sephora/Kohl’s agreement, that will allot space for a more immersive beauty shopping experience than has been available at Target previously.
Ulta is considering the partnership as a chance for consumers to treat the Ulta in Target experience as only a taste of what a full Ulta shopping experience would deliver. Once consumers have a taste of what it is like to shop in an Ulta, they may be more likely to go in to a full-size Ulta store and try the complete retailer’s experience.
The products carried in store locations will meet Target consumer demographics but also expose them to higher end beauty and skin care that they might not have been exposed to before.
The new merchandising mix on the retail floor is designed for consumers to shop across brands and price points. As this is a change from the traditional retail floor plan of shopping by price point, it gives customers a chance to see products above and below their normal shopping price point.
Since Ulta offers a chance for shoppers to try products, the consumers might try a product they had not previously because the different selection of brands next to one another. A shopper who is comfortable spending more on products might find a similar product they are happy with that is less expensive, and vice versa. A customer might also find a slightly higher priced product that they love more than their current beauty line they shop.
Ulta’s Change May Frustrate Frequent Shoppers
Shoppers usually shop through habit. When Ulta changes the merchandise set up, shoppers who routinely shop according to price point may find themselves a little lost when the new floor plan is laid out.
Until they get used to the new layout, they might spend a little more time finding their favorite products. Ulta is willing to risk this, as those same customers might find a new product that they previously wouldn’t have found.