As many retailers look to expand their digital presence, Ulta Beauty (ULTA) makes a different bet on the future.
Ulta beauty spent much of 2022 enhancing its beauty and skin care capabilities with the creation of GLAMlab, a new way for potential customers to try on products before buying with hopes of converting potential customers with a virtual beauty shopping experience.
Ulta expanded its retail footprint in 2022 by a beginning a new partnership with Target (TGT) and opening mini shop-in-shops insides select Target stores. The retail pair plans to have a least 800 shop-in-shop retail Ulta locations within Target stores. The partnership was expected to allow Target shoppers to have a mini Ulta experience, while providing new and exciting shopping experience and products to Target's loyal customers. Target employees that worked in the beauty section received special training to be able to assist customers who came through the new Ulta shop-in-shop.
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Ulta provides a unique shopping experience whether online or instore, and after seeing strong growth throughout 2022, the company's expectations are high for the beauty business. Ulta opened 47 new stores in 2022 and renovated or relocated 32 stores, according to the 2022 fiscal year-end earnings call.
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Ulta's Plans Feature Facelifts
Ulta is known for its variety of beauty and skin care products ranging from entry level brands to prestige lines, allowing customers to try from the least expensive brands to top line brands all under one roof. So, when the beauty retailer talks about facelifts, one would think it is talking about a new skin cream or skin care product. However, this is not the case for 2023 strategic plans.
Ulta saw growth throughout 2022 and expects the same in 2023. The beauty retailer plans to open another 25 to 30 more new stores and provide facelifts to or relocate another 20 to 30, according to Ulta CEO Dave Kimbell. These additional storefronts are above and outside of the plans to expand its shop-in-shops with Target.
Kimbell's 2023 plans include the ability to accelerate Ulta’s growth through multiple channels, digital platforms with virtual try-on makeup and hair styles, supported by digital stores to fill orders anywhere, enhanced by modern technology and architecture. The 2023 plans also include expanding the successful partnership with Target’s shop-in-shop locations.
Ulta already operates over 1,300 retail locations across the nation as the largest U.S. beauty retail business and has growth potential with its beauty lines from cosmetics, fragrances, skin and hair care products as well as in store salon offerings. The company provides a wide range of pricing for each product category to allow customers to shop top line and entry level products for whatever fits their needs and budgets.
Ulta's Looking Long Term
ULTA's long-term plan is to expand its stand-alone stores to 1,500 to 1,700, in addition to its planned 800 store-in-store Target shops, according to the Scott Settersten, Ulta's chief financial officer.
Some brick-and-mortar Ulta Beauty shops are located not too far away from a Target with an Ulta shop-in-shop, sometimes even in the same shopping center, but oversaturation has not been a problem yet, as Ulta says it has seen both shops performing nicely alongside one another.
More storefronts will enable Ulta to expand its ability to offer curbside service as well as same-day delivery by shipping from stores to customers. Ulta expanded its same-day delivery service to six new markets in 2022, and more are expected in 2023.
