“Not much ado about something “
ULTA Beauty. High Performance Retailing Mirror
- Founded in 1990, it is in the stock exchange and currently has almost 1,200 of its own stores, all of them in the USA, with an average area of 1,000 sqm. They have scrupulously fulfilled their plans to open 100 stores / year in the last five years. The estimated optimal potential for Usa is a total of 1,700 stores. Further, you will have to start an expansion in other geographic markets.
- All its stores have a hairdressing salon (100 sqm) with more than 10,000 people working only in this service.
- They are especially strong in cosmetics (above 50% of their sales). They offer an assortment with 25,000 references, 500 brands and top 10 suppliers represent 2/3 of the business. They also have their own brands and some external brands such as Kylie – digital natives – exclusive for their physical stores.
- Its authentic machine room is its loyalty program with 32 million members and they contribute 95% of its sales.
- With a strong omnichannel vocation, ecommerce already accounts for more than 11% of its sales and those customers who use more than one channel have an x3 expense higher than what they only buy in physical stores.
ULTA, as the leading chain (sales of USD 6,716 million) in the USA specialized in perfumery and cosmetics, has a discrete business card and the analysis of its results generates a special satisfaction when it is verified how a company of that size has doubled its turnover in just 5 years in an organic way and with an operational efficiency without frights or “big headlines”
Operating model with proven track record of real benefits
- The growth in sales has been achieved maintaining the solid profits (before taxes) of 13% on sales. Vital constant of this business and in clear contrast to the “Unicorn” business models that occupy the main comments in the current economic news.
- Traditional retail KPIs such as sales productivity per meter (USD 6,000 / m2), inventory turnover (x5 per year), LFL growth to comparable surface … coexist with selective investment initiatives in artificial intelligence and virtual reality start-ups that are incorporated Gradual way in business.
And all this is being achieved with a board of directors made up of 11 members with an average age of 60 years. Experience, good work and a culture open to innovations that work
Retail Strategy and Operations >>
ULTA vs Sephora
- There is strong competition in this sector in the different existing channels including department stores, consumer generalist and specialists such as Sephora.
- The boundaries between the mass market segment and the selective “Prestige” have become blurred and in the case of ULTA customers, ¾ they are both mass market and Prestige.
- The cornerstone of ULTA’s progress has been the continuous improvement and upgrade of the half-accessible brands to match them in their store setting and attention with the selective channel.
- With a wide range of age / socio-economic level of its customers there is a gradual convergence between the two leading operators ULTA-Sephora
ULTA ¡They have a Plan… and know how to execute it!
Always with changes not abrupt but that occur and are executed with a clear purpose.
Sephora and ULTA, two different paths that converge over the years. Nike and Adidas, Sephora and ULTA … the binomials work.
Health and beauty is clearly a mirror where to look for other retail sectors
¡High performance and profits do not go out of style!
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