In 2013, beauty store chain Ulta welcomed a new CEO in Mary Dillon and ever since its star has been on the rise, Digiday notes.
It wasn’t long ago that Ulta was considered something along the lines of an expanded drugstore beauty aisle, while Sephora was considered to be the market leader in beauty. French giant Sephora has long held the preeminent position among beauty retail chains thanks to its wide roster of prestige beauty brands.
But Ulta evolved its own market strategy which allowed it to overtake Sephora in the beauty market in 2015, as reported by Bloomberg. So what’s Ulta’s strategy?
The popular beauty store stocks a mixture of less-expensive drugstore beauty brands and more-expensive prestige beauty brands. They offer products you could find at your local Walgreens as well as lines carried at Sephora and upscale department stores.
Urban Decay can be found gracing the beauty store’s shelves, and it recently made a deal to start working with MAC Cosmetics. Ulta has thus turned itself into a one-stop-shop for high-low beauty mavens. As its slogan runs: “All things beauty. All in one place.”
Additionally, Ulta developed an app to interface with guests. The app features makeup tutorial videos, and allows guests to try on makeup with its service “GlamLab.” It also allows guests to book in-store services for hair, brows, and skin. As of today, Sephora’s app has 535 ratings on the App Store, while Ulta’s app has 38,794.
Ulta also rejuvenated its previously-stale loyalty program. It made the program easier for guests to understand in order to cultivate long-term customers and repeated transactions. Last week at Boston’s eTail East conference, Ulta’s senior director of loyalty marketing Linh Peters stressed the importance of simplicity and ease of use in loyalty programs. That’s why, Peters claimed, 90 percent of Ulta’s business comes from loyalty program members.
Let’s look at how Sephora’s and Ulta’s respective loyalty programs differ.
In Sephora’s loyalty program, called Beauty Insiders, guests accrue points for every dollar spent. They can then trade those points and choose from a limited selection of mini beauty products, deluxe samples and in-store services.
Ulta’s loyalty program dispenses with the prizes and instead offers simple store credit, which means real savings for the customer. This way, guests can buy luxury brands cheaper than at Sephora, which rarely offers material discounts. Ulta also has a marketing team that works to offer targeted promotions to guests based on past shopping behavior.
Ulta has taken advantage of its boom in business to expand its store locations in flourishing strip malls, even as actual malls struggle.
Featured Image via Wikimedia Commons/Michael Rivera
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