With prestige skin-care sales within the U.S. officially on the rebound — and growing faster than prestige makeup, in response to The NPD Group — Ulta Beauty is starting to broaden its reach within the category.
The retailer lately has been known for a prestige-makeup-heavy brand assortment in its roughly 1,107 stores. On an organization earnings call in March, chief executive officer Mary Dillon announced the addition of Chanel makeup in a small variety of doors, and earlier in 2017 MAC Cosmetics entered 25 doors, with plans for 100 by 12 months’s end. When Ulta’s first Manhattan outpost opened in November, chief merchandising and marketing officer Dave Kimbell told WWD that the shop’s layout — with nearly 50 percent of the space dedicated to prestige makeup — is reflective of the breakdown of the corporate’s business.
While an outsize emphasis on prestige makeup stays within the retailer’s doors, Ulta is edging toward placing increased deal with prestige skin. This month, it’ll unleash a slew of recent brands in its doors, including Elemis, Tula, Skin Gym and Peach & Lily’s product lines — including five sku’s that weren’t included as a part of the K-beauty platform’s July launch campaign. Brands reminiscent of Kopari, Crepe Erase and David Beckham’s House 99 have already rolled out to stores.
Though prestige makeup has driven much of Ulta’s growth, Wall Street analysts see increased opportunity in skin as category sales grow. Skincare’s inherently higher margins are “a key consideration to drive profit dollar growth on the product mix level” for Ulta, said Jefferies analyst Stephanie Wissink in a recent report.
Tara Simon, Ulta’s senior vice chairman of merchandising for prestige beauty, is spearheading the augmentation of the retailer’s skin-care assortment, which she intends to maintain balanced between trend items and classic products and a deal with hero sku’s and mixing and matching brands as a substitute of regimens.
“Truthfully in 2015, 2016, I used to be scared to death of the Millennial who was only using Neutrogena wipes to take their makeup off and never using eye creams or moisturizer,” said Simon. “We were selling a lot makeup, it was staggering.”
Simon said Ulta’s skin-care business began to choose up in 2017, across the time overall category sales began to extend. “Unexpectedly, people began saying, ‘My skin’s not acting right, it’s fussy and sensitive — you had an entire group of individuals realizing that they had to pay more attention to skincare,” said Simon.
The corporate’s customer research showed a consumer who was open to experimentation — greater than 70 percent of Ulta’s consumers are willing to experiment with or alternate between two or more brands inside almost every category in skincare, from cleansers to moisturizers to masks. Thus, Ulta is evolving its skin-care marketing away from single-brand regimens — think Clinique’s classic three-step system — and as a substitute, cherry-picking items to bring into the fold.
“[We wanted] to present brands in a less overwhelming way — up until this 12 months, if we desired to bring a brand into prestige, the smallest presentation we had was one-and-a-half feet in a gondola with 4 shelves — that’s a variety of space and shelves,” said Simon.
She noted the retailer is concentrated on bringing in smaller assortments from buzzy brands — reminiscent of five sku’s from Tula’s probiotic-based skincare and Peach & Lily Collection’s nine-sku skin-care line, which incorporates a Matcha Pudding Antioxidant Cream, $40, and the Glass Skin Refining Serum, $39 — in addition to Instagram-driven trend items like glitter masks and Skin Gym jade rollers. “You don’t should buy the whole lot from Clinique or Shiseido [for example],” said Simon. “You’ll be able to buy what you’re keen on from each brand.”
There are some exceptions. Warburg Pincus-backed, K-beauty-inspired brand Julep launched at Ulta on Aug. 1 with a $249 “Passport to K-beauty” box set consisting of its best-selling skin-care items. Julep’s skincare is merchandised alongside its makeup selection in Ulta stores — skincare accounts for about 40 percent of brand name sales at Ulta.
On Aug. 12, L Catterton-backed British skin-care brand Elemis is rolling out 24 sku’s to 300 Ulta doors after launching on ulta.com in July. Ulta is the brand’s first major specialty retail partner within the U.S. The four-item Superfood collection, Pro-Collagen and Peptide collections are all launching in Ulta stores, said Elemis founder Noella Gabriel. Gabriel recently moved to the U.S. and shifted from a creative position to the role of company president. She’s focused on growing the brand’s U.S. customer base with Millennial-oriented lines just like the Superfood collection, which is formulated with prebiotics and retails from $25 to $55, on the lower end of most Elemis ranges. Ulta can even carry an assortment of Elemis travel-sized items. In its native London, Elemis operates a quick-service menu at its flagship House of Elemis spa in Mayfair. Gabriel sees a chance to expand the brand’s quick services to the U.S. as well, potentially with Ulta.
Skin-care services are also something Ulta is trying to ramp up. The retailer is rolling out the Skin Bar at Ulta Beauty in stores which can be either newly built or undergoing renovation. The Skin Bars will feature a full-time skin expert accountable for retail sales and a service menu consisting primarily of on-the-go treatments. The Skin Bars add 10 to 12 square feet of space to existing prestige skin-care sections in Ulta doors.
Placing skin services in the midst of the ground, reasonably than a non-public room, is something Simon is finding to be working, performing “stronger than what we’ve seen with our services [in the past].” “[The customer] likes the express a part of it,” said Simon. “A part of the strategy is the product demonstration a part of it — it’s less serious [than a hard sell] and also you’re not sequestered off by yourself. It’s in a relaxed environment.”
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