As the calendars flipped to October, retailers switched into holiday mode, or, in the case of the beauty category, haul-iday mode. Ulta Beauty is preparing for those beauty hauls and the shopping behaviors that drive them to look a bit different this year, however, as consumer wallets remain pressured.
Ulta Beauty reported lackluster results in Q2 that CEO Dave Kimbell noted were “short of our expectations,” as demand cooled in mass beauty and the makeup category, and competition increased within prestige as distribution grew and competing retailers opened.
Though shoppers will likely be “cautious,” Ulta Beauty is aiming to infuse some joy into the holiday season, Ulta Beauty CMO Michelle Crossan-Matos told Retail Brew, hoping its new products, campaigns, and doubled-down focus on its mass and prestige offerings will help the season sparkle.
“The consumer needs choice this holiday more than ever,” she said.
Sitting pretty: While consumers may spend conservatively this holiday, Crossan-Matos noted “splurges” persevere, but are shifting, perhaps from a several thousand dollar Gucci handbag to a Chanel beauty item priced under $200.
“What has happened is that people are splurging, high-low splurge—you could splurge on Chanel today, but you could splurge on E.l.f. tomorrow, and that’s what makes our business model quite unique and set up for the turbulent times that we’re going through right now,” she said.
Crossan-Matos predicted the fragrance, body care, and wellness categories will be standouts during the holiday season, especially as Ulta Beauty has found Gen Alpha showing an increasing interest in skin care. The makeup category, as the retailer reported in its most recent earnings call, has been struggling, but she said she has “high hopes and aspirations for cosmetics” given the innovation its offering at various price points.
That includes its collaboration with Universal Pictures on the Wicked beauty collection, which debuted in stores yesterday (though Diamond and Platinum loyalty members received early access online the week prior). Spanning 10 categories, the collection features products from Ariana Grande’s r.e.m. beauty, OPI, Conair, Wella, and Scunci, priced from $8 to $60. On the same day, the retailer also rolled out a collection of toy mini versions of popular products like Tarte Shape Tape, the Urban Decay Naked Palette, OPI nail polish, and Supergoop Glow Screen, in collaboration with Mini Brands. Crossan-Matos also teased the return of the fan-favorite bathrobe as a free gift with purchase.
Joy ride: These new items underscore the retailer’s focus on “playfulness” and “joy,” Crossan-Matos said. Last year, Ulta Beauty launched its Joy Project initiative focused on spreading positivity among consumers, and last month extended that with the debut of the Joy Council, led by author Deepak Chopra and also featuring Olympic gymnast Laurie Hernandez and Peloton instructor Ally Love, who will make content across its social channels.
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This holiday season, Crossan-Matos said, will be an extension of that focus on joy. The retailer has an upcoming holiday TV campaign that’s “all about an unexpected moment where people get frustrated” but “everyone comes together” at Ulta Beauty. The tagline “Find joy in the present” has also been implemented across marketing, particularly for its holiday gift guide.
That approach to holiday marketing around gifting evolves throughout the season, she noted.
“As a marketeer, we are really thoughtful about a gifter and a giftee,” she said. At the beginning of the holiday season, gifters are just beginning the gift selection process—narrowing it down from category to product to brand to finally, closer to transaction, price point—and Ulta Beauty adjusts how it communicates with consumers throughout that process. For giftees, Crossan-Matos, said consumers “often might drop hints that you want a fragrance or a bag or whatever it is, and so that happens a little bit early on. So we’re trying to get on your radar screens saying, ‘Wouldn’t you love a gift like this?’”
Learning experience: That personalization is made easier thanks to the shopping data collected from its 44 million loyalty members. In October, Ulta Beauty will launch a community platform intended on bringing together those consumers from across the country and sharing in-store events, like founders demonstrating how to use their products, online. It’ll essentially take omnichannel beyond standard efforts like BOPIS to center around experiences—something the retailer has found beauty consumers have come to expect.
Facing rising competition as points of distribution for beauty products continue to grow, especially in prestige, Crossan-Matos said it will continue listening to requests and needs of its community (like bringing its “most requested brand ever,” Charlotte Tilbury, to stores earlier this year) and double down on its high-low model.
“You keep building your unique point of differences as a brand,” she said. “It's pretty fail safe because you’re building the fundamentals of what grows the business, and you don’t get distracted by what other people are doing.”