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ulta business model eight reasons for its explosive growth

by ryancooper
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UBS originally dubbed Ulta Beauty as one of the “top growth stories in retail,” and the company was right to make that assessment. Ulta Beauty’s sales have increased by at least 20 percent nearly every year for the past decade and a half, with the exception of 2018, when they increased by a “mere” 14 percent. In 2018, Ulta hair salon growth was a “mere” 14 percent.

The year 2018 saw Ulta hair salon debut on the Fortune 500 list, solidifying the company’s standing as one of the most profitable and successful businesses in the United States. Ulta Beauty reported a seven percent increase in its comparable store sales for the first quarter of 2019, and the company has plans to open eighty new locations in 2019.

That Ulta Beauty Has Made A Number Of Strategic Choices

No one gets to the top of their field without putting in a lot of effort, and it is obvious that Ulta hair salon has made a number of strategic choices that have enabled it to prosper in a retail climate that is always shifting. Are you curious about the factors that contribute to Ulta Beauty’s continued success in the face of fierce competition? The following are eight reasons. why Ulta Beauty’s strategy has resulted in sales growth of more than ten years in the double digits.

An Appealing Mix Of High-End And Lower-Priced Products For The Market

Consumers have a tendency to buy high-low, with 77 percent of beauty aficionados purchasing both mass and prestige items. This is despite the fact that the beauty business has historically offered mass and prestige beauty products through various channels (i.e., high end vs. low end). Because it sells both mass market and high-end beauty items within its stores, Ulta hair salon


has been able to benefit from this trend, and some may even argue that it was the company that started it.

Eyeliner Can Be Purchased For $1.50 At An Ulta Beauty Store

At an Ulta hair salon establishment, eyeliner costs $1.50, but a luxury selection of goods costs $350. Prices can range anywhere between these two extremes. This sets it apart from competitors like Sephora which concentrate more on prestige brands due to the fact that it offers more affordable options.

Revlon’s Chief Executive Officer Fabian Garcia made the following statement in reference to Ulta Beauty: “[Ulta Beauty] has utterly destroyed the old assumption that you were either prestige or mass.” “The fact that Ulta disrupted the status quo is sufficient evidence that the world is evolving,” said the CEO of Ulta hair salon

A Customer Retention Program That Is In High Demand

Starbucks Rewards, the prominent consumer loyalty program offered by Starbucks, has 16 million active members; Ultamate Rewards has 32 million members, which is more than twice as many as are enrolled in Starbucks Rewards.

The customers who are part of the Ulta hair salon loyalty program were responsible for an astounding 90 percent of the company’s revenue in 2018. As a point of reference, customers who participate in the loyalty program offered by Starbucks account for forty percent of the company’s total sales.

Ultamate Rewards Member Spending

Every dollar that an Ultamate Rewards member spends earns them one point in the loyalty program. For instance, 100 points are equivalent to an ulta coupon $10 off $40, while 1,000 points are equivalent to a $50 discount. “I can’t emphasize enough how important it is to keep your program simple for the visitor to comprehend,” said Linh Peters, Ulta Beauty’s Senior Director of Reward Marketing.

Linh Peters was speaking about the loyalty program. Loyalty points have replaced freebies as part of the company’s reward scheme in recent years.

Change Made In Response To Customer Feedback

This change was made in response to customer feedback. Customers now have the ability to redeem their points for monetary discounts on their preferred products. Customers who would like to buy a premium brand. But typically are unable to do so due to financial constraints and will find this particularly enticing.

A Store That Can Meet All Of A Client’s Requirements At A Single Location

Maybe Ulta Beauty should be referred to as the department store for people who shop for beauty products. In addition to selling cosmetics and other beauty-related items. Ulta Beauty also offers its customers a wide variety of services. Including hair salons located within the stores themselves.  Customers of these salons make twice as many trips to an Ulta hair salon shop as individuals who do not utilize the service. Indicating that these salons are a significant driver of foot traffic.

In addition. Clients can get their brows or nails done, receive a facial, have their bikinis waxed, get new eyelashes, and even have a make-up consultation all during the same appointment. Ulta Beauty is able to grab market share from a wide variety of shops. Including the makeup counters of department stores and drugstores. Thanks to the extensive range of services that they offer. This, in turn, helps to increase foot traffic.

Exclusive Business Relationships That Bind Clients To A Single Vendor

In addition, Ulta Beauty takes great pleasure in its various relationships with unique brand names. As an illustration, 25 of Ulta’s best-selling items are not available for direct purchase on Amazon. Additionally, it has a partnership with Kylie Cosmetics that is exclusive. These agreements bring in new customers and encourage existing customers to make additional purchases.

Unique And Trendy Brands

The business is also doing incredibly well in the lucrative teen market. Because it carries distinctive and trendy products that aren’t offered anyplace else. Because it stocks over 500 brands—roughly twice. As many as Sephora—Ulta hair salon has become a hotspot for discovery among young people.

In 2018, results from a Piper Jaffray survey revealed that young girls were for the first time. More likely, to prefer Ulta Beauty to Sephora. Seema Shah, an Analyst at Bloomberg Intelligence

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