Ulta Beauty reveals latest achievements from digital transformation

Ulta Beauty, which operates 1,400 stores and manages multi-billion-dollar online sales business, has revealed its latest achievements from digital transformation.
Ulta Beauty digital achievementsUlta Beauty’s annual report 2023 has revealed that it spent $80 million for Information Technology systems and $75 million for supply chain projects in fiscal 2024. Total capital expenditure of Ulta Beauty touched $490 million.

Ulta Beauty’s SG&A increased 8.8 percent to $666 million in Q1. The hike in store payroll and benefits was driven primarily by higher wage rates. The growth in store expenses was due to IT investments and increased testers. Ulta Beauty’s operating margin fell to 14.7 percent of sales from 16.8 percent.

Rewards loyalty program

Ulta Beauty’s associates are creating emotional connections with their guests and helping them discover beauty on their own terms. Ulta Beauty’s loyalty program has more than 43 million active members and it uses transaction data to enhance customer experience.

Ulta Beauty’s CRM platform from SAS enables analysis of the customer data in loyalty member database as well as personalization of marketing campaigns and communications. Transaction data demonstrates that loyalty members spend more per visit as compared to non-members.

Ulta Beauty uses SAS Customer Intelligence 360 to manage marketing and customer engagement programs – from credit to loyalty, customer insights and surveys. Ulta Beauty has seen significant results in three core areas: automation, participation and retention.

Ulta Beauty uses rewards loyalty program to increase retention of existing guests and to enhance their loyalty to the Ulta Beauty brand. More than 95 percent of total sales are coming from 43.3 million active Ulta Beauty Rewards loyalty program members. In fiscal 2023, 18 percent of loyalty members shopped both in Ulta Beauty stores and through digital platforms.

Digital marketing

Ulta Beauty earlier revealed that it spent $422 million in last financial year towards advertising that includes digital advertising. In Q1, Ulta Beauty achieved traffic growth in both store and digital channels. It increased marketing investments across TV, audio, and social platforms to maximize brand launches, support semiannual beauty and spring haul tent pole events, and amplify brand equity with the Joy Project.

Ulta Beauty said these strategic media investments drove higher traffic across web and app platforms and increased traffic growth per store.

Digital achievements

Ulta Beauty completed the final phase of digital store transition and are on track to decommission the legacy platform in the second quarter.

Ulta Beauty completed an important phase of Project SOAR with a transition of our Dallas, Greenwood, and Fresno distribution centers to new ERP system. Ulta Beauty’s primary distribution centers are operating on the same platform. Ulta Beauty began the process of migrating stores to new ERP system.

The benefits include an upgrade of a key digital application to provide store teams with a guided user experience, enhanced reporting to support inventory management, and increased visibility to product information to elevate the guest experience.

Ulta Beauty CEO David C. Kimbell said: “Our plans are focused on five key areas: strengthening our assortment, accelerating our social relevance, enhancing our digital experience, leveraging our loyalty program, and evolving our promotional levers.”

Ulta Beauty expanded partnership with DoorDash with launch on DoorDash marketplace, which extends assortment to the more than 70 million active users of the DoorDash app. Ulta Beauty will introduce digital buying guides that amplify search engine optimization while providing guests with educational content, beauty tips, and product recommendations.

Ulta Beauty will improve the path to purchase through guided navigation and leverage innovative search capabilities to facilitate discovery. Ulta Beauty will accelerate app adoption via targeted communication and offers as app users spend nearly two times more.

In the first quarter, Ulta Beauty’s app accounted for 57 percent of e-commerce sales, up more than 450 basis points compared to last year.

Ulta Beauty introduced new mobile POS capabilities to engage existing members and drive new member acquisition. Ulta Beauty is testing ways for guests to engage with loyalty benefits in-store transactions. Ulta Beauty modernized its store operations across 1350+ locations in 50 states by upgrading its Xstore POS with Infosys, Oracle said in a blog post.

Ulta Beauty is also testing gamification platforms, creating new ways to engage with program and Ulta Beauty.

Ulta Beauty will activate marketing technology that will advance personalization efforts with guests. Its digital marketing strategy includes search engine optimization, paid search, mobile advertising, social media, display advertising, and other digital marketing channels.

Baburajan Kizhakedath

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