Should Ulta be merging premium and mass beauty products in its stores?

Discussion
Photo: Wikimedia Commons/Fastily
Sep 09, 2022

Ulta Beauty plans to combine in-store displays of mass and prestige skincare and makeup brands for the first time in a new store layout.

Currently, Ulta organizes merchandise by price point. Mass skincare and makeup brands are positioned on one side of the store, prestige on the other and fragrance in the middle. Hair care and salon have traditionally been in the back.

Under the new layout that the company will debut in new stores and remodels this fall, skincare and makeup will move closer to the front of the store, taking advantage of heightened interest in self-care and wellness coming out of the pandemic.

Mass and prestige brands will be displayed next to each other because research indicates consumers increasingly want to shop across price points.

“We really want to have a merchandise layout to magnify our differentiated assortment and really better reflect how a guest really shops with consolidated categories and intuitive adjacencies,” Kecia Steelman, COO, said last week on Ulta’s second-quarter conference call.

Ms. Steelman noted that the items will be marked with “clear brand delineation” to highlight the differences. “You’ll be able to tell the difference between mass and prestige, but it will be organized together the way the guest shops it,” she said.

Ulta continues to be one of the few retailers that sell both mass and prestige beauty brands, adding Chanel and Fenty this year.

The in-store consolidation follows the successful rollout of Ulta Beauty shops inside 186 Target stores with three prestige brands Benefit, Tula and Morphe recently added to Target’s selling floors. Ulta CEO Dave Kimbell told analysts of the Target push, “We continue to be pleased with overall guest engagement.”

The new layout also comes as consumers are trading down in certain categories due to inflationary pressures, although Ulta hasn’t seen a change yet. Mr. Kimbell said, “I think that’s a reflection of the importance this category plays in our guest lives — the increasing connection that beauty has to wellness and the desire of our guests to express themselves as the world reopens.”

DISCUSSION QUESTIONS: Do you see a greater upside or downside to Ulta’s new layout that consolidates mass and prestige skincare and makeup brands in-store? Do you agree that consumers increasingly want to shop brands across price points across many categories?

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"Combining mass and prestige products does create a more organic shopping experience, one that better matches the online shopping experience."

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11 Comments on "Should Ulta be merging premium and mass beauty products in its stores?"


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Richard Hernandez
BrainTrust
Richard Hernandez
Merchant Director
4 months 30 days ago

Ulta is smart enough to make the changes, realizing that the economy has changed.

DeAnn Campbell
BrainTrust

Combining mass and prestige products does create a more organic shopping experience, one that better matches the online shopping experience. This is important because it will help shoppers mentally shift between online and offline channels much more quickly, which will help them make a purchase decision more easily. At the same time, this does make it even more important for the retailer to offer tools to help shoppers feel they have chosen the right products at the end of their shopping trip.

Tara Kirkpatrick
BrainTrust

This is a smart move. As interest in “clean beauty” rises, beauty buyers are shopping ingredients not labels. Brands like e.l.f. and The Ordinary have clean beauty on the cheap, but some luxury labels that have long invested into R&D on clean ingredients may feature ingredients that are so innovative and effective that it’s worth paying for, for one step of the 12-step skin care routine that the beauty as wellness and self-care movement created. We see this wellness interest reflected in the mobile data of beauty apps too. One of the most-downloaded beauty apps is “Think Dirty”, a scanner that pulls up how clean a product actually is.

Neil Saunders
BrainTrust

This makes sense as most people shop by need or look for specific brands. Organizing in this way makes shopping more convenient and easier. Price remains a critical part of product selection and decision making but that can be established from seeing a spread of different price points which are clearly labeled and signaled in store. By organizing in this way Ulta can also facilitate trading up, and trading down if price-sensitive consumers feel the need.

Jenn McMillen
BrainTrust

Merging the products on the same fixtures could be a disaster, since the experience of shopping prestige — and the price premium it commands — will be eliminated. On the prestige side of the store, the brand positioning shines through with more visually engaging presentations, signage, better fixtures and seemingly better lighting. Looks rich, feels rich and more aspirational. Putting everything on the same shelf erodes the unique brand positioning that everyone has worked so hard to achieve. Were I the prestige brands, I’d be up in arms.

Patricia Vekich Waldron
Staff

I think it’s a great way to give consumers a choice across categories. Given the economy consumers can easily trade up or down depending on their priorities and pocketbook.

Melissa Minkow
BrainTrust

This is clearly based on consumer insights, so I approve. However it will be hard to create a visually appealing experience this way since they risk cohesion. As long as they have strategies for merchandising aesthetically, this is smart in that it speaks to modern shopping behaviors.

Heidi Sax
BrainTrust

Brilliant! Prestige and mass products aren’t for two different customers. Product categories (ex: skincare vs. haircare) should live together. Let the consumer should be in charge of how she divvies up her dollars. I, for one, will be filling my basket with Chanel foundation and Revlon mascara in one fell swoop.

Brian Delp
BrainTrust
4 months 30 days ago

Organizing in this format will likely highlight to customers the options and ability to step up with products being seen side by side. Price isn’t the only factor customers look at, so different merchandising methods will likely speak to different consumer value hierarchies.

Patrick Jacobs
BrainTrust

This is a solid move by Ulta to enable customers to discover and engage with brands from their entire product catalog. The blending of brands within the Ulta stores will yield greater conversions because of curiosity or simply removing barriers to engaging with prestige brands.

Dave Wendland
BrainTrust

This could pose potential challenges to consumers searching for a particular brand and become confused by the new merchandising strategy. For Ulta, it may cause some consumers to “trade down” from prestige to lower-priced mass brands. And I’m very curious how fixturing will be used to tell this story.

wpDiscuz
Braintrust
"Combining mass and prestige products does create a more organic shopping experience, one that better matches the online shopping experience."

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