Beauty retailer cashing in on the selfie craze

NEW YORK • In the Instagram era, one retailer has found a way to capitalise on the selfie craze.

Ulta Salon Cosmetics & Fragrance was a rare bright spot in what was otherwise a disastrous 2016 for United States retailers.

Shares of the Illinois-based company surged 38 per cent last year, about four times higher than the Standard & Poor's 500 Index's gain.

Its mobile app has a feature called Glam Lab that allows shoppers to take selfies and apply virtual makeup before they make a purchase. At its 950 stores, customers can visit a professional skin therapist for "face mapping" and get their eyebrows tweezed, trimmed and tinted.

"They are changing the way people shop as they have allowed people to buy both mass and prestige, as well as get salon, brow and other services," said Mr Brian Yarbrough, an analyst at Edward Jones & Co. "No other retailer offers all three in the same spot."

As Ulta sells brands at all price points, it has the ability to capture market share from drugstore chains and high-end department stores like Bloomingdale's.

Combining a one-stop retail model with salon services helped it overtake Sephora in 2015 to become the largest beauty-specialist retailer in the US. Since it went public a decade ago, annual revenue has quadrupled.

Most of Ulta's stores are located in suburban strip malls.

At 930 sq m, they are big enough to house a range of products.

The company is also opening urban stores half the size of its typical space, including its first Manhattan location this year.

"They are relatively hip for a speciality retailer, and they have products you can't get anywhere else if you want to be different," said Bloomberg Intelligence analyst Seema Shah.

Beauty-specialist stores like Ulta make up the second-fastestgrowing US retail category in the past five years, with a sales gain of 48 per cent, according to market research firm Euromonitor.

Ulta's weapons include new brands and exclusive items, said Ms Shah. The company added 30 new brands in 2015 to reach more than 500.

With 90 per cent of sales coming from members of its loyalty programme, Ulta is able to target customers and stock the products they want, chief marketing officer David Kimbell said in October.

Ulta has focused on boosting its premium products, such as Estee Lauder, which it sees as a critical piece of its growth strategy.

One of Ulta's advantages is that 90 per cent of its stores are located in outdoor shopping centres, rather than enclosed malls whose department-store anchors are struggling with slow traffic and competition from

Ulta, which opened its first store in 1990, is planning to add 100 a year, with a goal of 1,700 US locations.


A version of this article appeared in the print edition of The Straits Times on February 02, 2017, with the headline 'Beauty retailer cashing in on the selfie craze'. Print Edition | Subscribe