Beauty is one of the most practical categories in physical retailing, a fact that has made life more difficult for stores like Ulta Beauty during the pandemic.
Ulta this week reported that comparable sales, a measure that includes sales in stores that have been open for at least 14 months as well as e-commerce, fell 8.9% in its fiscal third quarter. Its online activity nearly doubled, growing by 90%, meaning in-store activity fell sharply, even with most of Ultra’s stores reopened.
Many shoppers preferred to avoid the stores, and Ulta cannot offer its skin and makeup services for safety reasons, which contributed to a 30% drop in revenue from its salon services business in the last quarter.
The beauty product chain therefore had to increase its in-store technology more quickly. For example, Ulta promoted its GLAMlab, a virtual trial tool for items like eyeshadows, foundations, eyelashes and blushes.
“The pandemic has by necessity accelerated the use of digital tools for Ulta Beauty in a way that we were well positioned to capitalize on,” said Mary Dillon, CEO of Ulta Beauty. Fortune.
Since the start of the pandemic, Ulta has added QR codes to shelf strips so that customers can use GLAMlab as an alternative to testers that are no longer available for customers to touch and use. And the company has trained its employees on how to get buyers to download it.
“It’s a phenomenal way to try things out if you’re in the store and can’t use a tester right now, or just sitting at home,” she adds.
GLAMlab will be a feature in Ulta stores that the company will begin opening in hundreds of Target sites starting next year as part of the recently announced business combination. (Ulta will soon have a lot more company in the malls it occupies, once Kohl’s completed the installation of 850 Sephora stores in its stores in 2023.)
Ulta also recently launched a skin analysis tool, which uses augmented reality technology and artificial intelligence to make product recommendations, which is useful to Ulta given that full face-to-face skin consultations are discontinued for the moment. The retailer updated the tool to allow customers to keep ratings at different points over time to track how their skin is changing.
“Skin care is really hot right now,” Dillon says. And Ulta’s third quarter results prove it: Skincare sales were up, but makeup, which generates nearly half of Ulta’s overall sales, was down, while skin care, hair care, bathing and perfumes held up well.
Part of Ulta’s new technology has been helping with more mundane considerations such as scheduling appointments: Ulta has completed the rollout of a new booking tool for services, with one-third of the appointments being made. you service, such as hairdressing or eyebrow sculpting, last. trimester.
All this does not mean that Ulta is abandoning physical commerce. Dillon said Ulta could potentially accommodate up to 1,700 stores in the United States, excluding Target locations. (Ulta just suspended plans to launch a fleet of Canadian stores.)
But the pandemic has brought about changes in the way customers shop, even in stores, and that will persist long after the pandemic has subsided.
“The intersection of digital and physical is here to stay,” says Dillon.
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