Look­ing to The Fu­ture

The brand will launch KKW Fra­grance and Kylie Cos­met­ics for the hol­i­day.

WWD Digital Daily - - Front Page - BY AL­LI­SON COLLINS

Ulta en­ters M&A with in­vest­ments,

ac­qui­si­tions.

Ulta Beauty is now do­ing M&A.

For the first time, the beauty re­tailer has made two in­vest­ments and two ac­qui­si­tions as it works to ramp up per­son­al­iza­tion. The busi­ness has in­vested in dig­i­tal work­flow part­ner It­er­ate and on­line book­ing tool Spruce, and ac­quired two busi­nesses — QM Sci­en­tific and GlamST — which will al­low Ulta to bet­ter build out its aug­mented re­al­ity and ar­ti­fi­cial in­tel­li­gence ca­pa­bil­i­ties, es­pe­cially as it re­lates to per­son­al­iza­tion.

“Both GlamST and QM Sci­en­tific bring tech­nol­ogy lead­er­ship, guest ex­pe­ri­ence, fo­cused ca­pa­bil­i­ties and the right cul­tural fit,” said Prama Bhatt, Ulta’s se­nior vice pres­i­dent of dig­i­tal and e-com­merce. “We now own the tech­nol­ogy as­sets to sup­port our dig­i­tal ex­pe­ri­ence roadmap.”

She spoke at Ulta Beauty’s in­vestor day on Thurs­day, where the ac­qui­si­tions were un­veiled. “We may con­tinue to look at M&A as a way to ac­quire ca­pa­bil­i­ties,” said Scott Set­ter­sten, chief fi­nan­cial of­fi­cer, though he noted the com­pany does not an­tic­i­pate M&A will be an enor­mous part of the over­all strat­egy.

Per­son­al­iza­tion was one of the big themes of the day, as was the ex­pan­sion of dig­i­tally na­tive brands with Ulta and the com­pany’s dig­i­tal ini­tia­tives.

Ulta has long talked about its cus­tomer as a beauty en­thu­si­ast, but go­ing for­ward, is work­ing to seg­ment out that con­cept fur­ther. The idea is to de­ter­mine a shop­per’s ori­en­ta­tion to­ward ser­vice, spend­ing, means of in­flu­ence and pre­ferred shop­ping tools, said Ulta chief ex­ec­u­tive of­fi­cer Mary Dil­lon.

She ex­pects shift­ing de­mo­graphic trends in the U.S. — more Mil­len­nial and Gen Z shop­pers, as well as more His­panic and mul­ti­cul­tural ones — to ben­e­fit Ulta in the long term. “The grow­ing seg­ments in the U.S.…allover-in­dex in beauty,” Dil­lon said.

Tar­geted mes­sag­ing through things like e-mail mar­ket­ing and views of the Ulta Beauty web home page are also part of the com­pany’s plan.

“When we look big-pic­ture at the fu­ture, per­son­al­iza­tion is where we’re headed,” said Dave Kimbell, Ulta’s chief mer­chan­dis­ing and mar­ket­ing of­fi­cer. “By un­der­stand­ing what’s im­por­tant to our guests, we can tailor [their ex­pe­ri­ence].”

Ulta is able to cre­ate that per­son­al­iza­tion in large part due to the data it has from its 30 mil­lion loy­alty pro­gram mem­bers. Those shop­pers make up about 95 per­cent of the re­tailer’s to­tal sales, and be­cause Ulta is price point and cat­e­gory ag­nos­tic, it has broad data with which to tar­get shop­pers, Kimbell noted.

That per­son­al­ized ser­vice will run through the com­pany’s dig­i­tal ini­tia­tives, in­clud­ing things like pre­dic­tive anal­y­sis and con­ver­sa­tional com­merce.

Ulta Beauty ex­ec­u­tives also fo­cused on core prod­ucts Thurs­day, not­ing that ex­clu­sives — which make up 9 per­cent of its as­sort­ment — are par­tic­u­larly cru­cial.

Tara Si­mon, se­nior vice pres­i­dent of mer­chan­dis­ing, pres­tige, at Ulta Beauty, de­tailed the an­tic­i­pated launches of KKW Fra­grance and Kylie Cos­met­ics.

“Much like the con­ver­sa­tions with th­ese other dig­i­tally na­tive brands, no­body can smell th­ese fra­grances…so [Kim’s] re­ally ex­cited to be part­ner­ing with us and we couldn’t be more thrilled,” Si­mon said.

On Nov. 17, Kylie Jen­ner is plan­ning to launch a lip-ori­ented col­lec­tion from Kylie Cos­met­ics with Ulta.

“Kylie chose it her­self,” said Si­mon. “She chose her best-sell­ing and fa­vorite lip kits.” They will hit all Ulta stores and on­line the same day, though the in-store as­sort­ment will carry more prod­ucts, Si­mon said. “Ulta. com has an edited as­sort­ment.”

“She’s re­ally cute and she’s su­per ex­cited…her words — ‘su­per ex­cited’ — to be able to have a place for her fans to ac­tu­ally touch the prod­uct and buy it,” Si­mon said. “We think it’s go­ing to drive a lot of traf­fic into the stores.”

In the past two years, since the com­pany’s last in­vestor day, Ulta has launched about 250 more brands in the stores, with a par­tic­u­lar fo­cus on dig­i­tally na­tive brands that are seek­ing ex­pan­sion that Ulta ex­ec­u­tives say can come from part­ner­ing with a re­tailer. The busi­ness is con­tin­u­ing to build more stores, and “study­ing” in­ter­na­tional ex­pan­sion with no im­mi­nent plans, Dil­lon said.

On Thurs­day, Ulta re­leased pre­lim­i­nary third-quar­ter re­sults. The com­pany’s com­pa­ra­ble sales were up 10.3 per­cent, with e-com­merce growth of 42.2 per­cent, for the quar­ter. The busi­ness also said it was im­ple­ment­ing a $150 mil­lion to $200 mil­lion mul­ti­year cost-sav­ings pro­gram that should al­low it to make in­vest­ments in fu­ture growth ini­tia­tives.

Wall Street re­sponded well to Ulta’s plans — the shares rose nearly 5 per­cent to $304.76 in mid­day trad­ing.

MAC at UltaBeauty.

Kylie Cos­met­ics’ Lip Kit in Posie K.

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