Ulta's partnership with Target might have surprised observers, but it's been on the minds of executives at the beauty retailer for some time. Dave Kimbell, president of Ulta, said the idea had been talked about "for a little while" and "came naturally" thanks to a shared guest-centric and team-centric approach, but the pandemic also pushed the idea to the forefront as executives considered strategic opportunities this year.
"Certainly in 2020, with the shifts in consumer behavior, with everything going on around us, we started thinking more about, 'Are there bolder moves we can take?' and that's what ultimately led us to this partnership and opportunity with Target," Kimbell said.
The partnership, which begins with Ulta opening about 100 shop-in-shops in Target stores, has two clear goals for Ulta: deepening loyalty with current guests and reaching new ones. That means the shop-in-shops, which measure about 1,000 square feet, have to do double duty by providing what current shoppers expect from Ulta and also drawing in shoppers who don't know the brand.
"Reaching them in a convenient way will allow us to deepen our loyalty, and we've seen that so many times. Every time we're able to offer new experiences to our guests, whether it's our app, or our loyalty program, salon, our e-commerce business, of course our stores, we see loyalty increase with our guests across all aspects of our business," Kimbell said.
To that end, the beauty retailer is focused on making the Ulta Beauty at Target experience an "extension" of the Ulta store experience, offering a curated assortment of more than 40 brands across makeup, skincare, haircare and fragrance, according to Kimbell. That will include both staple brands, as well as new up-and-coming ones, and there will be consultation areas with trained associates as well as discovery zones.
The online experience will also feature many of the same things Ulta online shoppers are used to, including an emphasis on ease of discovery, information on key brands, reviews and other information to help consumers make purchasing decisions. The company's Ultamate Rewards program, which Kimbell called "critical" for guests at every touchpoint, will also be accepted at Target, and the retailers are working on unique offerings for their respective loyalty programs in the partnership.
"It won't be everything that Ulta Beauty offers. We see it as a real complement to our full stores — everything that we did, all the experiences and products you can get in our full stores — this will be a segment of that," Kimbell said. The retailer is still committed to its own footprint, which stands at over 1,200 stores currently, with plans for 1,500 to 1,700 total. "But we felt like this 1,000 square feet was what made sense from the consumer standpoint, gives us enough room to bring brands to life, to get a good assortment across makeup, skincare, haircare and fragrance that we think is going to add value to that Target shopping experience."
Ulta's brow and salon services, which its stores are known for, won't be offered at Target, but Kimbell noted that associates will be trained on them and can educate customers on those offerings. The assortment will be for the most part standard across the entire fleet at launch, and that assortment will be consistent with Ulta's online offering with Target, though the retailer expects to consider localization efforts once the shop-in-shops have been around longer.
"What we know about our business is there's a big part of our assortment that's widely engaged and kind of has universal appeal and so a lot of this will be items across those products and then we'll customize and segment as appropriate down the road," Kimbell said.
For new guests, he's hoping the shop-in-shops serve as entry points to Ulta's ecosystem rather than a one-and-done shopping experience.
"Ultimately, what we're quite confident in is that not only will they enjoy continually engaging with Ulta Beauty at Target, they'll discover that there's a whole lot more to Ulta Beauty that isn't represented in there," Kimbell said. "We see them coming back to our stores, to our e-commerce business, to our salons, and engaging in the full Ulta Beauty environment."
The confidence of execs also explains the beauty retailer's plans to expand the partnership to "hundreds more" Target stores over time. Kimbell said the company has taken a very focused approach in identifying which stores to bring the experience to so far, looking for areas where both Target and Ulta "have the greatest opportunity to grow awareness, to reach new guests, to deepen loyalty with our existing guest."
Not all of those stores will be coming immediately, though. The two retailers worked together to determine the right cadence for shop-in-shop openings, settling on 100 as an attainable goal in 2021, but Kimbell said they're also leaving room to learn and make adjustments as they expand.
Getting it right is important to Kimbell, and making sure that the shop-in-shops at Target are reflective of the full Ulta experience is key to that.
"We think that this Ulta Beauty at Target will allow us to reach millions more guests with an exciting way to do that. It'll be partially about delivering convenience, making it easier for them to reach us, but also delivering what they love about Ulta — the fun, engaging, welcoming, exciting, fresh experience that Ulta Beauty brings to life in a new, compelling way," Kimbell said. "We think there's a big opportunity here. We're excited about the path primarily because all the research, all the work we've done with consumers and our members of our loyalty program suggests that this is going to be a big hit."