The beauty and personal care market is expected to reach $646.2 billion globally in 2024 and is anticipated to grow at a compound annual growth rate of 3.3% over the next four years, according to Statista. In the U.S. alone, revenue is expected to reach $100 billion this year.
One of the retailers leading the way in the space is Ulta Beauty. The company last year saw net sales increase 18.3% year over year to $10.2 billion, while comps rose 15.6%. Ulta’s operating income also increased 26.3%.
So how is the retailer holding onto those gains? Through innovation.
“I think the best time to innovate is when something is doing really well,” Ulta Beauty CEO Dave Kimbell said during the National Retail Federation’s Big Show in New York City on Monday.
The retailer last month announced plans to relaunch its customer loyalty program, Ultamate Rewards, with a new name and expanded benefits. In addition to existing loyalty perks, Ulta said it would offer an enhanced birthday offering, including allowing members to choose their desired birthday gift from a selection rather than receive a predetermined product.
The retailer touts over 42 million members in its loyalty program, with over 95% of its sales going through its loyalty program. That “means that almost everything we sell we can connect back to an individual and understand our guests’ behaviors,” Kimbell said.
The retailer also keeps things feeling fresh by evolving its assortment with new brands, developing tech innovations — like having an automated sampling program and piloting robotic manicure capabilities — and by leaning on AI to enable chat capabilities or create personalized communication to customers. The key, Kimbell said, is finding a way to integrate technology that complements the human experience.
“We have 50,000 associates across the country that are delivering a one-on-one experience to help our guests discover beauty on their own terms or find solutions that meet their needs,” he said.
While growth is expected to normalize from the highs it experienced in recent quarters, Ulta — and the beauty sector more broadly — are anticipated to remain in a stronger position than other retailers.
“Despite all of the economic pressures, concerns, anxiety in the world around us, the importance that beauty plays in our guests’ lives is stronger than ever,” Kimbell said. “That's allowed the category as a whole to continue to navigate and be resilient to some of the pressures that we've seen in the overall market.”