One stop shop: the strategy that sent Ulta’s shares skywards

One stop shop: the strategy that sent Ulta’s shares skywards

Ulta is bucking the trend in US retail, with revenue rocketing and shares soaring last year – and it’s all thanks to a winning strategy, says Bloomberg Markets, that enables the cosmetics retailer to be all things to all people, with both mass and prestige brands on offer as well as in-store beauty services.

“Because Ulta sells brands at all price points, it has the ability to catch market share from drug store chains and high-end department stores like Bloomingdale’s. Its format – 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, with a 27 percent market share,” wrote Bloomberg reporter Stephanie Hoi-Nga Wong.

The beauty specialist retail category was the US’ second-fastest growing over the last five years, according to research conducted by Euromonitor – with sales up 48 percent, compared to an 11 percent decline for department stores. Ulta is aiming to add 100 stores annually to its network, reaching a peak of 1700 in the US. Analysts believe that while Ulta gains square footage, it can sustain its current revenue trajectory – although competition in the form of Macy’s Bluemercury may well affect sales going forward.

 

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