Beauty Store Business

JAN 2019

Beauty Store Business provides solutions for better retailing! New products, industry news, savvy business moves and important trends affecting both brick-and-mortar and online retailers are included in each issue.

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28 January 2019 | THE SECRETS TO PRODUCT SELECTION Penny Coy, vice president of merchandising, prestige skincare and fragrance, has more than 30 years of retail industry experience, including a five-year stint as a planner for Claire's. "I have an amazing merchant team [with nine people] that really knows two things to look for," she says. "They're looking for trailblazing ingredients and they're looking for products that have proven results–especially those that have really strong clinical claims." Coy adds that it's also critical for her team to discover emerging indie brands that amass large followings by resonating with consumers online. Her team is constantly combing product reviews and comments on Instagram to try to find the next hot brand. She cites coconut oil-based skincare line Kopari and Tula, a probiotic skincare line, as two recent examples. Sandy Ovington, vice president of merchandise, has a career spanning decades in retail as a corporate buyer and division vice president for Kmart Footwear prior to joining Ulta Beauty in 2010. She partially credits the retailer's success to its "unmatched assortment" of more than 25,000 products from 500 brands. "Our guests want newness, they want innovation, they want technology and efficacy–and we want brands that bring that to the table. And we want brands that are willing to work really hard with Ulta," she says. While Ovington admits that selecting a winning product "is not really an exact science," she stays ahead of the curve by relying on facts, data and research and depending on tools that yield quantifiable results, including consumer analytics, market trends, customer surveys and sales data history. But that's not all. She and her team of 18 merchants do competitive shopping–analyzing what direct competi- tors are doing–and diligently attend key industry trade shows throughout the year, including Cosmoprof North America and Bologna, to discover new products. Data reveals specific qualities that make a product worthy of strong consid- eration for Ovington–and Ulta buyers in general. "One of the stats we have from consumer analytics is that seven out of 10 guests are open to trying something new. Some of the things we think of as strengths for a brand are if they provide a solution to the guest, showcase a point of difference, have authenticity, bring new- ness to the table and have a strong brand identity," Ovington reveals. But sometimes the best tips for selecting winning products come from the customers themselves. Ulta's merchandising teams work closely with the stores' own roughly 40,000 sales associates and brand partners to find out what shoppers are requesting and suggesting in-store and online. Another important factor in product selection, Coy notes, is inclusivity–a value the company holds dear. "We look to have a continuum of products that appeal and are inclusive across all ages, all ethnicities and gender in all its forms. … We're also being very cognizant to really appeal to the 40 and over guest with our marketing and who we are using for our photo shoots," she says. Of course, it pays to be inclusive, casting a wider net to bring in customers of all kinds. According to Nielsen, multicultural consumer spending power is valued at $3.2 trillion, while Euromonitor predicts that baby boomers' spending power will reach $15 trillion by the end of 2019. Ovington compares Ulta's product selection to what's in the average woman's purse. "If you look at the way people shop, it mirrors their beauty bag; they have a mix of prestige and mass all in their closet or handbag. We approach our products the same way." Smart, in-store merchandising further supports sales. Ulta entices customers as they meander the aisles with Travel and Trial end caps featuring on-the-go beauty and its curated sections such as New and Notable. At the close of the shopping experience, impulse-buy fixtures at checkout inspire last-minute additions to consumers' hauls. LOYALTY PAYS With Ulta's loyalty program, Ultamate Rewards, generating roughly 90 per- cent of its overall sales, the company understands its nearly 30 million active members are one of its greatest assets. As such, they provide great value to its participants who accrue points for their "Our guests want newness, they want innovation, they want technology and efficacy—and we want brands that bring that to the table." —Sandy Ovington, VP of merchandise A search for innovative, eff ective ingredients, popularity on social media and data analysis factor into Ulta's in-store skincare off erings and more. S A L E S b t h e N U M B E 19% 5% 4% Haircare Products and Styling Tools Salon Services Other 21% Skincare, Bath and Fragrance Cosmetics Co 51% y R S Courtesy of Ulta Beauty

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