Dive Brief:
- Ulta Beauty’s loyalty program reached 44.4 million active members in its latest quarter, up 5% year-over-year, executives said during a Q3 2024 earnings call Thursday.
- Online improvements including enhanced search, enriched product pages and better site optimization drove e-commerce conversion rates, according to CEO Dave Kimbell. The number of members engaging with the Ulta app saw double-digit growth, and the app accounted for two-thirds of e-commerce sales in the quarter.
- “Even though we've had a lot of growth in that — in our loyalty program over time — we still see a lot of opportunity ahead, and we're continuing to attract new members and bring them into our business,” Kimbell said during the call. “And that, of course, is important fuel for future growth.”
Dive Insight:
Loyalty was one ingredient for success at Ulta, which achieved better-than-expected sales growth. Net sales were up 1.7% at the retailer during the third quarter, while comparable sales rose 0.6%, according to an earnings report.
“When assortment is stronger and experience is right and our loyalty is working and our touch points are driving both in-store and online, those are the things that will come together,” Kimbell said.
Ulta leaders attributed loyalty program growth to a combination of new members, returning lapsed members and improved member retention.
Kimbell highlighted growth in the program’s highest tiers, platinum and diamond. Higher-tier members shop more frequently and spend more with each visit, and Ulta leveraged exclusive and early event access and personalized offers to attract more members.
Ulta expanded its loyalty ecosystem beyond its traditional rewards with the launch of Ulta Beauty Community in October. The digital forum lets members share tips and access content such as podcasts.
Ulta Beauty Community has already tripled the target for number of initial users, according to Kimbell.
The retailer improved its GLAMlab virtual try-on experience as well, according to Kimbell. The updated engine is more precise, offers shoppable makeup looks and adds sharing capabilities.
Other improvements to the online experience include digital buying guides with educational content and recommendations, expanded personalization capabilities and the launch of product replenishment reminders.
In-store CX wasn’t left behind. Ulta hosted more than 13,000 in-store events during the quarter, from celebrity and brand founder events to salon lessons and coaching from in-store stylists.
“Engaging guest experiences drive differentiation, loyalty and meaningful business value, and we are focused on creating authentic, personalized experiences across all our channels,” Kimbell said.
While the third quarter was positive, Ulta executives warned of potential weakness during the remainder of the fiscal year. With a shorter holiday season and uncertain consumer demand, leaders projected a low single- digits comparable sales decline in Q4 2024 compared to Q4 2023.
