Dive Brief:

• Ulta Beauty is preparing to tackle product loss — a major challenge of the busy holiday season that executives attributed to a spike in crime — without cutting back on CX, according to a presentation at the Raymond James 2023 TMT and Consumer Conference on Monday.
• The retailer has locked up fragrances, its highest category for theft, at 70% of stores for the holiday season based on historic Q4 theft spikes last year, according to Kecia Steelman, president and COO. 
• The company has increased store staffing to reduce frustration from customers who have to wait for associates to unlock products and ensure timely assistance.

Dive Insight:

Product loss was a challenge for Ulta Beauty in Q3, according to CFO Scott Settersen on a Q3 earnings call last week. 

The retailer is making progress on the issue, but there is more work to be done — especially when part of the solution can inconvenience busy holiday shoppers.

“We're gaining on it a little bit,” Settersen said on the call. “Again, it's not mission accomplished by any stretch of the imagination, but we do feel like we've got tactics in place now that will help us get that better managed.”

Ulta Beauty is pursuing a balance that keeps valuable items safe without sacrificing shoppers’ ability to test out products before making a purchase, according to Steelman.

“You can go to other retailers today, and it's hard to shop,” Steelman said during the conference. “It's very distracting. So when we've put the locked cases in our stores in fragrance, we've also increased our labor because we want to make sure we're continuing to have great experiences for our guests.”

Well-staffed stores further deter theft because criminals prefer locations where they can get in and out without being approached by an associate. Ulta Beauty is also leveraging partnerships with local law enforcement and installing security tags on prestige category items to thwart crime, according to Steelman.

Increased staff will be key to deploying Ulta Beauty’s upgraded point-of-sale system, which has been rolled out across the company in an effort to combat long lines, according to Steelman. Associates can use mobile devices to transact gift cards from anywhere in the store and place online orders at registers.

“[If] they couldn't find an item in store that's on their Christmas shopping list, we will be able to very quickly place the order right at the registers, charge them right then if it's in the distribution center, and ship it to their home free of charge,” Steelman said. “That's a tool that we did not have last year for us during the holiday season.”