Omnichannel never looked so good: How Ulta Beauty keeps reinventing retail

In 1990, Ulta Beauty opened its first five stores in the Northwest suburbs of Chicago with a unique vision to build a new kind of store. Ulta Beauty would offer a colorful oasis that brought products out from behind the counter, housing all things beauty—cosmetics, fragrances, and salon services—together under one roof. 

From the beginning, the beauty retailer was unconventional. It featured a large mixed inventory of affordable mass market products alongside high-end brands you could try out at conventional stores, strip mall locations, and on-location salons, which offered hair, nail, and cosmetics services. 

It turned out to be exactly what suburban shoppers and budding beauty enthusiasts wanted, sparking a beauty retail revolution that has lasted for over three decades—even if the blue eyeshadow, glitter, and pencil-thin brows didn’t.

Ulta Beauty is now the largest beauty retailer in the United States, carrying more than 25,000 products from more than 600 established and emerging beauty brands, including Ulta Beauty's own private label. 

Despite many traditional retailers being faced with fierce competition, razor-thin margins, and declining sales, Ulta Beauty is still setting trends and producing fresh takes on what it means to be a beauty purveyor. Today, the company is trying on new digital offerings and cloud-enabled tools to deliver a vast array of personalized experiences and transform how shoppers buy and discover beauty yet again. 

“Innovation is everybody’s responsibility, not just one team’s,” said Prama Bhatt, Ulta Beauty’s chief digital officer. “It's each of us being curious, each of us in the work we're doing every day, thinking through different perspectives and lenses to drive innovation."

Giving transformation a brand new look

The newest technologies and scientific research have long played a role in the product development and enhancements of the beauty industry.

In recent years, the sector’s use of technology has burst beyond the lab into the business, with brands turning to the cloud and emerging technologies like AI, machine learning, and augmented reality (AR) to redefine how they interact with and serve customers.

Though Ulta Beauty wasn’t in the business of building technology tools and services from scratch, it partnered with startup QM Scientific to develop an AI-powered recommendation engine, eventually acquiring the company, along with AR startup GlamST, in 2018. 

Together, this growing innovation family provides new digital capabilities that enable Ulta Beauty to do what it does best—reinventing beauty retailing. This time, instead of customers trying out makeup in a store, it’s helping them do it anytime, anywhere.

“The underpinning of those two technologies, AR and AI, and marrying them together,  for us it’s a one-plus-one-equals-three outcome,” Bhatt said. “This fuels our focus on all things, especially in beauty, around virtual try-on. There's nothing like being able to take makeup and digitally try it on your face.”

Take GLAMLab, a virtual try-on experience in Ulta Beauty’s app, which lets customers try thousands of products before they buy, including lipsticks, eyeliners, foundations, and eyeshadows. You can hold up your phone and immediately see what MAC’s RubyWoo red lipstick looks like on your face, for instance, while a variety of people, partners, and technologies help with the heavy lifting behind the screens. 

Makeup is physically swatched, scanned, and transformed into a digital representation, complete with color, texture, and finish. Machine learning algorithms powered by Google Cloud computing services detect a shopper’s face in the camera lens, and computer vision applies a final 3D makeup look that moves with their expressions.

You can try other AR and AI-powered experiences in GLAMlab, from foundation matching to AI-based skin analysis and personalized product recommendations, or even virtually testing a new hair color before you buy or dye.

Ulta Beauty has continued cultivating new technology relationships to create innovative beauty experiences. The company invested in AI retail technology company Adeptmind in 2021, which aims to bridge the gap between digital discovery and physical commerce. It also recently announced a strategic partnership with Haute.AI to build a personalized AI engine that analyzes your skin and provides recommendations tailored to your taste in texture, smell, brand values, and shopping preferences. 

“Who knows all the different ways we're going to be showing up digitally across the internet in the coming years—it’s a perfect opportunity,” Bhatt said. “We feel strongly about the possibilities that beauty brings, and the ability to express and self-express in the physical world, which surely has a corollary in the digital world.” 

The perfect match: Beauty and the cloud

Ulta Beauty views cloud as an essential part of its digital stack. It plays a starring role when it comes to powering all of the company’s digital experiences, paving the way to capture insights faster, and, crucially, executing on those data and insights to meet customer expectations.

Early on, Ulta Beauty saw the potential of technology and data to build stronger relationships and increase sales at physical stores. It was among the first retailers to introduce a rewards-based shopping program during the 1990s, for example, which eventually grew into the popular Ultamate Rewards loyalty program.

Those rewards quickly became  synonymous with saving serious cash with purchase points, discounts, and freebies galore. And today, they serve an added purpose as a source of valuable data insights that help Ulta Beauty get to the heart of who its customers are and deepen the emotional connection with them both online and in stores.

“Our loyalty program gives us a real strategic asset in customer data,” Bhatt explained. “Being able to mine that data, connect it, and drive insights helps us shape every experience.”

Through Ultamate Rewards, Ulta Beauty’s technology, marketing, and strategy teams gain a more intimate look at customers. They can generate data based on sales, transactions, product reviews, and social media engagement. By expanding its partnership with Google Cloud, Ulta Beauty has been able to leverage cloud-based data analytics and machine learning to help centralize, organize, and transform all of this information into more meaningful insights.

“Our partnership with Ulta Beauty has enabled increased engagement with customers in store and online, and the creation of new tools and capabilities,” Thomas Kurian, the CEO of Google Cloud, has noted before. “That’s enabling deeper connections with guests, ultimately driving customer loyalty.”

That focus on personalization has been embraced and rewarded by consumers. Thanks in large part to the data-driven Ultamate Rewards, more than 95% of Ulta Beauty’s offline and online sales come from its active user base of more than 38.2 million members. 

Building a digital store of the future

Like picking the perfect lipstick and eyeshadow pairing, blending physical with digital has become Ulta Beauty’s forte. And like that perfect look, it really is a balancing act of just the right details—in this case, using the right digital capabilities at the right time to inspire real-life emotion and blending them seamlessly with physical store experiences. 

Even with the shadow of the “retail apocalypse” looming, Ulta Beauty continues to expand its physical retail presence, with plans to maintain growth for 50 new stores per year and hundreds more store-in-stores to open in Target locations around the country. 

Ulta Beauty credits this success with keeping store experiences at the core of the entire beauty journey, choosing to focus on digital experiences as an intersection of the digital, physical, and emotional. 

While brick-and-mortar retailers were particularly hard hit by the pandemic, Ulta Beauty took it as a chance to learn from its data insights and doubled down on using mobile devices and digital capabilities to enhance omnichannel shopping experiences.

“Even pre-pandemic, but definitely during the pandemic, we saw that our phones and digital devices are connectors,” Bhatt noted. “They are relationship builders, whether it's your family, your friends, your favorite brands, or your communities.”

With this in mind, the company has focused on using technology and devices to create fun, functional, and helpful personalized shopping experiences that can be used wherever and whenever a shopper may need them, whether at home, on the go, or in a store. But the ultimate goal is to blend the store and digital realm to perfection, creating connections that feel human instead of purely transactional.

“We’re really excited about taking the virtual and using the camera, and instead of turning it towards your face, you’re turning it towards the store and really augmenting our physical store experience,” Bhatt said. 

“The store is already buzzing with energy,” she continued, “but how awesome if you can also use your phone to bring other content and digital experiences to life?” 

For Ulta Beauty, the possibilities are indeed beautiful. 

If you’d like to learn more about Ulta Beauty’s technology journey, we have two more exciting channels for you. You can watch a video conversation or listen to an extended podcast with Prama Bhatt, Ulta Beauty’s chief digital officer. In each, she goes even more in depth on Ulta Beauty’s transformation with Amy Eschliman, managing director of Industry Retail Solutions at Google Cloud, and Chris Hood, digital strategist at Google Cloud.