Ulta Beauty Swot Analysis

Ulta Beauty Swot Analysis

Shanequa Figgins

National Louis University

Introduction

Ulta Beauty is a retailer in the U.S and Canada that offers over 25,000 products from over 500 brands from all category price points. They pride themselves in having all things beauty all in one place, offering not only cosmetics but hair, skin, and brow services to the guest.

Strengths

• Ulta Beauty is the only major retailer that carries both prestige (high- end) and Mass (Drug store) products. This creates a unique shopping experience for guest who likes both expensive and affordable brands because they can find everything all under one roof.
• Ulta also has a staff of licensed beauty professionals that provide a variety of services such as Brows, Makeup, Haircut, and Facials. While a guest is shopping fix a beauty dilemma, a licensed professional can fix the issue before she even walks out the door.
• The organization also has a unique reward system that offers the customer a bang for their buck. The Ultimate Rewards Program offers customers points for every dollar spent, and those points turn into dollars that can be used in the store. Not only do they offer a great rewards system, they also send major deals via email — some including 20% off the entire store. Ulta also offers a credit card to those who qualify. The perks include double the points when used and can also be used outside the store.
• Guest experience is significant to Ulta. They have made it where every dilemma can be fixed. If a guest needs a product, but it is out of stock, it can be ordered online and shipped to their home free shipping. Guest can also order online and pick up in store; this is good for a guest who has limited time. Also, if a guest did not want to wait on shipping, there is a device that shows customers what neighboring location have that product in stock.
• Ulta has partnerships with notable brands such as Kylie Cosmetics, Morphe, Tarte and many more who have agreed only to sell their products in Ulta Locations.
•  The company has shown high profit according to their website (2019), “In 2018, sales increased 14.1%, or 16.3% adjusted for the 53rd week in 2017, to $6.7 billion. Total company comparable sales rose 8.1%, driven primarily by strong traffic. GAAP earnings per diluted share grew by 22.1% to $10.94.”

Weaknesses

• Ulta has shown itself to be a significant player in the industry, but it is not globally known as some of its competitors such as Sephora. Sephora operates in over 2500 stores in 32 countries. Ulta cosmetics current has 1300 stores nationwide and has expanded to Canada.
• The company shows an increase in trade receivables. According to Marketline Company Profile (2018), “ In the FY2018, the company’s trade and other receivables accounted for 5.9% of its current assets. Such increasing accounts receivable reflects inefficient credit management by the company. In the backdrop of recovering economic slowdown, the probability of defaults by any of creditors increased, may impact the overall financial position of the company.”(pg 15)
• There are some major brands such as Fenty cosmetics created by Rihanna that are not sold in Ulta store. This dilemma may lead customers to shop elsewhere.  

Opportunities

• The industry is continually expanding with new brands that customer is excited to try but are not as accessible because these products are sold online only. Ulta has the opportunity to bring in those brands to their stores, giving customers the oppturnity to test before they buy. The did this with Juvias Place, and it was an instant success.
• The company should invest in new locations to create a more significant presence. The company is doing well in the US as stated, but some areas do not have many locations.
• Investing in the locations already established could bring in more revenue. Ulta highlights that they offer hair, skin, and brow services, yet they lack in one area, which is nails. Adding a nail tech in high volume locations can be a big move for Ulta. That way, a guest can get everything they need all in one place.

Threats

• The company is apart of a highly competitive market. Which includes national, regional, and local operators of specialty stores, department stores, discount retailers, and online retailers. Some of these competitors have more resources and are stronger financially.
• There are many alternatives in the market. Some of the brands Ulta offers other retailers such as Macy's, Sephora, Walmart, target, and other retailers offer as well. Also, Amazon offers many products at a discounted rate.
• Customers are becoming more health conscious. Ulta offers a few vegan and natural products but not many. This issue can turn a customer away to another retailer.

References

MarketLine, a Progressive Digital Media business. (2018). MarketLine Company Profile: Ulta Salon, Cosmetics & Fragrance, Inc. Ulta Salon, Cosmetics & Fragrance, Inc. MarketLine Company Profile (p. N.PAG). Retrieved from