Visa Embedded Lending June 2024 Banner

Ulta: The Future of Beauty Is Click-and-Mortar™

Ulta

As consumers seek more convenient buying options for even the most historically on-site trial-based categories, the beauty industry is transforming to meet shoppers’ increasing Click-and-Mortar™ expectations.

Ulta Beauty, for instance, discussed this demand for shopping journeys that combine the digital and physical at the William Blair Growth Stock Conference.

“We really think about our business through an omnichannel lens, and we think both our digital as well as our brick-and-mortar business has a really important role in working together and driving growth,” Ulta Beauty Chief Financial Officer Paula Oyibo said. “…When a guest engages with us across multiple touchpoints, whether it is in our stores or online, in our app or on our site, as well as UB at Target, they engage more, they’re more loyal and they spend more. … Omnichannel guests spend 2.5 times to 3 times more than our brick-and-mortar-only guests.”

The PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” created in collaboration with Visa Acceptance Solutions, found that roughly a third of U.S. consumers are Click-and-Mortar™ shoppers, preferring either to make purchases online for in-store pickup or to shop in stores with the assistance of digital technologies.

Driving digital adoption in the beauty space can be challenging, especially for brands looking to acquire new customers, given how trial-based the industry has been in the past. As such, brands are looking to digital technologies that replicate some of the more immersive, more in-depth experiences you can get in stores. At its simplest, this may look like posting a video demonstrating the application of a product.

In an interview with PYMNTS, Vincent Yang, co-founder and CEO of video commerce platform Firework, observed that as shoppable content gains popularity, the beauty category is at the forefront. Consumers seek out opportunities to see products in use, as the packaging alone does not provide sufficient information about their functionality.

“For beauty, without seeing a video, all that you’re seeing is a package,” Yang said. “…The packs look the same. You need to really see the before and after, etc.”

Augmented reality (AR) try-on is also helping bridge the trust gap for online beauty shoppers. By using digital simulations tailored to users’ facial features, individuals can virtually try a wide range of beauty products without physically applying them. This also helps solve the returns problem for brands.

Virtual try-on helps to reduce returns because you get the best product, which you like [the most],” Wayne Liu, president and chief growth officer at Perfect Corp. told PYMNTS in February. “…It saves lots of waste. … In the beauty industry, they just throw away returned products. … You don’t know if the customer has already used it, so you won’t be able to really take it back and resell it.”

It seems these digital bets are paying off, as beauty’s online growth is outpacing retail overall. According to the PYMNTS Intelligence report “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” which drew from a survey of more than 2,600 U.S. consumers last year, 39% of eCommerce shoppers said they were very likely to boost their online purchases of health and beauty items in the upcoming year. This percentage was higher than any other product category.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.