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Ulta Beauty: Leading the Discretionary Pack

by 
Lila Margalit
 on 
August 21, 2023
Ulta Beauty: Leading the Discretionary Pack

Cosmetics may be a discretionary category – but if Ulta Beauty’s continued stellar performance is any indication, it’s one that many people seem to have relegated to the status of an essential good. Whether driven by the Lipstick Effect – which sees consumers seek out inexpensive ways to splurge when prices are high – or by the heightened interest in health and wellness that has characterized the U.S. market in recent years, Ulta Beauty continues to shine. 

Consistent Year-Over-Year Visit Growth

Year over year (YoY), Ulta saw positive foot traffic growth for every month of 2023 through July – even as many other discretionary segments languished. While some of this visit growth is likely due to the chain’s continued expansion, the average number of visits to each of Ulta’s stores was also 21.3% higher in H1 2023 than in 2022 – so same-store visits are generally also on the rise.

What (Else) is Up at Ulta?

And foot traffic isn’t the only thing up at Ulta. Those customers that do visit the chain are staying longer than they did last year. This is good news for the brand – since longer visits means more time spent browsing the aisles and filling up shopping carts. Ulta visitors are also more loyal than they were in H1 2022, with 34.4% visiting the chain at least twice in the first half of 2023, up from 31.6% last year. 

From College Students to Empty Nesters

Ulta’s remarkable resilience appears to stem, in part, from its broad appeal: The chain’s mix of luxury and value-priced merchandise draws both affluent and less well-off shoppers, and the brand continues to attract customers of all ages. 

Analyzing the captured markets of Ulta’s trade areas using audience segmentation data from Spatial.ai’s PersonaLive highlights the chain’s special draw for college students – a key part of the coveted GenZ demographic. College students are notoriously skint – but they also know how to splurge, and research indicates that they’re spending more money on personal care items than they used to. Nationwide, and in states across the country, college students were significantly over-represented in Ulta’s captured markets in the first half of 2023, showing that they are an important driver of the chain’s success. 

And college students aren’t the only ones who love Ulta. Another demographic that’s over-represented in the captured markets of Ulta’s trade areas – albeit to a lesser degree – is the “Pets&EmptyNests” segment, defined as “middle-aged empty-nesters in diverse suburbs”. Ulta’s unique ability to offer something for everyone – without diluting its very particular appeal for specific audiences – seems to be a formula that can’t be beat.

Looking Ahead

As inflation continues to ease, discretionary spending will likely ramp up once again. And Ulta, which has proven its staying power even in the face of significant economic headwinds, will likely continue to thrive.  

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