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Ulta & Lululemon: Discretionary Spending On The Up

Bracha Arnold
May 18, 2023
Ulta & Lululemon: Discretionary Spending On The Up

Ulta Beauty and lululemon athletica – two brands that fall solidly into the discretionary spending category – are thriving in a challenging retail environment. Both seem nearly impervious to tightening consumer budgets and continue to scoop up market share despite economic headwinds. 

We take a closer look at recent foot traffic data to see what may be driving visits to these stores. 

Ulta: Ultra-Popular, Ultra-Visited

When we last checked in with Ulta, the company seemed poised to continue its upward trajectory. Location intelligence data continues to prove just how popular the brand is with customers, with visits and visits per venue to Ulta locations nationwide up year-over-year (YoY) since the start of 2023. And while some of January and February’s more outsized growth can be attributed to an Omicron wave keeping many shoppers home in early 2022, the positive visit trends continued into March and April. 

The consistent traffic increase can be partially attributed to Ulta’s investments in improving its store fleet. The company is continuing its multi-year expansion with plans to open 25-30 new locations in 2023, remodeling existing ones, and focusing on its salon services. Since Q3 2022, Ulta has enhanced its in-store services, like the popular Benefit Brow Bar and makeup and lashes counters, and has also expanded its increasingly-popular skincare selection. By providing customers a reason to come into a store, whether to pick up a product or consult with a skincare expert, Ulta is positioning itself as the go-to beauty and wellness destination – and is continuing to reap the resulting traffic gains.

Lululemon: Performance Wear That’s Outperforming 

With around 430 locations in the U.S. and an international expansion that's bringing stores to places like Shanghai and Australia, lululemon is a major player in the activewear market. The company's focus on high-quality products has helped it build a loyal following of customers who appreciate its commitment to innovation and comfort.

And the chain's popularity comes into sharp focus when comparing its YoY visits with visits to other apparel retailers – lululemon outperformed the wider apparel and luxury retail categories by wide margins each month, so far, in 2023.

Like Ulta, lululemon consistently gives customers a reason to return to its stores. The brand’s new product releases are regularly met with excitement and positive customer feedback, highlighting how novelty and innovation can help retailers attract visitors in challenging economic times.

Loyalty For Both Chains Grew Year-over-Year

Both Ulta and lululemon give consumers plenty of reasons to visit brick-and-mortar stores – and the brands’ loyalty programs may ensure these visitors are returning regularly. Ulta's Ultamate loyalty program added three million users in 2022 to reach a total of 40.2 million users, while lululemon, which has experimented with different loyalty programs over the years, launched its current membership program in October 2022. The program is split into two tiers – the free Essential tier and a paid Studio tier. 

Location analytics indicates that these programs are succeeding in driving repeat customers to stores – both Ulta and lululemon saw an increase in the share of returning visitors between Q1 2022 and Q1 2023. The YoY increases in repeat visitors suggest that both companies are doing something right with their loyalty programs.

Discretionary Dollars Deliver 

Ulta and lululemon are thriving in a challenging retail environment. By focusing on innovation and an exciting shopping experience, these companies have managed to build loyal followings of customers who appreciate their unique offerings.

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