Right now, the conventional logic among retailers is that physical space must be efficiently designed. Chain retailers like Target and Wal-Mart are opting for smaller urban locations that serve as fulfillment centers as well as shopping destinations.
Sprawling megastores just aren’t the winning design they were in the past. That’s what makes Ulta Beauty’s success so stunning: While its competitors downsize and trim their list of locations, Ulta is opening new stores of impressive size — roughly 10,000 square feet in sales space, in many instances.
Ulta stores sell more than 20,000 products from 500 brands, and it plans on opening 100 new stores by the end of 2016. This isn’t a misguided or desperation move, either: As Forbes notes, the company’s 2015 sales grew 21 percent over the previous year, to $3.9 billion.
In some ways, Ulta might seem like a modern-day retail anomaly — a company whose strategy has gone unaffected by sweeping changes in retail strategy and consumer shopping behavior. In reality, Ulta is doing the opposite: It’s looking ahead and building stores that respond to these shifting market demands.
When Size Matters
Retailers focused on beauty and style have advantages against online-exclusive competition the same way retailers have a physical edge: Shoppers like to try things out in-person before making a person. Beauty and makeup bars are such successful retail installations because shoppers can try out makeup, perfumes and other products before spending considerable money on them.
Ulta understands that, and that’s one reason it has dedicated itself to large retail locations. But it’s not just about access and options — the company is committed to building exciting in-store experiences centered around customer interactions and engaging features.
The company recently added Drybar as one of its in-store vendors, which gives shoppers a chance to enjoy new styling tools they may not have experienced before, along with other beauty products.
Drybar is just one example of Ulta’s commitment to build itself as a destination. When its retail space is being used to curate experiences that bring shoppers into the store, concerns about space efficiency and brick-and-mortar overhead dissolve into the background.
Many retailers have advocated for smaller retail spaces by stressing that it’s not how much space you have — it’s how you use it. Ulta’s business model shows that this retail manta can work both ways.
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