ULTA - Ulta Beauty

[chompsterama]

What's this business got that's special? 

Yes, they've ridden a huge wave of makeup/hair/beauty exploding and sometimes being in the right place is all it takes for a while.  But management (as per the most recent CC) is admitting that the tide is turning and the wave shrinking.  I don't know they have anything special beyond that.  Maybe they do. 

Here's the thinking:  The business sells mostly third party products and caters to makeup and hair (both styles of which don't change often - most people keep their makeup/hair routine for years once they find what works).  Once a customer finds their favorite dermalogica, clairol, elf, clinique products why should they come back to Ulta?  There are zero switching costs and the business sells almost nothing proprietary.  I mean I like my local tennis shop (that isn't around anymore), but I am not paying $6/sleeve of Penn balls when Walmart or Amazon sell them for $2.50. 

In the end, the lowest cost seller will win the business because they are selling someone else's stuff.  I doubt Ulta will be the lowest cost over the long-run.  How can they be? 

[BG2008]

What's this business got that's special? 

Yes, they've ridden a huge wave of makeup/hair/beauty exploding and sometimes being in the right place is all it takes for a while.  But management (as per the most recent CC) is admitting that the tide is turning and the wave shrinking.  I don't know they have anything special beyond that.  Maybe they do. 

Here's the thinking:  The business sells mostly third party products and caters to makeup and hair (both styles of which don't change often - most people keep their makeup/hair routine for years once they find what works).  Once a customer finds their favorite dermalogica, clairol, elf, clinique products why should they come back to Ulta?  There are zero switching costs and the business sells almost nothing proprietary.  I mean I like my local tennis shop (that isn't around anymore), but I am not paying $6/sleeve of Penn balls when Walmart or Amazon sell them for $2.50. 

In the end, the lowest cost seller will win the business because they are selling someone else's stuff.  I doubt Ulta will be the lowest cost over the long-run.  How can they be?

Dude,

Have you watch any of the make up tutorials on Youtube?  There are non-binary/gay men/young boys who make a full time living off tutoring women on applying make ups.  The ability of these individuals to make a living is due to the fact that there is a ton of females who are wearing a lot of make up. 

10-15 years ago, I may look at an attractive black female and notice the bumps and imperfections in her skin.  In the last 5 years, I have notice a lot more African American females who have great contours and very smooth skins.  They look glamorous and I am sure that the upkeep is expensive.  But who wants to show bumpy skin once they have a taste of that smooth silky skin? 

Have you bought cosmetics?  It's an experience!  I'm not talking about a guy who goes to the pharmacy and look at Nivea shave cream vs Harry's.  Kylie Jenner and Rhianna have over 20 different skin tones.  Rhianna has an albino cosmetic.  It's about inclusivity and body positivity.  We all think it's bullshit.  Try to convince me to pay $10,000 for a handbag or $250,000 for a Ferrari.  No way in hell.  But there are buyers out there for it.  It is nice to go to a cosmetic store and try out different shades, tones, and foundations.  It's an experience.   

No dog in this fight.  But just like to rant. 

[frank87]

To pile on the tennis ball analogy - you know what tennis ball and what brand you like to buy whereas women like to experiment and try out new looks. It totally makes sense why the experiential aspect of cosmetics is so valuable.

[BG2008]

To pile on the tennis ball analogy - you know what tennis ball and what brand you like to buy whereas women like to experiment and try out new looks. It totally makes sense why the experiential aspect of cosmetics is so valuable.

To further pile on the tennis ball analogy - you know what tennis ball and what brand you like to buy because "at some point, you played tennis and tried different balls on different courts and you wind up choosing certain types of balls for performance."  Ulta is that playground to chose.  Keep in mind that the world keep making 15 years old girls every year.  Every year, they start using make up and there is an experimentation process.  Back when I was 18, I thought "who wouldn't drink Budlight?"  I thought that way because I have seen hundreds of football games on TV and I have seen thousands of Budlight ads.  At the time, I took it for granted.  But there is a customer acquisition cost to every Bud drinker.  I was slowly brainwashed and I thought I was just getting a free football game on TV. 

[Gregmal]

To pile on the tennis ball analogy - you know what tennis ball and what brand you like to buy whereas women like to experiment and try out new looks. It totally makes sense why the experiential aspect of cosmetics is so valuable.

To further pile on the tennis ball analogy - you know what tennis ball and what brand you like to buy because "at some point, you played tennis and tried different balls on different courts and you wind up choosing certain types of balls for performance."  Ulta is that playground to chose.  Keep in mind that the world keep making 15 years old girls every year.  Every year, they start using make up and there is an experimentation process.  Back when I was 18, I thought "who wouldn't drink Budlight?"  I thought that way because I have seen hundreds of football games on TV and I have seen thousands of Budlight ads.  At the time, I took it for granted.  But there is a customer acquisition cost to every Bud drinker.  I was slowly brainwashed and I thought I was just getting a free football game on TV.

I'm in my 30's and still think that. Although it took me a while to move on from Natty Light, the original hard seltzer, before hard seltzer was a thing.

[chompsterama]

What's this business got that's special? 

Yes, they've ridden a huge wave of makeup/hair/beauty exploding and sometimes being in the right place is all it takes for a while.  But management (as per the most recent CC) is admitting that the tide is turning and the wave shrinking.  I don't know they have anything special beyond that.  Maybe they do. 

Here's the thinking:  The business sells mostly third party products and caters to makeup and hair (both styles of which don't change often - most people keep their makeup/hair routine for years once they find what works).  Once a customer finds their favorite dermalogica, clairol, elf, clinique products why should they come back to Ulta?  There are zero switching costs and the business sells almost nothing proprietary.  I mean I like my local tennis shop (that isn't around anymore), but I am not paying $6/sleeve of Penn balls when Walmart or Amazon sell them for $2.50. 

In the end, the lowest cost seller will win the business because they are selling someone else's stuff.  I doubt Ulta will be the lowest cost over the long-run.  How can they be?

Dude,

Have you watch any of the make up tutorials on Youtube?  There are non-binary/gay men/young boys who make a full time living off tutoring women on applying make ups.  The ability of these individuals to make a living is due to the fact that there is a ton of females who are wearing a lot of make up. 

10-15 years ago, I may look at an attractive black female and notice the bumps and imperfections in her skin.  In the last 5 years, I have notice a lot more African American females who have great contours and very smooth skins.  They look glamorous and I am sure that the upkeep is expensive.  But who wants to show bumpy skin once they have a taste of that smooth silky skin? 

Have you bought cosmetics?  It's an experience!  I'm not talking about a guy who goes to the pharmacy and look at Nivea shave cream vs Harry's.  Kylie Jenner and Rhianna have over 20 different skin tones.  Rhianna has an albino cosmetic.  It's about inclusivity and body positivity.  We all think it's bullshit.  Try to convince me to pay $10,000 for a handbag or $250,000 for a Ferrari.  No way in hell.  But there are buyers out there for it.  It is nice to go to a cosmetic store and try out different shades, tones, and foundations.  It's an experience.   

No dog in this fight.  But just like to rant.

I appreciate your optimism for youtube and makeup tutorials, Dude.  It's obvious this strange phenom HAS been huge and has probably driven consumers to try then buy products at ULTA.  My point is that management thinks that wave is shrinking.  And going with the tennis ball analogy, doesn't that mean that ULTA could have a negative selection bias?  When someone wants to experiment every few years with changing their makeup they go to Ulta and get a demo, ULTA fronts the cost for the demo and product and MUA then the customer buys their tennis balls from the cheapest seller thanks to ULTA helping them find which ball they like best?  I just can't sort out why ULTA would be that sticky six months after I've found my ideal dermologica product.  I'm going to Google to find whoever will sell it to me the cheapest.   

[BG2008]

What's this business got that's special? 

Yes, they've ridden a huge wave of makeup/hair/beauty exploding and sometimes being in the right place is all it takes for a while.  But management (as per the most recent CC) is admitting that the tide is turning and the wave shrinking.  I don't know they have anything special beyond that.  Maybe they do. 

Here's the thinking:  The business sells mostly third party products and caters to makeup and hair (both styles of which don't change often - most people keep their makeup/hair routine for years once they find what works).  Once a customer finds their favorite dermalogica, clairol, elf, clinique products why should they come back to Ulta?  There are zero switching costs and the business sells almost nothing proprietary.  I mean I like my local tennis shop (that isn't around anymore), but I am not paying $6/sleeve of Penn balls when Walmart or Amazon sell them for $2.50. 

In the end, the lowest cost seller will win the business because they are selling someone else's stuff.  I doubt Ulta will be the lowest cost over the long-run.  How can they be?

Dude,

Have you watch any of the make up tutorials on Youtube?  There are non-binary/gay men/young boys who make a full time living off tutoring women on applying make ups.  The ability of these individuals to make a living is due to the fact that there is a ton of females who are wearing a lot of make up. 

10-15 years ago, I may look at an attractive black female and notice the bumps and imperfections in her skin.  In the last 5 years, I have notice a lot more African American females who have great contours and very smooth skins.  They look glamorous and I am sure that the upkeep is expensive.  But who wants to show bumpy skin once they have a taste of that smooth silky skin? 

Have you bought cosmetics?  It's an experience!  I'm not talking about a guy who goes to the pharmacy and look at Nivea shave cream vs Harry's.  Kylie Jenner and Rhianna have over 20 different skin tones.  Rhianna has an albino cosmetic.  It's about inclusivity and body positivity.  We all think it's bullshit.  Try to convince me to pay $10,000 for a handbag or $250,000 for a Ferrari.  No way in hell.  But there are buyers out there for it.  It is nice to go to a cosmetic store and try out different shades, tones, and foundations.  It's an experience.   

No dog in this fight.  But just like to rant.

I appreciate your optimism for youtube and makeup tutorials, Dude.  It's obvious this strange phenom HAS been huge and has probably driven consumers to try then buy products at ULTA.  My point is that management thinks that wave is shrinking.  And going with the tennis ball analogy, doesn't that mean that ULTA could have a negative selection bias?  When someone wants to experiment every few years with changing their makeup they go to Ulta and get a demo, ULTA fronts the cost for the demo and product and MUA then the customer buys their tennis balls from the cheapest seller thanks to ULTA helping them find which ball they like best?  I just can't sort out why ULTA would be that sticky six months after I've found my ideal dermologica product.  I'm going to Google to find whoever will sell it to me the cheapest.

This is such a man's way of thinking...men seeks efficiency and lowest price...women seeks adventure and discovery and all over again

[KCLarkin]

What's this business got that's special? 

Yes, they've ridden a huge wave of makeup/hair/beauty exploding and sometimes being in the right place is all it takes for a while.  But management (as per the most recent CC) is admitting that the tide is turning and the wave shrinking.  I don't know they have anything special beyond that.  Maybe they do. 

Here's the thinking:  The business sells mostly third party products and caters to makeup and hair (both styles of which don't change often - most people keep their makeup/hair routine for years once they find what works).  Once a customer finds their favorite dermalogica, clairol, elf, clinique products why should they come back to Ulta?  There are zero switching costs and the business sells almost nothing proprietary.  I mean I like my local tennis shop (that isn't around anymore), but I am not paying $6/sleeve of Penn balls when Walmart or Amazon sell them for $2.50. 

In the end, the lowest cost seller will win the business because they are selling someone else's stuff.  I doubt Ulta will be the lowest cost over the long-run.  How can they be?

They have twice as many rewards members as Starbucks. Maybe there is more to this business than tennis balls?

[BG2008]

I talked to my wife at dinner tonight about Ulta and cosmetics.  I told her about the tennis ball analogy and she told me that girls will own over one hundred lipsticks.  I asked her why?  She said "they brands will market them as limited color, limited edition, limited tone, etc"  She says that they are available all the time. But girls are "gatherers"  and FOMO is very real when it comes to acquiring that supposedly limited edition lipstick. 

I don't get it.  It doesn't make sense.  But why do people spend $13 on a pack of smoke?  But people do it. 

[writser]

This is such a man's way of thinking...men seeks efficiency and lowest price...women seeks adventure and discovery and all over again

That is such a man's way of thinking..