Ulta Beauty is luring young customers away from its strongest competitor.
In the history of marketing, there are often times when a young but aggressive brand begins to defeat a very strong but less mobile competitor. And the fight between Ulta Beauty and Sephora, which is now unfolding in the US market, well demonstrates this situation. The first is increasingly able to win the sympathy of consumers, despite the fact that the second is the full power of the LVMH concern.
Ulta Beauty bets on Gen Z. According to Piper Jaffray's latest teen marketing study, Ulta Beauty has become the leading US teen beauty chain. It has 38% on its side, while Sephora is the closest competitor with 26%. A similar survey conducted this spring showed a much smaller gap - 33% for Ulta, and 31% for Sephora.
According to analysts, Ulta Beauty is expanding its presence in the US market, deliberately focusing on the strongest competitor. So, the company opens outlets in the immediate vicinity of Sephora stores and thus purposefully entices customers. Ulta has already opened stores within 10 minutes of nearly 80% Sephora stores and the process is still ongoing.
Sephora confronts its young rival by launching new brands in its stores, recruiting social media stars, introducing a subscription gift package service and much more. But these efforts are not yet enough to correct the situation. Ulta is betting on an enhanced personal care experience that visitors can experience at its locations, as well as an exclusive partnership with Kylie Cosmetics brand from Kylie Jenner.
No less than LVMH, the JC Penney network is also concerned about the position of the brand. In total, Sephora operates more than 2,500 stores worldwide, with about 660 of them located in JC Penney department stores in the United States. And the presence of Sephora outlets is one of the main factors for the network to attract young buyers and one of the significant sources of income. If the position of the brand is shaken, then JC Penney will experience significant difficulties.