BOLINGBROOK, Ill. — Ulta Beauty Inc. has built a powerful business combining mass and masstige and offering beauty products under one roof capped off with salon services. Now the beauty giant is fortifying that synergy by putting all categories under the leadership of one chief merchandising officer rather than delineating mass and prestige.

Monica Arnaudo

Stepping into that role is Monica Arnaudo, who formerly was senior vice president of merchandising overseeing mass and professional products.

Arnaudo is a perfect person for the job. During her more than two years enriching the mass assortment, Arnaudo brought in brands that separate Ulta Beauty from other retailers selling popularly priced lines. “We saw a huge opportunity to evolve our mass assortment and further differentiate,” she says. To that end, she and the team sought out digitally native lines like ­Morphe, ColourPop and Juvia’s Place, as well as ranges that she says fill in market gaps. “We’ve had great success with those brands,” she says. Additionally, Ulta Beauty has added the popular Revolution Beauty brand from the U.K. (along with other lines under its umbrella). Among the benefits of these lines are the delivery of elevated in-store experiences, including testers.

As she assumes the responsibilities of prestige, Arnaudo can delve into her vast experience with premium brands such as Bobbi Brown, Bare Escentuals (maker of Bare Minerals) and Sephora. “I’m excited to have the opportunity to work with all sides of the business. The prestige team has done a good job, similar to mass, with exclusive brands like Kylie and KKW,” she says of those two retail exclusives. Ulta Beauty also hit the secured strong product exclusives such Tarte’s Sugar Rush and Tarte’s Shape Tape Concealer. She plans to keep that momentum going.

“Beauty is ever changing and evolving rapidly,” Arnaudo says of the new structure, which allows the retailer to approach the business in a “holistic” manner. With trends typically starting in the up-market, Ulta Beauty can be ready quicker to translate emerging categories in mass, too. She uses the “no makeup” look as an example. Prestige was ahead of the game in ushering in the concept, and that gave Ulta Beauty the head start to prepare for the look to drill down to mass. With the company’s new structure, it is easier to reflect how shoppers buy beauty — they don’t always delineate between mass or class. But, that said, Ulta Beauty has the opportunity to drive “mass migration” where shoppers may start out in popular prices and trade up with exposure to prestige brands under Ulta Beauty’s roof. Younger consumers, in particular, have been found to trade up as they mature.

Although there is one leader, Arnaudo says there will still be experts for categories with their ear to the ground in all of Ulta Beauty’s segments. “With this structure we can be more nimble and flexible,” she explains.

A perfect example of finding up-and-comers is Sparked at Ulta Beauty. In 2018, the retailer assembled an emerging brands team under the direction of Muffy Clince, formerly senior buyer for prestige cosmetics, to identify embryonic brands with potential and effectively stock them at a retailer of its size. One result is the Sparked at Ulta Beauty concept that is parlayed online and in selected stores. Next month will be the fourth iteration of the concept punctuated this time by brands including: Carbon Theory, a fresh approach to cleansing; Spotlight, a harm-free oral care brand; Hynt, a high-performance brand made with the environment top of mind; and AuNaturale, a clean color brand fused with skin care. Ulta Beauty is also expanding the footprint of Sparked in regard to door count and the impact of the in-store real estate.

Brands looking to get a chance at Ulta Beauty can click on a link to a page on the company’s website for submission that is monitored by an expert and funneled to the right department (www.ulta.com/ulta/
common/merchandising.jsp).

Ulta Beauty continues to be a coveted launch pad for brands. Last year the retailer added the Revolution Beauty brand along with nameplates in its portfolio such as I Heart Revolution, which appeals to younger shoppers with whimsical packaging like donut-shaped eyeshadow palettes that are scented. The brands are exclusive in the U.S. to Ulta Beauty.

In mass, Arnaudo says e.l.f. Cosmetics has nurtured a strong partnership working on innovation and speed to market with some Ulta Beauty exclusive items that drive sales.

Lines formed around the block at its stores for influencer collaborations, especially last year’s Morphe x James Charles Eyeshadow Palette. Ulta Beauty also inked a deal for the exclusive launch of a Gen Z-focused line called Florence by Mills with skin care and makeup curated by actress Millie Bobby Brown. “The whole idea is that it is made for Gen Z by someone who is Gen Z,” says Arnaudo. She says the younger generation gravitates to lines that are vegan and cruelty free.

Hair care is emerging as a big sales generator for Ulta Beauty, and Arnaudo is enthused by response to Pattern, a launch from Tracee Ellis Ross. The actress pulled from her personal hair experience to create an assortment specifically for curly, coily and tight-textured hair. “Pattern filled a gap in our assortment, and Tracee is so authentic and passionate,” Arnaudo says.

She’s confident hair will continue to soar with items that help extend hair coloring, as with fun temporary color products. Professional continues to over-index at the retailer, thanks in part to its salons, and Jen Atkin’s Ouai and IGK were just added to the assortment.

Is she concerned about a slowdown in makeup? “The business landscape is evolving, and trends come in waves. But makeup is still a big part of our business. Consumers are embracing a natural beauty look, but we’re seeing that requires skin care to take care of your skin, vitamins for overall health and even makeup for the ‘no makeup’ look,” she explains.

Brands serving these needs include Pacifica, Juice Beauty and Tarte. Ulta Beauty’s proprietary brand, Ulta Beauty Collection, created a subcategory of makeup infused with “good for you” ingredients like green tea and tea tree oil.

Skin care continues to be a major sales engine and a category where Ulta Beauty experiences a healthy trade-up from mass to masstige and to professional derm brands. Current strong performers include Tula, Dermalogica, Elemis and Kiehl’s. In the mid-market and mass sector, the company is also doing well with The Ordinary, CeraVe, Derma E and Thayers.

CBD, says Arnaudo, is an area being explored. The retailer currently stocks a number of brands with CBD products, including Cannuka, Hello in oral care, and Derma E, with more brands in the pipeline.

Fragrances have always been strong for Ulta Beauty, despite the fluctuations at other retailers. Arnaudo has seen a sales uptick in designer fragrances as well as with various fragrance forms like roller balls and travel sizes. The retailer has a strong online fragrance push through a platform called Fragrance Crush that spotlights different scents each month.

Like many in the industry, Arnaudo is in tune with the mounting interest in sustainability and better for the earth environment. “It is something on the minds of our guests, especially the younger generation. We’ve seen an influx of products that are not only good for you but good for the planet as well.” Ulta Beauty recently introduced a brand called UpCircle that is housed in aluminum tubes in fully recyclable packaging and made from leftover natural ingredients like coffee grounds.

Arnaudo also has two secret weapons that augment her knack for knowing what’s next in beauty with a Millennial view — her son, 26, and her daughter, 24. “Many times I will ask them what they think of a particular brand or influencer, as well as new digital spaces such as TikTok,” she says. “They’ve been a great sounding board. They are my greatest ­inspiration.”