Ulta 2008 Annual Report Download - page 16

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Merchandising
Strategy
We focus on offering one of the most extensive product and brand selections in our industry, including a broad
assortment of branded and private label beauty products in cosmetics, fragrance, haircare, skincare, bath and
body products and salon styling tools. A typical Ulta store carries over 19,000 basic and over 2,000
promotional products. We present these products in an assisted self-service environment using centrally
produced planograms (detailed schematics showing product placement in the store) and promotional merchan-
dising planners. Our merchandising team continually monitors current fashion trends, historical sales trends
and new product launches to keep Ulta’s product assortment fresh and relevant to our customers. We believe
our broad selection of merchandise, from moderate-priced brands to higher-end prestige brands, offers a
unique shopping experience for our customers. The products we sell can also be found in department stores,
specialty stores, salons, mass merchandisers and drug stores, but we offer all of these products in one retail
format so that our customer can find everything she needs in one stop. We believe we offer a compelling value
proposition to our customers across all of our product categories. For example, we run frequent promotions
and gift coupons for our mass brands, gift-with-purchase offers and multi-product gift sets for our prestige
brands, and a comprehensive customer loyalty program.
We believe our private label products are a strategically important category for growth and profit contribution.
Our objective is to provide quality, trend-right private label products at a good value to continue to strengthen
our customers’ perception of Ulta as a contemporary beauty destination. Ulta manages the full development
cycle of these products from concept through production in order to deliver differentiated packaging and
formulas to build brand image. Current Ulta cosmetics and bath brands have a strong following and we have
plans to expand our private label products into additional categories.
Category mix
We offer products in the following categories:
• Cosmetics, which includes products for the face, eyes, cheeks, lips and nails;
• Haircare, which includes shampoos, conditioners, styling products, and hair accessories;
• Salon styling tools, which includes hair dryers, curling irons and flat irons;
• Skincare and bath and body, which includes products for the face, hands and body;
• Fragrance for both men and women;
• Private label, consisting of Ulta branded cosmetics, skincare, bath and body products and haircare; and
• Other, including candles, home fragrance products, exercise accessories, educational DVDs and other
miscellaneous health and beauty products.
Organization
Our merchandising team reports directly to our CEO and consists of a Senior Vice President of Merchandis-
ing & Store Design who oversees a Senior Vice President of Prestige Cosmetics, Vice President of Mass
Cosmetics, Skincare and Haircare, Divisional Merchandise Manager of Fragrance, Bath and Gift with Purchase
and Prestige Skincare, Divisional Merchandise Manager of Salon Products, and a Divisional Merchandise
Manager of Styling Tools. Reporting to the Senior Vice President of Merchandising are approximately 21
Divisional Merchandise Managers, Senior Buyers, Buyers and Assistant/Associate Buyers. Our merchandising
team works directly with our centralized planning and replenishment group to ensure a consistent delivery of
products across our store base.
Our planogram department assists the merchants to keep new products flowing into stores on a timely basis.
All major product categories undergo planogram revisions once or twice a year and adjustments are made to
assortment mix and product placement based on current sales trends.
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