Ulta 2010 Annual Report Download - page 15

standards, in all of our stores. All stores receive a centrally produced promotional planner for each event to
ensure consistent implementation.
Planning and allocation
We have developed a disciplined approach to buying and a dynamic inventory planning and allocation process
to support our merchandising strategy. We centrally manage product replenishment to our stores through our
planning and replenishment group. This group serves as a strategic partner to, and provides financial oversight
of, the merchandising team. The merchandising team creates a sales forecast by category for the year. Our
planning and replenishment group creates an open-to-buy plan, approved by senior executives, for each
product category. The open-to-buy plan is updated weekly with POS data, receipts and inventory levels and is
used throughout the year to balance buying opportunities and inventory return on investment. We believe this
structure maximizes our buying opportunities while maintaining organizational and financial control. Regularly
replenished products are presented consistently in all stores utilizing a merchandising planogram process. POS
data is used to calculate sales forecasts and to determine replenishment levels. We determine promotional
product replenishment levels using sales histories from similar or comparable events. To ensure our inventory
remains productive, our planning and replenishment group, along with senior executives, monitors the levels of
clearance and aged inventory in our stores on a weekly basis.
Vendor relationships
We work with over 300 vendors. Our Senior Vice President of Merchandising has over 30 years of experience
and each merchandising vice president has over 15 years of experience developing relationships in the industry
with which he or she works. We have no long-term supply agreements or exclusive arrangements with our
vendors. Our top ten vendors represent approximately 48% of our total annual sales. These include vendors
across all product categories, such as Bare Escentuals, Farouk Systems, L’Oréal, Procter & Gamble, and Coty,
among others. We believe our vendors view us as a significant distribution channel for growth and brand
enhancement.
Marketing and advertising
Marketing strategy
We employ a multi-faceted marketing strategy to increase brand awareness and drive traffic to both our stores
and website. Our marketing strategy complements a basic tenet of our business strategy, which is to provide
our customers with a satisfying and uplifting experience. We communicate this vision to our customers and
prospective customers through a multi-media, multi-touchpoint approach. Our primary media expenditure is in
direct mail catalogs and free-standing newspaper inserts. These vehicles allow the customer to see the breadth
of our selection of prestige, mass and salon beauty products.
In order to reach new customers and to establish Ulta as a national brand, we advertise in national beauty and
lifestyle magazines such as InStyle, Allure, Lucky, Elle and Vanity Fair. These advertising channels have
historically been successful in raising our brand awareness on a national level and driving additional sales
from both existing and new customers. In conjunction with our national brand advertising, we have initiated a
public relations strategy that focuses on reaching top tier magazine editors to ensure consistent messaging in
beauty magazines as well as direct-to-customer efforts through multi-media channels.
Our e-commerce marketing strategy complements our print media strategy. Ulta.com serves not only as an
e-commerce site, but additionally as an extension of Ulta’s marketing and prospecting strategies (beyond
catalogs, newspaper inserts and national advertising) by exposing potential new customers to the Ulta brand
and product offerings and providing a 24 hour forum for loyalists to engage with the brand. This dual role for
Ulta.com exists through online marketing strategies including search marketing, affiliate marketing, social
networking, banner advertising, and other online marketing channels. Ulta.com’s email marketing programs
are also effective in communicating with and driving sales from online and retail store customers.
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