In this exclusive interview from Cannes Lions, Ulta Beauty’s Chief Marketing Officer, Michelle Crossan-Matos, spoke to WARC’s Anna Hamill about thinking beyond Gen Z, the success of retail media, and why retention matters.
We’re hearing a lot about recession which could happen anytime. Have you seen any changes in consumer buying behaviors that are notable?
We’re trying to capture it. We have 41 million members across loyalty members in the Ultimate Rewards program, so we can track how often they spend and what they’re spending. We are actually seeing spending increase per member, so that’s really positive for Q1 versus last year. Traffic is up and really strong. People are really engaged right now in the beauty category, and especially with Ulta Beauty.
What we are seeing, though, is that the mass market seems to be hotter. We’re trying to figure out whether it’s the price point driving that or innovation… If you look at what the consumer trends are saying – Gen Z in particular – yes, they are worried about the economy, but they want to splurge on beauty care because they love beauty care. They’re buying more and they are accessing all the new innovation at more accessible price points. I think that’s what’s happening, but we can’t say conclusively because it’s only Q1. I think it’s primarily driven by innovation, personally, because there’s really good stuff out there right now.
How is this economic upheaval impacting how you’re thinking about marketing strategy in the short term and also in the longer term?
We’re very lucky because we cater to the mass market all the way up to luxury. There are many beauty retailers that only do luxury, and they may be concerned for the future. We know that we’re going to cater for everyone depending on where they are on their price points.
For us, in terms of marketing strategies, we’ll keep doing the same as what we’ve been doing. We are innovating our content a little bit more as we’re giving people choices of different price points. Say you want a new blusher that gives you a summer glow – we’ll show you entry-level right up to luxury and allow consumers to choose what is right for them. So the same channels, but with more innovative content, especially in social media. We’re playing to our advantage – the fact that we cater to all price points – because many of our competitors don’t.
Where do you see the growth potential for your brands moving forward? And how does your marketing strategy play a role in making it happen?
So many brands are gonna say it’s all about Gen Z. It’s not. Have you seen the ageless movement that is happening? Have you seen the menopause movement? There are so many brands emerging now for different communities, different ages and different stages of life. I’m entering that stage of life now, and my daughter – who’s 12 – is becoming a woman. Growth comes from all, but our marketing strategy needs to differ for each specific one. It can’t be that one piece of content fits all, it has to be very differentiated.
I love what we’re doing in haircare, for example. We’ve expanded our haircare range so that we have haircare for menopausal women. ‘Better Not Younger’ is a fabulous brand that we have listed. We’ve increased the retail space of that brand and we’re creating social content so that it talks to those consumers. We still do a lot of brands for Gen Z, but I’m specifically creating content for other brands with audiences in different age groups too.
Moms bring in their daughters, and daughters bring in their moms and grandmothers, so it’s not uncommon to see multi-generational packs walking around an Ulta Beauty store… We’re a little bit more inclusive in that respect. Life changes when you have your first baby, when you get married, or you have your first job, all the way up to being an ‘ageless consumer’. It’s very exciting that we can take that journey with our beauty enthusiasts.
Beauty now is a much-expanded category to just makeup products, it’s more about wellbeing. How are you tapping into those types of themes?
I totally believe that beauty sparks joy. It’s not about how thin you are or how tall you are. Those notions of what beauty care is are long gone. Now, it’s generally about how comfortable you feel in your skin and the joy that sparks when you meet other people.
I think beauty care has this higher order benefit: it goes from beauty, to wellness, to joy. I think joy is what we’re all reaching for. I don’t think people call themselves joyful, but you know how joy feels. People are starting to articulate that in different ways that are meaningful for them, and so maybe that new lip gloss you got makes you feel special.
It’s about creating an emotional connection, not just about price or range.
Yes, and that’s the magic of marketing. It’s not about products, it’s what the product has that gives you meaning that allows you to fulfil your dreams – whatever those dreams are. Is it that you want to feel stronger so you can go and run a marathon? Is it that you want to feel more confident so you can go on stage and give a presentation? Or if you want to straighten your hair because you’ve got your first day at a new school. Everything has a role. It is just more than functional, that is what is unique about beauty care.
Is there anything that you’re prioritising strategically from a tech or media standpoint right now?
We launched our retail media network UB Media a year ago, and this is where we’re expanding significantly. We’ve got 41 million loyalty customers, and I have the retail media offering.
If a new brand comes to me and says ‘please help me build my brand’, it’s great. We have members that I know love their brand, then we target them using UB Media. That is a big win. We’re not just doing it on our site, it’s off-site too and also in-store. That is a game changer. Then there’s personalisation as well, which is also a game changer, especially for brands who want to grow their business.
It’s driving significant value in terms of co-creating content and being able to target consumers in a much more personalised way. We’re starting to see quite a significant uplift, in terms of brands investing. It’s more than just dollars, it is actually investing in their growth with Ulta Beauty, so there’s an emotional connection between us and the brand partners too.
How do you balance the need to invest in long-term brand building versus delivering short term, especially as a retailer and a publicly listed company?
The devil’s in the details of planning ahead… It really needs to be that your planning process happens a year before, so you know that you’re very competitive, not just on offers but in terms of member love, all the media and making sure you’re strengthening [the brand]. You can’t take your eyes off the size of the prize.
For me, I look at two things: I’ve got Ulta Beauty the brand – where I keep driving media – but I also have my brand partners where they’re investing in media. I toggle between those two. I’m able to toggle member offers and incentives that don’t dilute brand equity and keep bringing people back and making them feel good. I think that’s how you toggle between those two tension points.
How do you lean into differentiation to make your brand stand out? Because there’s a lot of beauty retailers out there.
First of all, we are the largest US beauty retailer because we know the US consumer. When any new brands enter the US market, they want to go to the expert in that market. We really make sure that we keep building expertise and understanding our own country’s dynamics.
We have 41 million loyalty members and that’s the largest of any beauty retailer in the US. Again, that’s a point of differentiation, so we keep growing that. We talk about growing member numbers, because the sales will come if you have loyalty from the members. We constantly train our associates that work in our stores. We constantly reaffirm our equity, which is that we’re accessible, we’re the nice people of beauty care and we will make you feel good. You come as you are and we celebrate you.
When you’re building out your marketing teams and capabilities, what skillsets are top of mind for you right now? What are you looking for from your partners?
Leadership skills never go away. For me, it doesn’t matter if you’re a marketer or an accountant, you’d better have leadership. The first thing I think is ‘extreme ownership’, where if you’re going to drive sales, you feel ownership for that. Agility is another, especially in the US with its dynamics. You’ve got to constantly test and learn and try new things.
I can teach people data. I can teach people how to do brand-building frameworks. I don’t think it’s necessarily as easy to teach leadership, hunger, hustle and agility. Ideally, you’ve come with that. We’ve got the people that are social media savvy and people just love data and be able to see the trends, but those social aspects of the individual – that leadership profile – is what I’m after right now.
What’s happening in the marketing industry now that excites you the most as a potential opportunity moving forward?
I think it’s the creator and the community space. I have 45,000 associates that work for Ulta Beauty and that’s 45,000 creators if I want it to be. So I’m pretty excited about the authenticity of that. These are people that genuinely love the brand, and they’re not necessarily incentivised to create content that may not be true to their own values. For me, that is something that I’m quite excited about.