Sephora outpaces Ulta's footfall even with fewer stores

Dive Brief:

Sephora's U.S. stores enjoy footfall traffic that outpaces Ulta's more than 2 to 1, according to data provided to Retail Dive by location intelligence firm Cuebiq, which analyzed Sephora and Ulta's store traffic during the second quarter.
Sephora also enjoys better customer crossover, Cuebiq found. Nearly 20% of shoppers visiting an Ulta store in the quarter also visited a Sephora, while just 9% of Sephora customers also went to an Ulta store, according to the study.
As of Aug. 4, Ulta Beauty operates 1,124 retail stores across 49 states, according to the company's website, while Sephora says it has more than 430 stores across the Americas (and about 2,300 stores in 33 countries worldwide).

Dive Insight:

Ulta has capitalized on its strength in the fiercely competitive beauty market with a massive brick-and-mortar expansion, but its most recent quarter showed signs of some weakness as same-store sales growth retreated. First quarter retail comparable sales rose 4.7%, which included salon comparable sales growth of 3.2%.

But Sephora appears to be doing more with less, by Cuebiq's measure.The LVMH-owned brand is doing particularly well in the U.S., LVMH Financial Communications Director Chris Hollis said last month. The brand will continue to open its smaller studio locations, which he said have been well received, according to a transcript from Seeking Alpha. "Looking to the second half of the year, Sephora is, as always, focused on innovation in products and services that cannot be found elsewhere," he said. "Renovation of the retail network will also continue."

Those stores feature tech-enabled discovery like a Virtual Artist tooland Color IQ feature, and they accommodate Sephora's Beauty Studio Check-In, an online reservation tool, as well as its SephoraClient App, where clients can check loyalty status or product information or check out.But it's not all tech — there are also classes, concierge advice and services like facials. The company plans to open more Studios this year, including in Brooklyn, New York, Los Angeles and Washington, D.C.

Such well-appointed stores, which are also found at the company's larger locations, are likely drawing in shoppers that also frequent Ulta. But Cuebiq's results are bolstered by earlier research from SimilarWeb comparing the retailers' digital traffic. While both ulta.com and sephora.com saw similar traffic declines between May 2017 and April this year of about 30%, sephora.com holds 10% more traffic than ulta.com. Plus, sephora.com boasts more unique visitors, a longer average visit duration and a higher share of direct traffic, according to an email from SimilarWeb sent to Retail Dive.

Sephora also appeals to a younger set, holding an advantage in the 18 to 24 and 25 to 34 demographics, while ulta.com is more popular with the 45-and-up crowd, SimilarWeb found.

And the momentum is poised to continue. LVMH CFO Jean-Jacques Guiony last month said that Sephora's innovation is actually "gathering speed" and that there remain more opportunities in the U.S. in light of the strong beauty market here.