2025 is shaping up to be a transformational year for Ulta Beauty, and according to Inna Larson, the company’s vice president of IT strategy, planning and enterprise architecture, technology will be at the heart of it all .
In addition to expanding internationally to Mexicothis year will be the first time that Ulta will be able to fully realize the operational benefits of its three major transformations of its core platform.
As Larson explains, Ulta was working on parallel, multi-year transformations that were completed in 2024. These fundamental transformations included a complete overhaul of its digital store platform, with an enhanced virtual try-on experience and hyper-specific personalization , opening more opportunities for e-commerce initiatives. Ulta also transformed its enterprise resource planning (ERP) platform to SAP S/4HANA to simplify supply chain, merchandising and inventory management.
Finally, Ulta upgraded its data platform by combining a number of different data sources and tools into a modern ecosystem, which prepares the retailer for artificial intelligence and machine learning capabilities. With this, Ulta is able to leverage data science to make more data-driven decisions faster across the business.
“As a technologist, what concerns us most is: Now that we’ve built these incredible foundations, how can we prioritize them in a way that the business can absorb and activate all of these incredible capabilities that we’ve unlocked? » Larson told Glossy at NRF’s Retail Big Show this week.
At this point, Larson said Ulta will use these new technological advancements to modernize the business and enable future growth, including Ulta’s international expansion ambitions, more digital innovation and personalization, and streamline back-end operations to increase its results.
Ulta’s third-quarter 2024 results, released in December, revealed a year-over-year increase of 1.7% to $2.53 billion. Former Ulta CEO David Kimbell, who retired on January 6 and was replaced by Kecia Steelman, credited the company’s growth to its loyalty program, which ended the quarter with 44.4 million active members, or 5% more than the previous year. Kimbell also highlighted Ulta’s marketing strategies and streamlining operational systems as key contributors to the retailer’s growth.
Following her NRF Retail Big Show panel this week, Larson sat down with Glossy to discuss how Ulta is growing its business using technology, preparing for potential headwinds, and balancing innovation and profitability.
How Ulta Beauty is using emerging technologies to drive and grow its business
“We have undergone fundamental transformations…that have allowed us to be very successful in innovation, because to innovate you need very strong foundations. …We have the industry’s leading virtual test drive. We have a unique business model and value proposition where our merchants are incentivized to be part of our digital catalog for a virtual trial – a digital twin, so to speak, of their product in our virtual catalog. Our Virtual Trial Library is the largest and most robust beauty catalog due to our unique and innovative business model.
We also transformed our marketing platform. We’ve partnered with Adobe, a leading marketing and personalization engine. We’ve been doing personalization for a while, but now it’s on a super-powerful, supercharged platform, and we can take every aspect of the customer journey and personalize it. We have the means, and our new platform allows us to personalize every step of the customer journey, what they expect in our store.
Potential challenges
“We have undergone many transformations, and transformation is not easy for any organization, especially transformations that impact every store, every associate and every employee. One of the lessons we learned is that now that the foundation is there, we (will) need to make sure we set thoughtful priorities. We can unlock many capabilities, but we want to thoughtfully prioritize and unlock (innovation) in a way that makes sense. We need to prioritize what will provide immediate value to the customer experience and what will provide immediate value to associate productivity in a way that allows them to spend more time with customers without tax them or the rest. organization with a huge learning curve.
Another challenge, of course, is that we all distrust AI. When I talk to a chatbot, I think, “Oh, are they going to give me the same customer service as an agent?” » We need to ensure that our technology is effective in a way that creates trust with our customers, that we provide them with an exact solution to what they need in a timely manner, and that they continue to benefit from that white glove service, even where they need. there is a bit of technology and automation between the customer and the product.
Prioritize both innovation and profitability
“We are fortunate that our management team is extremely visionary but also pragmatic, which is why we are always looking for innovation. We look at innovation through our innovation team, we look at innovation through our strategy and we also look at innovation in each business unit. There are additional innovations specific to operational efficiency and operational excellence. These innovations could enable the use of data science and AI/ML to increase employee productivity, increase loss prevention, and reduce losses. These are innovations, but they actually improve outcomes. Then there are innovations like personalization, which increase revenue, or innovations from the innovation group. Some of these cutting-edge innovations become cutting-edge innovations which then become operational productions. …So we have innovation across the entire ecosystem, but it happens at different stages. … We’re also strategizing how we can do what we do better, cheaper and faster. Or how can we increase productivity and improve the customer experience? Innovation is not always an incremental investment. Innovation could be an investment that generates optimization and cost savings and a direct positive impact on your bottom line.