What: Five years ago, the retailer tested smaller stores and ultimately didn't move forward with them but things have changed, putting stores at the centre of the business. Ulta will also launch a media network to leverage its customer data.

Why it is important: Stores will continue to be a major source of investment while Ulta will monetize its customer data.

Out of a planned USD 1.1 billion to USD 1.4 billion in capital expenditures for 2022 to 2024, over half (57%) is allocated to stores, between opening new stores and investments in the current fleet.

Ulta shared a glimpse into how it's viewing the brick-and-mortar experience in the future. The vision is to debut a 5,000-square-foot Ulta Beauty store in smaller markets with a tailored assortment and services. Depending on how that goes, the retailer could scale the concept going forward. On its side, Sephora’s new vision for stores is a 4,000-square-foot format focused in local neighbourhoods and shopping centres rather than malls.

Ulta is also launching a media network, dubbed UB Media, to allow Ulta brands to advertise with its customers. The idea is that brands can receive Ulta's customer data, advertise across its channels, and all purchases will be driven back to Ulta. The offering provides Ulta with another potential revenue stream, and allows it to monetize the customer data it already collects.

The retailer revealed plans for its "expanded view of beauty”, less relying on makeup as a category, and a move to take advantage of the growing wellness category (makeup accounted for 53% of Ulta's net sales in 2018 and now accounts for 44%).

Ulta tests small-format stores, moves into wellness as it seeks growth