More Than Skindeep

Ulta Beauty Has Built a Fast-growing Hair and Cosmetics Empire in America’s Strip Malls. Can It Go Toe-to-toe With the Big Department Stores? That’s Up to Ceo Mary Dillon.

- Phil Wahba

IT DIDN’T TAKE Mary Dillon long to realize she was in over her head.

Six months into her tenure as CEO of Ulta Beauty, Dillon wanted to see what it felt like to work on the retailer’s front lines on the craziest shopping day of the year. So on Christmas Eve in 2013, during a family ski holiday, she picked up a six-hour sales-floor shift at an Ulta store near Salt Lake City.

Inconspicuous in dress-code-compliant black shirt and pants and an Ulta name tag, Dillon found herself besieged with questions from customers—about this facial mask or that haircoloring treatment—and overwhelmed by just how much she didn’t know about the 20,000 different products Ulta sells. Eventually, at the store manager’s suggestion, she took a spot at the front of the store. “The only thing I was qualified for was handing out shopping bags,” she recalls.

That’s what she was doing when she had an epiphany. Another customer came up with a stack of coupons and asked Dillon how to apply them, given their mazes of terms and conditions. Dillon couldn’t decipher the discounts either. But what really ignited her agita was what those coupons said about Ulta’s marketing—its focus on the constant discounting that she calls a “race to the bottom.”

“It really hit me that day,” Dillon says. “I didn’t want Ulta to be thought of as the retailer for discounts. I wanted Ulta to be known as a beauty retailer.”

That may sound like a hair’s-breadth distinction to a layperson, but it’s a big deal to Dillon and Ulta Beauty.