Sephora dominating online, while Ulta leads in-store: new report

Ulta’s in-store share leads the space with 49% of sales, says the report, while Ulta & Sephora’s combined online sales grew 14% YOY, and subscription boxes declined.

Indeed, although beauty subscription boxes experienced significant growth after launching, that growth has moderated in recent years and they only represent 5% of the market.

“While in-store represents the lion’s share of sales, growth in the beauty space is headed online. Ulta’s online sales ​have nearly tripled since Q1 2016 and Sephora’s online sales have more than doubled in the same time,​” says the report.

“Although Sephora’s online sales have trended close to in-store in the past, online sales soared past in-store during 2017’s holiday season. That being said, Ulta and Sephora’s in-store sales are up 48% and 38% since Q1 2016, respectively.”​

Other key findings​

Other key findings include that Birchbox’s returning customers spent 10% less in 2017 than they did in 2016, contributing to a 22% decline in sales YOY.

In terms of market share of sales, Ulta’s retail locations claim the highest share of sales among these beauty retailers, with 49% of sales in 2017. While Sephora’s in-store share trails Ulta’s by 19%, its online share has a healthy lead at 13% vs. Ulta’s 4%.

“Based on share, subscription boxes don’t appear to have a significant impact on the health of prominent beauty retailers, and in-store purchases still generate the most sales,​” the report explains.

Finally, the report indicates that 88% of all active beauty shoppers only shopped with one retailer in 2017, with Ulta having the highest customer loyalty.

What was analysed and how?​

1010 Dara explains that its analysis was conducted using credit and debit card transactions from January 2016 – December 2017 at beauty retailers, including Sephora, Ulta, Birchbox and Ipsy.

Using a static panel tracking millions of consumers, this analysis evaluated the shopping behavior of over 1 million beauty consumers and how those behaviors changed year over year.