Our guest today is Monica Arnaudo

Monica Arnaudo is the chief merchandising officer at Ulta Beauty.

Since joining Ulta in 2017, Monica has built an unparalleled, world-class assortment reflecting how beauty lovers want to shop. Monica and her team are widely recognized for their ability to stay ahead of trends and for continually offering powerhouse brands that position Ulta Beauty as the destination for beauty.

With over 30 years of experience in the beauty industry, Monica has brought Ulta Beauty’s one-of-a-kind assortment to life in a way that transcends channels and keeps guests coming back to Ulta Beauty’s more than 1,200 stores.

Monica has served in numerous sales and merchandising leadership roles at Nordstrom and Sephora, along with beauty companies including Bare Escentuals, L’Oreal, Estee Lauder Companies and Chanel.

Join us as Monica reveals the significance of Ulta’s Conscious Beauty initiative, how Ulta has had to rethink product sampling in the wake of COVID-19, and the key trends that will redefine the beauty industry at-large.

Episode 103 of the RETHINK Retail Podcast was recorded on Septembet, 18. 2020 

 


Hosted by Julia Raymond
Researched, written and produced by Gabriella Bock
Edited by Trenton Waller

TRANSCRIPTION

Julia Raymond:
Great. Hi, and welcome to the RETHINK Retail show. Our guest today is Monica Arnaudo. Monica is the chief merchandising officer at Ulta Beauty. Welcome to the show, Monica. It’s so great to have you here.

Monica Arnaudo:
Thank you, Julia. I’m thrilled to be here. Thank you so much.

Julia Raymond:
It’s so exciting to talk with someone in your space because I am a consumer just like all of us and I love Ulta Beauty, so it’s going to be a really fun conversation. Your background is you have so much experience in the beauty sector. I’d like if you could kick us off by telling our listeners a little bit about your career journey?

Monica Arnaudo:
Yeah. Yeah. Thank you. It’s crazy to think this, but I’ve been in the beauty space for 40 years now and I just think, “How could I possibly be that old?” But here I am, and it’s just been such an incredible journey. I think, as you said, beauty is a fun space. It’s a feel-good space, and I’ve just had the privilege to work with phenomenal people and some really, really great companies in this time. I would say just a massive highlight for me was when I joined Ulta Beauty in 2017 and late last year, was really honored to be named the chief merchandising officer. A little bit about my role is currently, I oversee our merchandising and assortment across all of our categories and my team and I were very passionate about the beauty space and we’re laser-focused to puree the very best in beauty for our guests across really all segments, from mass, to masstige, to prestige. With that, we work really closely with our brand partners to continue to evolve our assortment.

Monica Arnaudo:
For us, that means constantly being plugged into consumer trends to what’s happening in the social and digital space. Influencers are a big part of the beauty space and really listening to what our guests want and need so that we can bring forward the hottest new brands and products that will keep them very, very engaged in beauty. It’s just been a phenomenal opportunity and frankly, I’ve just loved every minute of my beauty journey. Sounds corny, but true.

Julia Raymond:
Well, you have such a high stakes job because following the customer, especially in beauty with the role of influencers and how much that’s blown up over the past few years has been crazy in terms of the speed. What is it like to constantly involve the assortment? What are some of the challenges or some of the rewarding parts of that?

Monica Arnaudo:
For me, a challenge actually brings reward, right? Because whenever you’re faced with a challenge, for me, it’s like, “Okay. How do we figure this out?” I always believe we can and we do. Then, that’s where the reward comes in, but you were absolutely right. The influencer space within the beauty industry, it probably kicked in, in a lightweight fashion, maybe about eight years or so ago, but it really, really picked up in 2015, 2016 with some massive beauty influencers in the space like James Charles and Jeffree Star, and it was at a time when makeup, as a category, was on fire, and the beauty enthusiast had this opportunity to go on to whether they wanted to go on to YouTube or Instagram and learn from these mega influencers how to apply beauty.

Monica Arnaudo:
It just became incredibly simple for them and they engaged in the space or further engaged in the space. Then, there was some other things kind of coming to play at that same time with the submergence of digitally native brands that really started in the digital space and not in retail brick and mortar. For us, if I look back on that time, it was moving so fast and that in of itself is challenging. But again, what we were able to do was to take some of the things that were happening and quickly bring them to life and launch some of these brands in the digitally native space that influencers were talking about and get them into our stores. Morphe happens to be a really good example of a brand that was really plugged in, had some great influencers. You could only buy the brand online. Then, we were able to launch that brand at the end of 2017, and it’s just been a phenomenal success.

Julia Raymond:
Wow. Morphe, you said was digitally native, and then your team got in touch with them?

Monica Arnaudo:
Yeah. This industry is really small. It’s one of the things I love about it as well, is that even though it’s big, it’s a huge industry, it’s small when it comes to people. The irony actually is the person that was leading the charge at Morphe, I used to work with at another company, but she already knew the Ulta team. She had already connected before I joined. Then, they came to us initially, but we had a lot of strong partnerships from prior relationships. It worked out really nicely.

Julia Raymond:
Oh, wow. That does. It’s funny because in other categories of retail direct-to-consumer, Warby Parker or Casper, mattresses and glasses, it makes sense for them to open their own physical footprint, but for a cosmetics brand, it probably makes more sense to go through channels like you guys.

Monica Arnaudo:
Yeah. That’s an interesting conversation because I think now, there are so many options I think for brands and we used to think, “Oh, you’ve got to be able to go into the store to really try everything on.” That’s still true to a degree. The majority of beauty shoppers, they do want to come into the store. They want to try the shades on. They want to see everything in natural light. They want to play with the products. They want to see the color profusion. With that said, there’s still so much opportunity to do that online, and especially with the advancements and technology, we can talk about later or now, are the try-on app that we have, which is incredibly realistic. Now, you have the ability… We have a try-on called GLAMlab where you can… Just with the ease of your phone, you can try on thousands of makeup shades.

Monica Arnaudo:
It’s very, very realistic. I think with that technology, we make it a little bit easier for people to shop in the digital space, but I do think that the store experience is still incredibly important. We do a lot of research with our guests and we know, for example, that the Gen Z-ers, over 90% of them prefer to come into the stores and shop and play. Going back to the original point that you made, beauty brands have certainly been very successful, especially going back to 2014, 2015, who have started with launching online, right? Kylie, ColourPop, Morphe, but then to really, really scale and expand, that’s where we’ve had a great success in working with them because we’ve been able to bring that store footprint in a very accessible way because we’ve got over 1,250 stores as the largest beauty retailer in the US. It’s been a great win for these brands and really, really awesome for our guests and for their fans.

Julia Raymond:
Certainly. Out of curiosity, when it comes to GLAMlab, have you seen an acceleration because of the pandemic and people still needing makeup because we’re all on Zoom together and things like that?

Monica Arnaudo:
Yes. I’m really glad you asked this question because GLAMlab for us has been such an important tool, especially in COVID. We’ve really been leveraging this virtual try-on that you can find on our app to, like I said before, to allow our guests to play with products, whether they’re in-store or if they just want to do it from the comfort of their home. Actually, since the COVID-19 crisis began, the guest engagement has increased by seven times. We’ve seen product views increase in Q2 more than 150% from the prior quarter from Q1. Now, we’ve been on this mission to continue to add more products onto GLAMlab because pre-COVID, we didn’t have as many products for our guests to try on. We were building it out, but we amplified the effort and doubled down. Now, we have more than 7,000 new products for our guests to play with within the GLAMlab app.

Julia Raymond:
Huge.

Monica Arnaudo:
It’s huge. It’s across eyeshadow and eyeliner and lipstick and foundation and concealer. Then, over the last few months, we’ve also expanded our virtual try-on capabilities to now include hair color. It’s so fun. I highly encourage people to go on and try. You can try on any shade of hair color from silver to purple and everything in between. We also have false lashes and we’ve added our Benefit brow bar try-on. Lots of opportunities to try on makeup now. Again, whether you want to do it when you’re in the store or you’re at home. Then, a couple of other things to add to that since we’re talking about technology and really what’s prompted us with COVID, we also just recently launched our skin analysis tool, which is also within our app.

Monica Arnaudo:
This is bringing AI and AR together to make personalized recommendations on products and routines. You literally hold the app in front of you and it scans your face. You answer a few questions, it then scans your skin and makes product recommendations. With an influx of skincare, the trend in skincare, that’s been incredibly important. Then finally, another way that we’ve really been able to service our guests is we’ve also added a virtual beauty advisor one-on-one capability on ulta.com. With this service, our guests can experience private, real-time video consultation from the comfort of their home, completely free of charge. Again, we’ve really been utilizing technology to support this whole idea of discovery and play and experiencing beauty still in a very engaging way.

Julia Raymond:
You mentioned not only the GLAMlab was 7,000 products, which is huge because over the years, I’ve seen in these apps, the evolution. Sometimes you’re looking at some products and you’re like, “Oh, I can try it on virtually.” Then others, you can’t.

Monica Arnaudo:
Right.

Julia Raymond:
Here, 7,000 are available is a huge number. Then, the skin analysis tool, I’ve tested out some other ones that were in store where they actually had to touch your face with the tool. Obviously, I don’t think post-COVID, we’ll see that anymore.

Monica Arnaudo:
No, I agree. Yeah.

Julia Raymond:
That’s amazing.

Monica Arnaudo:
We’re not stopping, by the way. Even as we speak, we’re continuously adding more products on to GLAMlab because we know this is important and we’re working with our brand partners as we launch new products to make sure that that’s just part of the process now that they automatically get loaded into the app.

Julia Raymond:
Oh, okay. Wow. Okay. It’s part of the entire process of onboarding. That’s really cool.

Monica Arnaudo:
Yeah. Absolutely.

Julia Raymond:
Do you think it’s going to be democratized one day, a little bit of the product try-on or is it all in-house?

Monica Arnaudo:
For us, GLAMlab is in-house. I know that there are other competitive apps out there and virtual try-on has been out there. I really think this in-house team that we invested in the company has done a phenomenal job. I do think with what’s happening with COVID, the way that we’ve tested products in store, it’s not the same now. Today, if you go into our stores, we still have all of our testers out, but they’re for display purposes only. We’ve got signage out that explains that to our guests. That’s for the safety of both our guests and our associates. We’re not able to test products right now. That’s why it is incredibly important.

Monica Arnaudo:
I think to have this type of technology as we continue to then work on post-COVID, what does that in-store experience look like? We see kind of a combination of things coming to play. Obviously, what we already talked about, about digital technology and GLAMlab and virtual try-on, but also an opportunity for single-use samples versus having…

Julia Raymond:
Interesting.

Monica Arnaudo:
Yeah. Yeah, absolutely. Versus having testers. I think that we will still have the ability to have some testers out, especially if you think about things in pumps and tubes, because we’re all obsessed, of course, with hygiene and those are easy for us to clean and disinfect, but I do think we’ll have to reimagine what some of the other product formats will look like. We like this idea of a single-use sampling. We’re also looking at our fixture and visual presentations and how we can continue to evolve that. COVID has definitely prompted, I think the entire beauty industry to rethink what that experience will look like. I feel really good about where we’re at right now. I think the future will bring a lot more for us across all aspects, across technology, sampling abilities and fixture innovation.

Julia Raymond:
Certainly. Those are all great things. I’m excited about that because I haven’t even thought about what does single-use sampling look like, so I’m sure there are challenges there in terms of how do you scale that while including sustainability because I know you guys are big on that.

Monica Arnaudo:
Yeah. No. I’m glad you mentioned the sustainability piece because it’s top of mind for us, of course, as a retailer and certainly across the beauty industry. I think that that is something that we will have to consider as we think about things like single-dose samples. Again, I think it will be a combination of still having the ability of testing products the way that we have done. Then, some products will need to evolve. I think the little container, I would definitely want to make sure that we would look at something that’s sustainable. Lots of things for us to continue to reimagine and we are working on it literally, not right as we speak this moment, but every single day.

Julia Raymond:
Sure. It’s huge. You said sustainability is huge for the industry, especially beauty. I was prepping for this interview, and I saw that you guys announced your Conscious Beauty initiative pretty recently. Can you tell us a little bit about what that is?

Monica Arnaudo:
Yeah. We are so excited about our Conscious Beauty initiative because we know that our guests are increasingly conscientious about understanding and making well-informed product choices. Clean beauty, wellness, sustainability have been core elements of our journey for some time and part of the beauty landscape. Conscious beauty at Ulta Beauty is a holistic initiative that’s intended to help our guests find brands and products that reflect their personal values, what they’re looking for, wherever they are on their clean beauty journey. We’re excited to launch this in October and we’ll actually be certifying our brands across five key pillars.

Monica Arnaudo:
One is clean ingredients. The second is cruelty-free. The third is vegan. The fourth is sustainable packaging, what you brought up. Then, the fifth is positive impact. For us, conscious beauty is our next chapter to provide a more guided approach for our guests to discover the products that they want and they need across the pillars that matter for them. It was really, really important for us to look at this very comprehensively and not just look at one piece because there ae so many aspects to what many people call the clean space. We didn’t want to limit it just to clean. We knew that it was important to look at it holistically.

Julia Raymond:
That came through right when you said, “We’re basing this on five pillars,” because there have been so many times where we’ve seen brands say, “Oh, yeah. We’re doing sustainable things,” but they don’t explain what that means. The fact that there are five things that you are looking at when you’re certifying brands that you carry, I’m impressed.

Monica Arnaudo:
Thank you. It’s taken us a long time. We’ve probably been a little bit behind, but it’s because we wanted to be really thoughtful and we really wanted to make sure that we launched something that was going to really help educate, guide and simplify the space for our guests, because it can be a little bit overwhelming. We wanted to be really thoughtful and we wanted to be holistic. That’s why we took a little bit more time, but I can’t wait. I’m so excited to launch this program.

Julia Raymond:
Me too. I’m excited to see how it rolls out. What do you think about why these trends have accelerated? When I look to other industries like grocery, we’ve seen a lot of interest in where’s our food source and how does that impact our health, but when do you think it translated over to the beauty industry in such mass?

Monica Arnaudo:
Yeah. I think it’s a great point that you bring up the food industry, because I think a lot of what happens there eventually will evolve into other categories and this area for us, it’s so important because it’s top of mind for our guests. I mentioned to you, we do a lot of research. Over the past year, we’ve done some huge pieces of proprietary research to really get to the heart of what our guests and the broader consumer is looking for based on what is happening in the world. Just some great stats I’d love to share with you this research. We know that six out of 10 consumers intend to buy clean products over the next 12 months. By the way, nine out of 10 Gen Z-ers will buy clean beauty products. The younger generation is very interested in this space.

Julia Raymond:
Wow.

Monica Arnaudo:
75% of consumers wished it was easier to know which products are truly clean. Again, for us, it’s really trying to help guide that. Then, 66% of consumers choose brands with transparent practices. I think it’s doing good for the world, doing good to take care of ourselves. That’s really important to the consumer today. That’s why it was critical that we launched this platform.

Julia Raymond:
All great points. I’d like to end our conversation today with just a really broad question for you as someone who’s been in the beauty industry for most of her career, and is now the chief merchandising officer of Ulta. Just broadly speaking, what is something you’re excited about for the future of beauty in the next one to five years?

Monica Arnaudo:
It’s so hard. I get excited about everything in beauty. I will say just on the heels of what we were talking about, I am incredibly excited about this space because I think what COVID has really prompted for many of us, is to just take a moment to really slow down and think a lot more about our health and our wellbeing, and not only for us, but also for our world. We’ve been seeing this just influx in people that are leaning into self-care, wellness, holistic health. I’m super excited about that because I think we will see a lot of new innovation in this space. I think we’ll see exciting new brands. I would say I’m probably most excited about that. I think the other thing that has been at the forefront is just more around diversity and inclusion. We have, I think really leaned in over the last couple of years and launched some amazing black-owned founded brands, and I look forward to working in this space some more. Those would probably be a couple of the areas that I’m most excited about for the future.

Julia Raymond:
That is amazing. I love your answers, especially when it comes to diversity because I think we’ve made a lot of headway in that space with offering skin tone types that scan, or that cover the whole range, and just products. There’s something for everyone.

Julia Raymond:
I really enjoyed hearing your insights, Monica, the chief merchandising officer at Ulta Beauty, and I hope to have you on the show again.

Monica Arnaudo:
Oh, gosh. Thank you so much. It was such a pleasure to chat with you today, Julia.

Julia Raymond:
You too.

Monica Arnaudo:
Take care.