If you‘re seeking the perfect gift for the beauty enthusiast in your life, an Ulta gift card is sure to impress. Ulta Beauty is the premier destination for all things cosmetics, skincare and haircare, with an unrivaled selection of prestige and mass brands.
As a major pharmacy chain that‘s known for its extensive gift card mall, you might think that CVS would be a convenient place to pick up an Ulta gift card. However, CVS does not in fact sell Ulta gift cards – and there‘s a strategic reason why.
In this comprehensive guide, we‘ll take a closer look at the competitive dynamics between CVS and Ulta in the beauty retail space. We‘ll explain why you won‘t find Ulta gift cards at CVS, where you can purchase them, and how the gift card industry is evolving with the rise of digital gifting. Let‘s dive in!
CVS vs. Ulta: A Tale of Two Retail Giants
To understand why CVS doesn‘t sell Ulta gift cards, it‘s important to examine the key differences and similarities between these two retail powerhouses.
CVS Health Corporation is the largest pharmacy chain in the United States, with over 9,900 retail locations and a presence in 49 states, the District of Columbia, and Puerto Rico. In addition to its vast pharmacy business, CVS offers a wide range of health and personal care products, beauty items, household essentials, and convenience foods and beverages.
In 2020, CVS Health reported revenue of $268.7 billion, making it the fourth largest U.S. corporation by total revenue according to the Fortune 500 list. Prescriptions accounted for nearly 76% of the company‘s revenue, while front store sales (including beauty and personal care items) made up about 24%.
Ulta Beauty, Inc. is the largest beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products and salon services. As of January 30, 2021, the Company operated 1,264 retail stores across 50 states, as well as an e-commerce website and mobile app.
Ulta offers more than 25,000 products from over 600 well-established and emerging beauty brands across all categories and price points, including its own private label. The company reported net sales of $6.2 billion in fiscal 2020, a decrease of 16.8% compared to 2019 due to the impact of COVID-19 pandemic. However, Ulta‘s e-commerce sales grew 90.7% to $1.5 billion.
While CVS and Ulta both operate in the beauty and personal care space, there are some key differences in their business models and target markets:
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Product Mix: CVS offers a broad assortment of health and personal care products, with beauty comprising a relatively small portion of its total sales. Ulta, on the other hand, specializes exclusively in beauty and focuses on delivering a prestige experience with high-touch customer service.
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Store Format: CVS stores average around 13,000 square feet and are primarily designed for the "get in, get out" convenience of filling prescriptions and picking up essentials. Ulta stores average around 10,000 square feet and feature immersive, experiential elements like product testing stations and in-store beauty services.
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Target Market: CVS caters to a wide demographic with a functional, needs-based product assortment at accessible price points. Ulta targets a more specialized customer base of beauty enthusiasts and trend-seekers with a mix of prestige and mass brands.
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Loyalty Program: CVS‘s ExtraCare loyalty program has over 74 million active members who earn 2% back on most purchases. Ulta‘s Ultamate Rewards program has over 31 million active members who earn points on all purchases, with accelerated earning for higher spenders.
Despite these differences, CVS and Ulta do compete head-to-head for beauty customers, especially in the mass cosmetics and skincare categories. In recent years, both retailers have invested significantly in their beauty offerings in a bid to capture a larger share of the $511 billion global beauty market.
CVS‘s Competitive Strategy in Beauty
CVS has identified beauty as a key growth driver and has made notable moves to enhance its beauty assortment and store experience in recent years. Some of these initiatives include:
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Expanded Product Selection: CVS has added more on-trend and premium beauty brands to its shelves, such as Olay, L‘Oreal, Maybelline, Essie, Sally Hansen, and Flower Beauty by Drew Barrymore. It has also launched exclusive lines like Skin+Pharmacy and GSQ by Glamsquad.
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Elevated Store Design: In 2018, CVS unveiled a new store concept called BeautyIRL, featuring an expanded beauty section with interactive displays, testing stations, and mini beauty services like express facials and makeup tutorials. As of 2021, there are 50 BeautyIRL locations with plans for further expansion.
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Technology Integration: CVS has introduced digital tools to enhance the beauty shopping experience, such as virtual try-on for cosmetics, online skincare quizzes, and mobile app features like product scanning and personalized recommendations.
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Strategic Partnerships: In 2018, CVS struck a deal with Glamsquad, an on-demand beauty services company, to bring salon-quality services to select CVS stores. The retailer has also partnered with brands like Kiss Products and Nail Alliance to expand its nail care offerings.
Through these efforts, CVS aims to position itself as a convenient and accessible destination for beauty needs, while also elevating the perception of its beauty department. However, it still faces stiff competition from Ulta and other specialty retailers when it comes to prestige beauty.
One way CVS can compete is by leveraging its vast footprint and high foot traffic to drive impulse beauty purchases and cross-selling with other categories. For example, a customer coming in to fill a prescription might also pick up a new lipstick or skincare item they discovered on the beauty wall.
CVS can also lean into its strength in the value-priced beauty segment, which is less of a focus for Ulta. By offering compelling promotions, gift with purchase events, and a strong private label assortment, CVS can appeal to budget-conscious beauty shoppers.
Ulta‘s Competitive Advantages in Beauty
On the flip side, Ulta has several key advantages that have enabled it to become the dominant player in specialty beauty retail:
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Unrivaled Brand Selection: Ulta is known for its vast assortment of prestige, mass, and emerging beauty brands across categories. It offers a wider selection than drugstores like CVS, and also carries more exclusive brands than Sephora, its closest specialty competitor.
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Loyalty and Rewards: Ulta‘s Ultamate Rewards program is a major driver of customer loyalty and repeat purchases. Members earn points on every purchase, receive personalized offers and perks, and can redeem points for dollars off future purchases. In 2019, 95% of Ulta‘s sales came from loyalty members.
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In-Store Services and Events: Ulta differentiates itself through its in-store beauty services, which include hair, skin, brow and makeup applications. It also frequently hosts brand-sponsored events, classes and product demonstrations to drive foot traffic and customer engagement.
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Omnichannel Excellence: Ulta has invested heavily in its e-commerce and mobile capabilities to deliver a seamless, personalized shopping experience across channels. It offers features like virtual try-on, same-day pickup, and AI-powered product recommendations. In 2020, Ulta‘s online sales grew 90% and surpassed $1.5 billion.
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Experiential Retail: Ulta stores are designed to encourage product discovery and experimentation, with testers readily available and beauty advisors on hand to offer personalized recommendations. The retailer also uses technology like GLAMLab, a virtual try-on tool, to enhance the in-store experience.
Through these core strengths, Ulta has cultivated a devoted customer base of beauty enthusiasts who view the retailer as the go-to destination for all their beauty needs and desires. Ulta‘s share of the U.S. beauty market has grown from 2.8% in 2015 to 5.4% in 2019, according to Euromonitor.
Gift Card Industry Trends and Insights
Gift cards have become an increasingly popular choice for consumers due to their convenience, flexibility, and potential to drive loyalty. The gift card industry is massive and growing, with sales reaching nearly $171 billion in 2019 according to Research and Markets.
Some notable gift card industry trends include:
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Growth of Digital: E-gift cards have surged in popularity, especially during the COVID-19 pandemic. Digital gift cards can be purchased and delivered instantly via email, making them ideal for last-minute shoppers. According to Blackhawk Network, e-gift card sales grew 80% in 2020.
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Increase in Self-Use: Gift cards aren‘t just for gifting anymore. Many consumers buy gift cards for their own use to stick to a budget, take advantage of discounts or promotions, or earn loyalty rewards. A study by Mercator Advisory Group found that 47% of U.S. adults purchased at least one gift card for personal use in 2020.
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Rise of "Gift Card Malls": Many retailers, including CVS, offer extensive third-party gift card assortments in-store and online. These "gift card malls" provide one-stop shopping convenience for consumers and generate incremental revenue for the retailer. In 2019, InComm found that 55% of consumers purchased gift cards from gift card malls.
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Emergence of "Gift Card Hubs": Online gift card hubs like GiftCards.com, GiftCardMall.com, and Raise.com have also gained popularity. These sites offer a wide selection of gift cards that can be purchased and delivered digitally or via mail. Some also offer discount gift cards or the ability to sell unwanted gift cards.
As these trends illustrate, gift cards have evolved from a last-resort gift option to a highly sought-after and strategic offering for retailers and consumers alike. For retailers like Ulta and Sephora, gift cards represent a key sales driver and an important tool for customer acquisition and loyalty.
Ulta Gift Card Sales and Trends
Ulta offers gift cards in-store and online in denominations ranging from $10-$500. Key features and benefits of Ulta gift cards include:
- No fees or expiration dates
- Redeemable in-store, online, or over the phone
- Can be reloaded with additional value
- Qualify for points in the Ultamate Rewards loyalty program
- Can be checked for balance online or over the phone
- Digital and physical options available
Ulta also frequently offers promotions on gift card purchases, such as "Buy $X in gift cards, get $X off your next purchase" or "Get a free $X gift card with purchase of $Y or more." These promotions are designed to drive gift card sales and encourage repeat purchases.
As a specialty beauty retailer, gift cards play a particularly important role for Ulta during key holiday and gifting seasons like Christmas, Valentine‘s Day, and Mother‘s Day. In 2019, Ulta reported that it sold over 15 million gift cards during the holiday season.
In addition to direct consumer sales, Ulta also sells gift cards in bulk quantities to businesses and organizations for employee rewards, customer loyalty programs, and promotional purposes. This B2B gift card business is a small but growing segment for the retailer.
Consumer Perspective on Ulta Gift Cards
From a consumer perspective, Ulta gift cards are a popular and coveted item for several reasons:
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Flexibility: Ulta offers an unmatched selection of beauty brands and products, making its gift cards extremely versatile and appealing to a wide range of recipients. Gift card holders can choose from prestige cosmetics, mass brands, haircare, skincare, fragrances, tools, and more.
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Personalization: Ulta allows gift card buyers to choose from a variety of designs and to customize the card with a personal message or photo. This adds a thoughtful touch and makes the gift feel more special and tailored to the recipient.
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Services and Perks: In addition to products, Ulta gift cards can also be redeemed for in-store salon services like haircuts, colors, facials, and makeovers. Avid Ulta shoppers also love that gift card purchases qualify for points in the Ultamate Rewards program.
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Convenience: Ulta makes it easy to purchase and redeem gift cards across channels. Shoppers can buy physical cards in-store and online, or send digital gift cards via email. Recipients can redeem their gift cards in-store, on Ulta.com, or over the phone.
Gift cards have become a go-to gifting choice for many consumers due to their ease and flexibility. A survey by the National Retail Federation and Prosper Insights & Analytics found that gift cards have been the most requested holiday gift item for 13 years running, with 59% of those surveyed in 2020 saying they would like to receive a gift card.
For beauty enthusiasts, an Ulta gift card is an especially exciting and foolproof choice because it allows them to hand-pick products that suit their specific needs and preferences. It‘s a way for the gift giver to show they understand and support the recipient‘s passion for beauty without having to guess which shade of lipstick or eyeshadow they might like best.
The Future of Gift Cards in Beauty Retail
Looking ahead, gift cards are likely to remain a key offering for beauty retailers like Ulta and Sephora as they seek to drive customer loyalty, acquisition, and engagement. However, the way consumers purchase and redeem gift cards is evolving with the rise of digital payments and mobile wallets.
Already, many consumers store and redeem digital gift cards on their smartphones via apps like Apple Wallet, Google Pay, and Samsung Pay. This offers greater convenience and security than physical gift cards, which can be lost, stolen, or forgotten at home.
Retailers are also experimenting with new and innovative ways to sell and distribute digital gift cards. For example, Sephora has partnered with Venmo to allow customers to send digital gift cards within the Venmo app. Ulta has also introduced digital gift cards that can be purchased and redeemed directly from its mobile app.
We can expect to see more seamless integrations between gift cards and mobile payment platforms in the future, as well as more personalized and interactive digital gifting experiences. For instance, some retailers are exploring the use of augmented reality and video to make digital gift cards feel more special and engaging.
Subscription-based beauty boxes like Birchbox and IPSY are also getting into the gift card game by offering gift subscriptions that can be redeemed for monthly deliveries of curated beauty samples. This model combines the surprise and delight of traditional gift-giving with the convenience and flexibility of a gift card.
As beauty retailers continue to compete for customer loyalty in an increasingly crowded and competitive market, gift cards will likely play an even more strategic role. By offering compelling gift card promotions, personalized digital gifting experiences, and seamless integration with mobile payments, retailers like Ulta and Sephora can incentivize purchase behavior and deepen customer relationships.
Conclusion
In conclusion, while you won‘t find Ulta gift cards at your local CVS store, there are still plenty of options for purchasing them both in-person and online. Ulta sells its own gift cards at all retail locations, on Ulta.com, and through its mobile app. You can also find them at many major grocery stores, retailers like Target and Walmart, and through online gift card hubs.
The reason CVS doesn‘t carry Ulta gift cards comes down to competitive strategy. As the largest beauty retailer in the U.S., Ulta is a direct competitor to CVS in the cosmetics and skincare category. By not selling Ulta gift cards, CVS is likely trying to keep beauty customers within its own ecosystem and prevent them from taking their business to Ulta.
However, this doesn‘t mean CVS isn‘t investing in its own beauty business. In recent years, the drugstore giant has expanded its beauty assortment, elevated the in-store experience, and launched new digital tools to better compete with specialty retailers like Ulta and Sephora.
As the gift card industry continues to grow and evolve with the rise of digital payments and personalized gifting experiences, we can expect beauty retailers to find new and innovative ways to leverage gift cards as a customer acquisition and loyalty tool. For consumers, gift cards will likely remain a go-to gifting choice for their convenience, flexibility, and ability to delight recipients.
So whether you‘re buying for yourself or gifting to the beauty lover in your life, an Ulta gift card is sure to please. With its unrivaled assortment of prestige and mass brands, personalized shopping experiences, and rewards program perks, Ulta offers something special for every beauty enthusiast.
