First Sephora Now Ulta Beauty Plans To Double Black-owned Brands In Its Stores
Ulta pledges $25M to double the number of Black-owned brands in its stores
Only 8 of nearly 300 brands (2.6%) sold by the Sephora are Black-owned
In the latest game of ‘Follow the Leader’, Ulta Beauty (ULTA -1.06%) announced a $25 million initiative to reflect the country’s diversity by doubling the number of Black-owned brands in its stores, along with featuring more Black women in ads. The retail beauty giant isn’t just putting products on the shelf, they’re buying from Black-owned businesses. Are these small businesses prepared to fulfill huge purchase orders from a major national retailer with 1,196 stores across all 50 states?
Why This Matters: Ulta plans to spend $20 million on media across multicultural platforms aimed at reaching Black and Hispanic communities, such as TV commercials that feature Black women, according to CNBC. Then company allocated more than $4 million to market and fuel the growth of those Black-owned brands on the shelves and $2 million per quarter on mandatory unconscious bias training for its employees.
Pre-covid independently owned manufacturers could easily find a responsibly priced fulfillment or cold-storage warehouse with modest in-and-out fees. Post-covid more manufacturers have outsourced to co-packers and virtual kitchens due to necessity. Which affects co-packers and a brand’s delivery and transportation of products.
There are fewer room-temperature controlled storage options this year than there were this time last year and what is available is much more expensive. A better use of $20 million of advertising and marketing, could be coordinating freight and transportation, climate controlled storage, and accessible warehousing with little, to none, in-and-out fees?
Sephora, announced a similar plan to Ulta in mid-January to make its stores more inclusive. Only 8 of nearly 300 brands (2.6%) sold by the beauty juggernaut are Black-owned. Both Ulta Beauty and LVMH (LVMUY -1.63%) owned Sephora signed the 15% pledge and according to Bloomberg, each company has a multi-pronged approach to re-engage the country’s Black population as customers.
Situational Awareness: The initiative feels performative because brick-and-mortar retail grows less, and less, effective each year. Even before quarantine, e-Commerce had already rendered brick-and-mortar nearly obsolete, with pop-up-shops primarily drawing crowds. Perhaps Ulta is using Black-owned products, and the Black dollar, to give mouth-to-mouth resuscitation to the endangered retail business model.
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Brooke is a supply chain expert turned founder who spends her days as a Chief Executive Officer for VelourIt, the automated platform that provides Latin American retailers with a Uber Eats, Drizly like experience in buying American products then watching their orders arrive from any smartphone or website. Follow Brooke on Twitter: @Velour_It or Instagram: @velourit