Ulta Beauty's Amiee Bayer-Thomas on Why Stores Are Queen, Plus Wayfair's Big-Box Bet and Shein's Hong Kong Pivot

0:07Steve Dennis: Welcome to Remarkable Retail Podcast episode number 308. I'm Michael LeBlanc. And I'm Steve Dennis. On this episode, our guest is Amiee Bayer-Thomas, Chief Retail Officer for Ulta, recorded live in person at our pop-up podcasting studio in New York at the Commerce Next Growth Show. Amy was named Chief Retail Officer in January 2025. She oversees all aspects of Alta Beauties stores and services operations. 1 ,500 store teams coast to coast across the country. Background at Alta is impressive. Chief Store Operations Officer, Chief Supply Chain Officer, Senior Vice President of Stores. Prior to Alta, she had spins through JCPenney Limited Brands.

0:46Steve Dennis: It's a great interview. We get to that in and after we touch on the news. And, of course, there's lots of it in our summer biweekly format while taking a look at the overall retail results for June and what that tells us. Focus on the grocery sector's numbers anchored in Albertson's results. And we'll say something directionally somewhat positive about Wayfair and Sheehan and what is on our respective radar screens for the future. Now, speaking of our summer schedule, don't sleep on our periodic latest store tour videos. Decovis and Buck Mason with more to follow all summer recorded while we were in the Big Apple at Commerce Next.

1:27Steve Dennis: So let's get on to the news. Now, there's lots of news in and around us and in and around retailers that's impacting how they think about today, tomorrow, and the future. Let's anchor it, though, with an update of your number one prediction for 2026. and that is uncertainty reigns supreme. Yeah, so just as a little bit of background, and folks might have heard we did this a couple episodes ago, instead of doing like a full mid-year review of how the predictions are looking, we're just going to periodically dip in and do an update. And I thought this one was pretty appropriate to the state of the world right now.

2:06So the original podcast was broadly about kind of the chaos agenda of the Trump administration, you know, lingering tariffs, just to kind of the general macro environment, AI disruption, and just some of the trends that we've seen in retail kind of accelerating, particularly things like the great concentration. Well, and I guess just something that I think probably most people have experienced, which is over time, the volatility and uncertainty we see just seems to keep being amped up. And I think that's the rate at which technology change happens. We're all connected, so ideas disperse very quickly.

2:45So that's not really a new idea, but that's kind of a backdrop to the prediction. Now, having said that, never in a million years did I think the no forever war president would get us into what is looking like at least a bit of a forever war. But anyway, that is what's going on. And so I probably don't need to say much about that because I think we're all living that every day more than we want to. But then also tariffs have reentered the building. Again, I'm sure many people have seen the news on this. So the tariffs that were disallowed by the Supreme Court that has led to a bunch of these rebates.

3:26They expired last week. A specific tariff that was still in place that was expiring was a 10 % global tariff. There were a bunch of carve-outs in special situations, but basically there was a 10 % global tariff. So now that has been replaced by a range of tariffs. So it's a pretty narrow range for the most part, 10 % to 12.5 % on 60 trading partners, and the 60 cover almost 100 % of all U.S. imports. So more or less, it's a blanket tariff. And I should point out, as Michael and many of our listeners would know, Canada was granted an extra special high rate of 50 % on a number of products. So congratulations.

4:09And Brazil...

4:10Steve Dennis: Good luck buying that hockey stick. Good luck buying that hockey stick, all you listeners out there, for a reasonable amount of money. And Brazil, also for kind of reasons unknown, Trump didn't like the election results, apparently. It has a 25 % rate on a bunch of products, several exemptions. The rationale for this policy, the Trump administration has tried two different angles to justify the tariffs. One, because it's actually, not to get into the weeds too much, but it's a power that's largely vested in the Congress, not the president. So first was he declared an emergency. It wasn't really clear what the emergency was, so that was a problem.

4:46The other issue was this calculation around the balance of payments, trade deficits, and this crazy formula. That was part of Liberation Day. That failed. So now the rationale is they're targeting countries based upon forced labor. Now, I am very much against forced labor, but it's very hard to work out. Well, first of all, all of a sudden they're interested in this. But mostly, it's hard to work out how a 10 % to 12.5 % forced labor tariff applied across the board is in any way really targeting. Because clearly, there are a bunch of companies that really don't have this issue that are being charged the same rate as countries that very clearly have a huge issue.

5:32So anyway, I think it's just a gimmick. Many people think this will not stand up in court ultimately. But it will be a long process. But I think, you know, in some ways we can look at the tariff rates and say, well, you know, we've adjusted the supply chain around the world. Various countries have adjusted to a certain degree of this being kind of the new normal. And I've seen many people, and I guess this is my view as well, is that it's not so much the tariff rates are the problem, though they're not great for many countries and many industries. But it's this reset cycle and using them as a negotiating ploy or to punish people.

6:08And so you don't know whether there is going to be a post on Truth Social that is suddenly going to upset the apple cart like the Brazilian and the Canada tariffs. So I don't know if you have a couple other things just to say about this state of the prediction, but anything you want to add from across the Gordie Howe bridge?

6:26Steve Dennis: You know, the good news is this 10 % is still exempt from CUSMA or from the USMCA. So both Mexico and Canada, there's a lot of exemptions carved out of there, notwithstanding this 50 percent tariff that's going to happen on stuff we don't even sell to America. It's kind of one of these broad based things. And I guess the idea, you know, it's a particularly craven approach to kind of lay it at the feet of forced labor. As you said, who's in favor of forced labor? And I guess the longer vision, I listened to the interview on the Daily, the New York Times podcast with Jameson Greer talking about his philosophy around tariffs.

7:01Steve Dennis: tariffs. And what struck me was how isolated his view is. Now, every country can have their own tariff regime, of course. Some of it's legal, some it's less legal. But if you think about his world is tariff world. And regardless of that creating positive, negative implications for other relations, other businesses around the world in the context of even how America is perceived, that's not part of his agenda to even consider that. So it was just, I'd encourage anybody to listen to the interview because it is layout. He says, listen, you know, there's a whole bunch of things we're trying to write that we think are wrong, but his lens is so incredibly narrow that if you just took that lens, you would say, you know, these aren't tremendously bad decisions, but the impacts.

7:50The collateral damage, the externalities, whatever, yeah.

7:53Steve Dennis: We don't trust you anymore, like, And listen, we've got some evidence to this.

8:00Steve Dennis: Whatever deal we do isn't worth the paper it's written on because maybe we've got a forest fire and you want another tariff or whatever. So I'd encourage everybody to listen to that interview because it does lay out that context. And you can just see the narrow focus, which in the fullness of time, we see how it all works out. But if you're going to write down your debt with tariffs, it seems like that's the world we live in, to your point about getting used to things. That seems to be the world that we live in. I don't see the Democrats changing that. They accepted, as he makes a point, of the China tariffs that were put in place.

8:34Steve Dennis: They didn't change many of them, didn't roll back any of them because we want more jobs. We want some of the good outcomes of what tariffs are meant to do as policy. So anyway, super, super interesting. Yeah. So the other thing I would add, which is very much a U.S. perspective, but there are ripple effects, obviously, and many things that go on in the United States, is we have the U.S. midterms coming up. That is right around the corner, and all that stuff is amping up. And it seems pretty clear that the president is hell-bent on some degree of election interference. But just in general, because of all the polarized views, and of course a lot of people are worried about inflation going up, and the war, and deficits.

9:19And I think it's going to be even more chaotic, I guess, for lack of a better term, than it's been in the past. So, you know, again, a lot of this just ladders back to uncertainty and volatility is not great for business conditions as well. I mean, it's great for the therapy business, I suppose, but it's not so great for retail.

9:40Steve Dennis: It's great for the news business. Pretty good for the podcast business, I guess you could say. I guess, right. All the talking heads have plenty to talk about. So anyway, I would say that, you know, I'm so far, unfortunately, really, I'm looking pretty right about this, though I did not have the Iran war on my bingo card at all. Well, one last comment on that. You know, when I talk to retailers about the current state of things and, you know, looking outside in from Canada and, you know, what do we come up next? The context they come to bring up to me is COVID. They said, listen, we got through COVID and we, you know, that was real chaos, right?

10:15Steve Dennis: Stores were closed. This is still not as bad as that. So it's interesting the frame, or should I call it the touchstone, against which the chaos is benchmarked. Because if you look at the sales, we're going to talk about sales in a minute, they're not bad, right? They're not terrible. People continue on with their lives and going out, generally speaking. You debate plus or minus, and economists certainly do the impacts. But I think there's some context that retailers operate in and said, we got through COVID, we'll get through this. But let's talk about the numbers. the latest numbers for June tell a bunch of different stories.

10:48Steve Dennis: So take us through what we, or what you proceed from June results. Yeah, I won't go into too much detail, but we haven't really done a deep dive on some of these monthly numbers in a bit. So I thought maybe this was a good time because maybe we're at an inflection point, but we'll see. And by the way, I know long-time listeners know we sometimes talk about the Census Bureau numbers. Sometimes we talk about the CNBC numbers. But I'll just anchor on the Census Bureau. And they're not that dissimilar from the CNBC number in terms of direction. There's some reasons why the CNBC number are biased to be a bit higher.

11:25It really has to do with they don't count cash and checks. But anyway, but the overall picture is a pretty solid month. Once again, June was up 5.7 % year over year, or up about 5.1 % year to date. That is definitely higher than is typical now. Not adjusted for inflation, which is running about 3.5%. But even if you just sort of take the real dollar amount, that's pretty solid. Now, I will point out these numbers are not including gas or automotive sales. Gas, of course, has been extremely volatile, contributes like 8 % of the base. And just as an example of this, gas stations, and this wouldn't include Costco because it's just gas stations focused in the numbers, not other people that happen to sell gas.

12:13They were up 20%, and pretty much all of that was price. I also took a quick look at, because we have a bunch of listeners in Canada, the UK, Australia. The growth rates have been pretty similar, a little bit lower on average, but not a lot different. When you go to the category level, it continues to be the case that discretionary is doing better than staples. And some of that, I think, is, you know, you could say that's a little weird in the economic conditions that maybe people would cut discretionary. Some of the staples thing that's going on, though, and we'll get a little bit to this when we talk about grocery in a couple minutes, but there's a lot of trading down that's going on.

12:54So a lot of this is average unit retail, not necessarily units. But you've got categories like sporting goods, hobbies, and books up 15 % for June. Consumer electronics, which had been kind of weak, was up 8.6%. Apparel kind of pulled back a little bit, but still really strong at 4.8%. As we start to talk about the laggards, grocery only up 1%. Health and personal care, which had been running very, very strong. So I think they're comparing to some pretty good numbers, but they were basically flat. that, it's probably a good time to say a little bit, again, not to get in the weeds too much, a little bit about how the sample works.

13:33So the Census Bureau classifies every retailer into a particular category. So when we say grocery is up, it is the performance of grocery stores. So Walmart and Costco and Amazon, which are huge in grocery, are not in these numbers, So just to be clear. So some are more clean than others. Same thing with apparel. It's apparel retailers. So TJ Maxx is going to be in that number, but JCPenney is not. So anyway, speaking of JCPenney, nice segue, Steve. Department stores, down again, though slightly. And I guess the only other thing I'd say before we move on to the grocery business in particular is there is some speculation that some of these numbers are a little bit better than we probably will see in July.

14:22that's partially because last June was particularly weak. So easy comp. Also, Prime Day was moved up, days, was moved up into June from July. And, of course, a lot of companies compete with that with their own events or just heavier promotions. So, you know, obviously we'll see how July turns out. But, you know, I think, to be fair, you step back and you say some of the sectors like furniture and home furnishings and department stores, which have been slow for a long time, continue to be slow, and some of the other categories that have been pretty strong pretty much continue to be strong. So it's not a huge, huge difference in what we've been seeing.

15:04Steve Dennis: You know, you and I have been wildly positive about the economic impacts of the World Cup. We thought it was good and all fun, but for the city's hosting, probably net negative on the balance sheet. So it's interesting to see sporting goods up in June 15.2%. I expect some of that in July as people kind of decide to buy some kits. And so, you know, versus last year, I think that's a nice year over year. It's a nice explainable thing. There's a big event that happened in America, and people, we know one of our shorts, Nordstrom did a fantastic job with Adidas to do some activation. So I'm sure that was happening.

15:39Yeah, and actually I did see some stats, I think from Placer, that traffic at Adidas stores, you know, their focus stores was up a lot. So I think that's one brand that would appear to be benefiting specifically. How long-lasting that is, time will tell.

15:54Steve Dennis: Well, let's shift our gears a little bit and talk in a grocery category I'm particularly fascinated with. Talk about what you're seeing in the grocery category because the numbers I'm seeing in America remind me of the numbers I saw 18 months ago in trends in Canada. So it might be an inverse kind of crystal ball kind of talk. As we just talked about, grocery stores were quite weak. But there's some other data which looks at grocery more holistically, Bain did a study. And more or less, the way to look at it is the business is pretty flat to up slightly in dollars. But the units are definitely going down.

16:36And, of course, a lot of that is tied back to economic conditions and the amount of inflation. So just as an example, in the U.S., grocery prices are 33 % higher than they were right before COVID. So people are solving, stretching their dollars. And it seems like not only buying somewhat cheaper stuff on average, your private brand continues to grow pretty quickly, some of the discount. formats are growing more quickly, but just pulling back in total. And one thing that's really specific to the US, which is not moving the numbers tremendously, but there are also quite a lot of lower income families, which are really getting squeezed.

17:20And we've had several million people kicked off the SNAP program, otherwise known as food stamps. So you can really see certain sectors, which we've talked about the concentration with affluent in general, But, you know, grocery is obviously so fundamental, typically a big chunk of people spending. So, you know, that's something that really puts a lot of pressure on people.

17:43Steve Dennis: You know, a little bit of my feedback, because it does, as I said, sounds very familiar to what we've been going through here in Canada and other countries really 18 months ago, is people keep eating one way or the other. But their habits begin to change in small and large ways. And one of the benefits, if we could say that, less waste, more flexibility around best before dates, for example. A little more, hey, I'm going to have that as leftovers. So people are still eating. Some are eating less. But they're shifting the way. They shift brands, as you said, private label, whatever. Shift preferences around the trifecta of proteins, beef, chicken, pork.

18:16Steve Dennis: We all know how expensive beef is across North America. This is not an American thing. And into blue water proteins, as the industry calls them, you know, fish. A lot more fish taking a larger role. The other thing we saw and I'm seeing already is dollar stores become groceries because they offer very cheap, high-sodium, high-processed but cheap foods, small sizes. So, you know, I can only afford what I can, a box of like boxed pasta. It does fight against the Maha movement. So you might have more pastel-looking M &Ms because they're not bright blue anymore, but you're going to have to eat a lot more Kraft dinner or whatever.

18:52Steve Dennis: And then you've got this thing, and I'd love to continue this discussion about, in future episodes, protein orphans, as my partner, Solana Charlebaugh, calls them. Everybody needs proteins, even more so now with GLP-1s, and the QSRs are stepping up and saying, well, listen, if you want more protein, have I got a coffee for you? It's got a lot of protein. So last and definitely not least, and definitely more troublesome, is a shift to more use of food banks. and we saw tremendous growth in that. It's a little hard to track in the U.S. because at the state level, but in Canada we have a national lens and we have 2 million Canadians going to a food bank every month now.

19:33Steve Dennis: It's shocking really for an advanced... Right now, it's grown quite a lot in the U.S. as well, which is not a good thing to see. Just related to the overall grocery story is we got Albertsons, one of the big grocers here in the U.S., is earnings last week. I guess I'll just quickly tie this back because if for regular listeners to know, talked about grocery a little bit and the collapse of the unremarkable middle and how much Walmart and Amazon are growing. So if you look at Albertsons, net sales were up 0.2%. And that includes their fuel sales. Their fuel is not as big as Costco is on a relative basis, but it's still part of that.

20:14Net income down. So to the extent there's food inflation, and they don't seem to be able to pass it on. Of course, I shouldn't say of course, but they did decide to do some consolidation and they're cutting costs. They reduced their guidance. Their stock went down 20 % in one day. So that's not a good day for a company. And so I think the thing that I always worry about because I lived through this at Sears and have worked with some companies, which is, again, if you cannot get the top line going and you have a strategic issue, the typical result is to cut costs. And oftentimes that just makes matters worse.

20:56So, you know, I hate to be so negative about mid-market grocers in the U.S. And, you know, we'll see what happens with Kroger. We'll see what happens with Publix, et cetera. But I'm expecting when we get Amazon's earnings later this week, they'll probably have a lot to say about how great their grocery business is. I don't have any inside information there. That's just a forecast. And I suspect Walmart and Costco will definitely be much higher than Albertson and Kroger's growth. So we'll continue to see a pretty significant share shift. But again, I wonder how close... When you have a big fixed cost business, and of course grocery, while digital has grown, it's very much skewed towards physical store sales.

21:42fixed costs, sales go down. It is hard to work out how you grow that business without doing something meaningfully different. What is that?

21:51Steve Dennis: You and I have experience in a similar situation like this where we would say, well, let's launch credit card because we can make lots of money on the shield. Retail media network. And now today's credit card is retail media network. So I expect there's being more people assigned at Albertsons to, well, if we can't make it here, we've got to make it somewhere, and eventually that's going to run out of gas. But that's something definitely to pay attention to, is that that's the modern version of what you and I did with putting out credit cards and making money, tail wagging the dog with the credit card business.

22:25Steve Dennis: Guilty as charged. All right, well, let's get to our amazing interview with Amy Bayer Thomas from Ulta, and then we'll be back to talk about some other results, say some remotely good things about a couple of brands we generally don't like, and then what's on our screen. Well, Amy, welcome to the Remarkable Retail Podcast here at Commerce Next. We're catching you just off the stage, but we'll get to that in a second. I would just be curious, maybe take 30, 45 seconds to talk a little bit about your journey and how you ended up. When we met, I think you were running supply chain. Now you got a different job.

22:57So maybe just a little bit about your journey in retail. Yeah, no, thank you for asking. I have been in retail 30 plus years. I will be celebrating a decade with Ulta Beauty here later this fall. And in those 10 years with Ulta Beauty, I've held seven positions of which. One is Chief Retail, Chief Supply Chain Officer when we met. So, you know, the journey for me has been really incredible and remarkable. Retail is an incredibly dynamic industry and you either love it or you don't. And I can tell you it's a space I love deeply. In my 30 years, I've spent time in big box and specialty retail for some iconic brands during their time.

23:42And it's been a really incredible 10 years with Ulta Beauty. My time here, I've held, as I mentioned, several different roles of which leading stores, leading operations, stepped over into a chief supply chain officer during 2020 and then led. Trial by fire. Exactly. No, I learned a whole lot, I would say, that year and during that experience. And then in 2024, I stepped over back into the chief store operations officer role. And then last year, had the honor of taking on the newly appointed role of chief retail officer. And so that would be overall physical and digital combined, essentially? No, chief retail officer, I like to say it's a two-sided business card.

24:32If you think about it, everything from real estate growth and development on where we choose to build stores, site selection, etc., all the way through store design, visual merchandising, into our stores with the experiences and the services that we deliver, store operations, services operations, brand education, services education, asset protection, a.k.a. loss prevention. Oh, you own LP too? I do. That's exciting in your category. Yes, I would agree. And then eventing and experience along with the overall omni guest journey and experience. So, again, a two-sided event. What do you do with your spare time when you're at work?

25:12That's when you know you love what you do. So I'd be curious, just before we kind of get into the heart of the matter here, with those different sort of roles, well, different, you know, multiple retailers, but the different sort of roles, if you had to point out, like, what has that really taught you or what does it allow you to bring to your current role? Yeah, you know, as I look at my 30 years, if I may, I think about it in terms of chapters, you know, kind of three primary chapters. That first chapter was really about learning all of the different parts and facets of the business. I like to say my journey was really a lattice, not a ladder.

25:47So it was really about going over into multiple spaces, taking lateral moves, learning the different parts of the business, mastering those, and building skills. That second decade was really about leaning into leadership. and growing kind of leadership competencies and coming into, I guess, my own as a leader. And then this last chapter, which is this last decade I've had with Ulta Beauty, and particularly in this recent role with Chief Retail Officer, is I get to take all of what I've learned in my 30-ish years and really bring it together and drive impact in a much more intentional and purposeful way.

26:24Steve Dennis: We're here at Commerce Next. We're in the Commerce Next podcast studio. you just rolled off the stage and you were talking about some interesting stuff right up our alley, so to speak. We often talk about the role of stores and the multifaceted beyond the four-wall profitability role of stores. So you described it, I think, as like an acquisition engine. And, you know, that's not an unusual thought, but it's very interesting to hear you speak of it so prominently. So talk about the role of, you know, you're not just serving existing customers, but what roles the store has in terms of acquiring new customers?

26:56Steve Dennis: How important is it? Oh, it's absolutely critical. And I think that is one of the things I would say that people have underestimated, I believe, with all of the advancement that's happening in this incredibly dynamic space, the level of change that's happening and the speed at which it's happening on the tech side, AI side. It's like nothing I've ever seen. But what I think people have underestimated is the power and the impact of the store experience and the physical store presence. So when we think about stores for us, stores are queen. We like to say stores are queen. It's beyond the transaction that occurs with a guest.

27:32You know, historically, retail, you come in, you buy your product, you check out, you leave. And you might have a nice engagement with an associate or a conversation along the way. For us, our stores are truly experiential hubs. They are where we bring beauty to life. beauty, which is highly rooted in human connection, discovery, play. We like to say it's beauty-tainment. And our 60 ,000 associates bring that to life every single day for our incredible guests. And so the stores serve a purpose of going well beyond the transaction and providing this differentiated experience that only we can deliver through our services, through our eventing, and certainly through the engagement of our associates.

28:19And then the other part that our store plays is through omni-channel. And our omni-channel guests are our best guests. And so we want the guests to engage in the digital aspects of the business as well as in-store. And so we want them to do both. And so our stores act as a hub as well for omni-channel fulfillment. Ship from store, buy online, pick up in store, same-day delivery. And so not only are our stores representing this highly experiential moment where we bring beauty to life, but they are also serving to really fuel our e-com and digital growth.

29:00Steve Dennis: Now, you recently conducted a study, Nielsen IQ, I think, about Gen Alpha and their thoughts around stores. It seems to connect to what you're saying about the role and purpose of, you started all this technology all around us, all this AI, but you found some interesting results. What did you learn? We did. I will tell you, I think we found ourselves a bit surprised. And we did the smart beauty research with Nielsen IQ, and specifically on Gen Alpha. And you would think that the first true AI native generation would be highly engaged in purchasing through the digital channels. But what we found, surprisingly, is that those who engage at a higher rate through AI and technology are actually coming in at a higher rate to the stores to actually have the experience and purchase the product.

29:54In fact, 57 % versus 36 % opt to come into store of those who are highly engaged on the AI and tech side. I wouldn't have expected to hear that. No, very surprising.

30:07Steve Dennis: We're going to talk about the role of AI a bit later in discovery, because I think it is transforming both the in-store discovery experience as well as online, because your first thought goes to online, right? Absolutely, especially with that generation. Although, I will say our 47 million members tell us every single day that stores are where they're choosing to come in and engage. 95 % of our 47 million members are actually transacted this last year in a store, of which 75 % are in-store exclusive shoppers. Yeah, I was fascinated by that stat. What do you think is behind that? I mean, I get that the category you're in is more sensory, more experiential.

30:51So tilt that compared to some other retailers, but exclusively in stores. I found really, really interesting. Do you have any theory as to why it's that kind of black and white? Again, the category itself lends itself to that high touch human connection. When you think about beauty product, AI and technology and engaging online will serve a purpose to educating you potentially, helping kind of serve things up. But you want to smell that fragrance. It's about the five senses. And when you come into our stores, your five senses are engaged almost immediately. So it's, you know, the smell. It's the feel.

31:31It's the sensation of the product. It's the conversation. and the knowledgeability and the expertise that our associates are then able to give. And, of course, you can't get your hair done online. Not yet, anyway. Or your brows, right? I mean, you know, we do a whole suite of services from full hair salons to brows to makeup applications, skin analysis. And those are just things that you can't do in an app. and those are experiences that you can't get online.

32:07Steve Dennis: Let's talk about that, the intersection of AI. We've been talking about discovery and the associates. I had the opportunity to interview the president of IKEA last week, and we were talking about AI and his associates, and I said, you know, he's very clear. It is a superpower for the associates. It can be the best thing. Don't worry. But every day they hear headlines that creates anxiety. You know, these companies are proud to lay off people because of AI. But part of your conversation is we're going to have the best of AI and the best of you together. I think that's where you're heading, that synthesis, one plus one equals three.

32:37Steve Dennis: Is that how you're thinking about it? Absolutely. Absolutely. And I know I shared a bit of that in the session we just had in the main stage. But it is. It's not an either or. This is an and. And for our industry to continue to grow at scale and not just survive but really thrive, it's got to be both. So how do you leverage technology? And let's face it, it's coming. It's happening. It's coming at a fast pace. But the AI and the technology that's happening around us and will continue to happen are really, it's not AI for the sake of AI. We're really thoughtful about where we're engaging with AI and ensuring we're keeping the guest and the associate at the center of everything that we're doing and what we're deciding.

33:22if it doesn't benefit the associate or empower or supercharge them in some way, if it doesn't elevate the guest experience and remove friction for our guests, then, you know, we're really going to ask ourselves, why are we doing it or why are we thinking about it?

33:37Steve Dennis: And some of that discovery is kind of out of your hands, right? Some of it's happening on platforms that they, I mean, people are walking into your stores learning maybe the right things, maybe the wrong things about the product. How do you guys think about that? Is that another role for the associates? You may have read that. But we've all been dealing with this for 30 years with the increasing transparency of information, right? People coming in more informed than they did two years ago. How do you think about that? Yeah, I think that that's one of the things that the technology does, you know, and will continue to do better is serve you up with a variability or variation of all the things that are out there and certainly, you know, give you some aspect of knowledge and information.

34:19what you don't get from the technology and what you can't get through engaging with the technology is that associate that sees you standing in the skincare aisle. The tech is going to be lost and confused.

34:35Steve Dennis: Overwhelmed by choice or potentially in the category, right? Absolutely. There's a lot of things happening in the beauty space. And there's a lot of incredible knowledge out there specific to products and trends and techniques. And our associates are trained and educated on all of them. And oh, by the way, you will not find bigger beauty enthusiasts than our 60 ,000 associates who are out there engaging with our guests every day. And so while you can look online, you can replenish and you can save and the technology is going to know when you're running out and it might alert you. What it's not going to do is see the look of confusion on your face.

35:14When you've been served up too many things and you can't decide, are associates see that? And they provide that level of expertise and an experience that they then can walk out with.

35:26Steve Dennis: We'll be right back with Amy Bayer Thomas from Ulta right after these messages. The biggest names in retail don't guess. They use Placer AI. Placer's location intelligence platform turns foot traffic into real strategy, giving you near real-time insights into market share, cross-shopping trends, and trade areas for any location in America. Whether you're entering a new market, tracking a competitor, or optimizing your existing footprint, Placer gives you the data to decide with confidence. Visit placer.ai to see it in action. If the world has changed so very, very much, why have so many organizations changed so little?

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36:41So you and I have been, we met actually at a conference about, I think, five years ago or so. And if you go on the conference circuit, of course, we've been hearing about seamless, frictionless, omni-channel for years and years and years and years. Now that you have many, if not all of the components to try to create that, I like to call it harmonized experience, whatever we call it. It still seems like there are challenges there that despite us wanting to do that and everybody agreeing it's a good thing to do, it still doesn't happen consistently. Where are you still experiencing those challenges or maybe where you found something that you've been able to conquer over the last year or two?

37:17The omni-channel experience is increasingly important and critical. And right now, I would say there's still, I mean, just truthfully, transparently, right? And I think even the consumer thinks that they're choosing a channel over the other or they're opting into one area or the other. And I think we've done a really nice job of integrating that, particularly as I mentioned with our buy anywhere, fulfill anywhere capabilities and our stores being so central to doing that. You don't have to choose. You can have it both ways. You can have it always. and that Omni guest being the best guest for us, frequenting us two and a half to three times more frequently and spending three times more.

38:05So we want our guests to be Omni. We want them to engage in what I'll call for today, both channels. What needs to happen in the journey that we're on is how do we continue to, while the lines are blurred, how do we create one seamless view? So no seam, blurred, but how do we even take the blur and make that completely unrecognizable to where you don't know where nobody says I'm choosing to shop this channel or the other. It's just I'm just shopping. I'm just experiencing. Right. I'm just behaving in a way that blends it all together. I used to say for a while that brands are horizontal to the customer, but so many retailers are vertical in the way they think about it.

38:53And that's, I think, been part of the challenge for a long time. So I want to talk about your new Times Square store. Well, coming soon, I guess. Tell us what that's about, the new flagship store that I guess is getting a lot of attention. And you shared some interesting facts on stage. What's that about? This is the location I'm very excited about. And as we think about the evolution of Ulta Beauty and what we consider to be next generation beautytainment, this flagship location will bring what we undeniably do every single day into a global, what I would consider onto a global stage where we will get to represent the best of Ulta Beauty.

39:40in big, bold ways that will really give a nod to where we are being as a brand and an organization. You know, our stores, our 1 ,500 stores do an amazing job every single day of delivering on all of these incredible experiences that we've talked about. And, of course, we serve, you know, all ages, all stages of life and all of those special moments in life as well. But this flagship location is going to be very special, and it's going to be an opportunity for us to show up in a way we have not shown up before, and then really kind of inform us as we continue to evolve and grow into the future.

40:28So could you share a couple, how much bigger will this store be than a typical Ulta store, and what will be some of the things? Are you able to talk about that? I'm not able to talk about that. But what I will say, not at this moment anyway, Steve, but what I will say is that, you know, on average, you know, our stores are about 10 ,000 square feet. And we have started really exploring, and you'll see, opening, like, different formats. So the flagship being one of several new formats that you will start to see Ulta Beauty show up with across the country as we look at where we will continue to show up for the local guests and the way in which we will show up for the local guests.

41:15So flagship in New York City is one way. And then we have outlets, which we've started to show up in more recently in the last 18 months or so. And then, you know, small store formats and others I can't talk about. create a little mystery. I'm just curious, you know, flagship stores as a concept are not new, you know, here in New York, see quite a lot of them. How do you think about the ROI of that? Or how did you and your rest of the management team convince everybody to get on board for what's a very large investment, I imagine? This flagship store represents, you know, the next, I guess, generation of Ulta Beauty.

41:57And there is, you know, I said it on the stage when, you know, you can for, listen, we're all in the business of making money. So, you know, four wall productivity continues to be critically important. How you get there is equally important. And so that all comes when we focus on the relationships, we focus on the experiences, when we focus on what it is and how we deliver for our guests every single day across our existing fleet, but certainly in this flagship location, it will be incredibly meaningful. And that is what drives loyalty, which we've talked about the criticality of loyalty. That's what provides an even deeper level of brand love.

42:42And that is what will continue to translate across the brand, across the country, and frankly permeate from this flagship store. This is a permeation of something that's happening here in New York, but it is going to impact and our stores will feel it through the impact of this location. And in a lot of ways, that's priceless.

43:01Steve Dennis: So let's connect some dots around all the other activities or the core activities, whether it's birthday parties or influences are so important in the beauty business. In some ways, they always have been, but now it's kind of at a different level. How does all this activations and stores and brands, how does this all connect to building better loyalty and better experience? And, yeah, I love, you know, we like to make money. That's kind of what we're here to do. Do you connect that all in some seamless way that makes sense? And you can, you know, where to put my last dollar or marketing dollar or in-store activation?

43:33Steve Dennis: You kind of are pointed in some direction with that? So, eventing represents something really meaningful for us. We last year executed over 100 ,000 events across our 1 ,500 plus stores. This year we're tracking to do over 140 ,000 events. And those events show up really in different ways. Again, as we think about the local markets, as we think about kind of a tiered approach that we're taking to the events. So we show up in ways that are most meaningful to the local guests, one. And that can look very different in terms of a tiered approach to the event. Anything from a highly visible celebrity showing up in a big parking lot takeover to working alongside our brands, showing up, doing education, hands-on experience with the products to little pop-up events that our stores pop up over the weekend and bring to life some experiences and activations for our guests.

44:34So eventing drives traffic. So eventing drives engagement with our guests. Eventing deepens loyalty. We attract new guests through eventing. So we launched last year our new events portal, which enables a guest to look locally amongst their local stores. And oh, by the way, 85 % of the U.S. population lives within 20 minutes of an Ulta Beauty store.

45:01Steve Dennis: Depending on how fast you drive, by the way. I always like to say that. But, you know, through our eventing portal, you can go in and look at your local stores and see what events, what brands are going to be at your local store. And you can RSVP to come in. Tailor your own experience. Absolutely. Quick follow-up question. Pick your journey. How do your people pull that off? So at that volume, there must be kind of different levels. The store people own these following things and corporate own, you know, and it's a big start. Like to do 140 ,000 of anything is a big lift. We have an incredible events team.

45:30Like a couple thousand people? No. No, it is a very small, but a very mighty team. And they are mighty. But we, you know, it starts, you know, with them as we really map it out. We don't want to event to event. Not all events are created equal. And more is not always more. So we want to be really focused on, again, being intentional with what types of events we do, where we do them. And that really starts with our events team who orchestrates all of that. From there, we partner very closely with our brands. So our brands are a key component, and we have incredible brands and brand partners and field teams that our brand partners have out in the field that will partner with then our store teams as they come in and help support our store teams who collectively then deliver on this event.

46:22Steve Dennis: Ultimately, they're the ones delivering on the experience 99 % of the time, other than the big major events. Absolutely. Last question for you. So you and I are sitting here, the three of us are sitting here five years from today. You've already kind of hinted there will be some activity in Times Square, some other formats, but would I recognize your store five years from today? What would be the same, and what would you anticipate be different? Well, you will recognize us most definitely because the DNA of Ulta Beauty will continue to be threaded through everything that we do. And so you will undeniably know it is Ulta Beauty.

46:56What I believe will continue to evolve and change is how we continue to embrace AI and technology. That's not going away. The difference, though, I would say that that that's that's the change we continue to see coming. And that is the change that is going to be continuing to happen within the industry. And we're we're embracing that in all of the right ways. Coupled with that, what will stay the same always will be core to everything that we do are our people and our stores. And so it's this blend. And you will see, as I described earlier, it will be this blend. It will be seamless in terms of the experience.

47:33You will have incredible experiences. You will know undeniably at Sulta Beauty. And you will be shopping us. And you will not know or discern.

47:41Steve Dennis: Or care in some ways. Where that's happening or how that's happening. But it will be happening across all aspects of the business in stores and across digital. Well, your Gen Alpha study basically gives you a crystal ball because they're young today, but they're going to be a big core shopper in five years from today, right? Absolutely. So you already know that they value store experience so much. It's been so great. Love talking about your business. It's so fascinating. Thanks so much for joining Steve and I here in the Commerce Next podcasting studio. It's great to... The legendary. The legendary.

48:10Steve Dennis: The legendary. The legendary. Pop-up studio. Wow. Pile of fun. Thanks so much for joining us. Congratulations. What a career. Congratulations on your success and wish you much continued success. Thank you. Thank you both. Thank you so much for having me. All right. We are back. I mean, I found Amy such an impressive executive, versatile, dynamic retail leader, so talented. I think Ulta is very lucky to have her. You know, I was actually thinking, and this is a little bit, you know, patting myself on the back, but I was trying to think about, well, first of all, Ulta Beauty has just had this incredible track record.

48:41It's actually a company I've followed for a good amount of time, not because I shop at Ulta Beauty, but because I lived in Chicago for a long time and they were this emerging relatively small company 20, 25 years ago that has grown to this incredibly successful, you mentioned like 1 ,500 stores. And they've navigated quite a lot of disruption as well. I know I've mentioned this kind of dynamic before, but I decided to check. And it's not all about the stock price, but Ulta Beauty's market cap is over$20 billion. and that is more than Macy's, Kohl's, and Dillard's combined. And people may know that Macy's, Kohl's, and Dillard's sell a lot more stuff than cosmetics.

49:28In fact, cosmetics and the beauty business is probably like 10 % of their sales. So anyway, I've been thinking about how well Ulta Beauty, not because I helped them with this or what was even written when they were doing this stuff, but how they really line up with my eight essentials of remarkable retail framework. So anyway, you just see clearly some brands that, I mean, they made some mistakes along the way, but do a lot of things right, and particularly in the way they thought about the role of the stores. So I think she did a great job explaining that.

49:59Steve Dennis: Taking off from your idea about talking about stores, let's talk about Wayfair, and let's talk about stores. You've done a great tour, I think it was the Chicago, north of Chicago, Chicago stores they opened up, but it looks like they're pushing their chips to the center in terms of big boxes. They appear to be. I mean, we've talked about a couple of announcements they've made, but they're definitely stepping things up. They're going to be adding several new stores on top of the Chicago and Atlanta and I think the just open Columbus store. And these are large format stores. They range between 94 ,000 square feet and 140 ,000 square feet.

50:37I don't know whether that range is a function of the sites they're going into, site-specific considerations of trying to get things in or to what degree they're testing a range. The only thing, which I think we touched on when they first released it, is they haven't shared much about the performance, but presumably if the performance weren't good, they wouldn't keep investing in them. But I thought one of the things that was most interesting was half of the customers in Chicago, or it's actually Wilmette, half of the purchasing customers were totally new to the brand. And so, like we talked about with Amy, in terms of acquisition, definitely seems like Wayfair, which has been around for a while and is a multi-billion dollar business, is still able to drive a lot of new customers.

51:18Now, just to put this in context, Wayfair, while growing, particularly, it's interesting they've been able to grow in what has been a flat-to-down home furnishing market, so that's good, but they continue to lose a lot of money. In fact, they lost$105 million on$3 billion, just shy of$3 billion in sales this last quarter. So whether stores will somehow fundamentally unlock a different profitability trajectory, I would be a little bit skeptical of that. But anyway, they're clearly doubling down, tripling down, whatever, on big box retail.

51:55Steve Dennis: Let's talk about Shein. Well, this has been bouncing around in the ether here, I guess, for two, three years that Shein wanted to go public. They've been trying to get a listing for years. They tried to go do the big dog, the New York Stock Exchange, and that didn't work out. Then a year, year and a half later, they were trying to get listed on the London Stock Exchange. Well, it now looks like they are, in fact, going to go public on the Hong Kong Stock Exchange, which people may know Hong Kong is in China as a Singapore company, as they often remind us. But they do have a fair amount of ties to China.

52:34They apparently are looking to raise$2 to$3 billion, which would give them a valuation of$40 to$50 billion. So, you know, here's a company that's not very old, that has grown like crazy. and that would be quite a valuable company if it in fact happens that way. I will point out though that that's about half of where they were valued in 2022. So they have grown a lot, but the growth has really slowed down and a lot of that has to do with the ending of De Minimis in the U.S., which was something that they took great advantage of and then basically the cost of doing business in the U.S. skyrocketed.

53:10So they've really kind of popped their balloon.

53:13Steve Dennis: It ruined it for us all, is basically what it did. Yeah, such a party, and it's come to an end. But anyway, just as a quick callback, we did talk a month or two ago about Everlane being acquired, which is famously, or relatively famously, a sustainability brand. So that was a little bit of a head-scratcher. But anyway, yes, Shein bought them. So we haven't heard much about that. I'm not even sure the deal is closed, but perhaps in the information we get about their listing, will learn a little bit more, a little more of a peek inside the Shein business model and perhaps what they plan to do with Everlane.

53:49Steve Dennis: All right, well, let's wrap the episode with what's on our respective radar screens. And I think you want to talk a little bit more about tariffs and fuels and anchor that into what you're thinking is going to happen for retail in the future. Yeah, well, just quickly, also, I mentioned this briefly, but we do get Amazon, depending on when you're listening to this, that might already be out, but Amazon earnings come out on Thursday, episodes out on Tuesday. So that's always interesting to see for a bunch of reasons. But I mean, I think at this point, from a retail perspective broadly, kind of all roads lead to what's going to happen with fuel costs.

54:25And we had a bit of a respite on the cost of oil with the ceasefire and various statements that Trump made every day about a deal being imminent. Doesn't look like that's so true. I know it's shocking that he didn't tell the truth about something. But nevertheless, what direction is this all going to go? Obviously, it has been trending up just more recently. One of the things I was just thinking about, and again, I don't want to get in the weeds on this, but a lot of economists got the degree to which oil prices were going to go up wrong. We had a lot of kind of sky is falling,$150 oil, even before the ceasefire, which changed the trajectory.

55:09But I think what ended up happening is that China massively cut their imports, and that was not necessarily expected. And it turned out the reserves were quite high. It turned out that there was some workarounds where more stuff was going through the Red Sea. Well, now that the Hooties are shooting at boats in the Red Sea, that's an added complication. and the reserves are becoming quite, quite low. It's unclear what China is going to do going forward, but they can't cut their imports 30 % or whatever the number was forever. So it's a pretty precarious position, and increasingly it doesn't look like this is going to get resolved anytime soon.

55:48Perhaps we'll be pleasantly surprised. The other thing I'll just mention briefly, which again, maybe getting in the weeds a little bit, but crude oil prices are one thing. the end user price is a different thing. And the end user price is actually about 40, is proportionally about 40 % higher than the crude oil price. And so the spot oil price is actually, a lot of people are like, you should pay more attention to that than what you see on CNBC or Bloomberg about crude oil. And so anyway, fast moving, but given the effect on consumer spending, if gas prices go up a lot, And just transportation costs related to retailers could be quite significant for the holiday season.

56:34Steve Dennis: I've been thinking about the TAM. And I've been thinking about the context of Canada. But then I started thinking about the context of the U.S. And what I'm talking about here is population. Because we're experiencing here where we had this huge influx of immigration. Millions and millions of people by percentage. Huge. And it drove retail sales. Now, we cut way back on that. And retailers are like, hey, where'd all my volume go? It's not growing the way it used to. And so I did some research and the U.S. in terms of population 2026 is not forecasted to shrink, actually. It actually might grow 0.25 percent, which is the smallest addition to the population in 90 years.

57:14Steve Dennis: And for the first time, natural increase, not immigration is making up for that. No surprise. Now, what's interesting is, is this now the end of an era where retailers can say, well, the market grows, we're just going to grow with it, the boat's going up, we're going to go expand? It feels like it, because we've been thinking a lot about this here, it reframes the TAM as a share fight in a kind of a flat pool, and the center of gravity starts to shift a bit older. It gets uneven distribution geographically, and then something we've talked about offering, polarized by income. So, you know, this is what I'm keeping my eye on for North America, because as we change one thing, it needs to be really reflected on your growth strategy and how you're going to, particularly grocers, for example, because everybody eats, right?

58:00Steve Dennis: You can't, you might, you know, at the end of the day, the grocers feel it first, because they're the ones who are dealing in the volume, right? Yeah, and I can tell you, working for a mass retailer for a bunch of years and half of my time in strategy, we just basically said, well, we got 1 % baked in from population growth, more or less, and 2 % to 3 % in inflation. And then anything above that is real market share growth. So yeah, it's a pretty fundamental change. They say demographics are destiny, and in this case, that's a big contributor for sure. So many puts and takes. What I love about retail is that it is both a barometer and a thermometer on the economy and our lives and society.

58:45Steve Dennis: So with that big kind of statement, we'll leave it there. We'll leave it there. We'll be back in a couple of weeks. But as always, stay tuned next week for some more StoryTour videos. So with that, I'll leave it there. Thanks for listening. To learn more about my keynote speaking, bestselling books, and advisory services, go to stephenpdennis.com. And don't forget to check out my sub stack, Pardon the Disruption. Be sure and follow us on your favorite podcast platform or on YouTube, and give us a five-star rating and review. This summer, new episodes will be released every two weeks. You can learn more about me or get in touch on LinkedIn or online at emileblanc.co.

59:31Some people can worry. Midnight Secret Life