The Sephora–Ulta Duopoly

In American beauty retail, two names keep showing up at the top of the receipt—and the earnings call: Sephora and Ulta Beauty. They don’t sell identical assortments, they don’t court exactly the same shopper, and they rarely make the same strategic bet at the same time. Yet together they define how prestige and mass beauty are bought, displayed, priced, shipped, sampled, scrolled, and—ultimately—loved. If you want to understand why certain brands explode on TikTok, why “mini” sizes live by the checkout, or why fragrance refuses to cool, you have to study the rivalry that quietly sets the rules of the modern beauty economy.

This is the story of two very different business models converging on the same prize: lifetime ownership of the beauty shopper.

The Whole Market They’re Chasing

Even in a choppy consumer environment, beauty keeps growing. In 2024 the U.S. prestige channel expanded 7% to about $33.9 billion, while the broader U.S. beauty market hit roughly $119 billion—and in the first half of 2025 mass-channel beauty outpaced prestige, +4% vs. +2%, as value-seeking accelerated. Globally and in the U.S., fragrance remains an outsized driver.

Where beauty gets bought is changing just as fast. E-commerce now accounts for roughly 4 in 10 U.S. beauty dollars, with Amazon swelling its share even as in-store discovery still matters deeply—especially in prestige.

This is fertile ground for scaled retailers that can blend theater and convenience, content and commerce, and house the viral next thing and the luxury evergreen. Which is why Sephora and Ulta sit in the driver’s seat.

Two Models, Two Moats

Sephora: Global Prestige, Curated Heat

Sephora is LVMH’s beauty crown jewel—more than 3,200 stores across 35+ markets, with record sales and profit in 2024 as the retailer pressed its advantage in prestige and fragrance and accelerated a full-fleet redesign in North America. LVMH has publicly pointed to double-digit growth and a long-term ambition that industry reporting pegs around a €20 billion sales goal.

Sephora’s U.S. reach has been radically extended by the Sephora at Kohl’s partnership—1,100+ shop-in-shops completed in Spring 2025, building what Kohl’s says is a $2 billion beauty business. This is Sephora’s mass-footprint hack: prestige presentation in a mid-market box, driving new, younger shoppers into the funnel without the capex of new standalone stores.

Strategically, Sephora bets on exclusive or first-to-retail launches, on prestige storytelling (from Fenty to Charlotte Tilbury), and on making the store itself the brand. Its 2025–2029 store refresh—re-zoning categories, moving beauty studios for privacy, and slimming brand-owned fixtures—aims to keep a chaotic category legible and shoppable.

Ulta Beauty: America’s Mass–Prestige Hybrid With Salons

Ulta is the category’s scale aggregator: prestige, masstige, and mass under one roof—plus full-service salons. As of fiscal 2024 (year ended Feb. 1, 2025), Ulta ran 1,445 U.S. stores, posted $11.3 billion in net sales, and outlined potential to grow to 1,800+ stores over time.

The salon footprint is more than ambiance; it’s a defensible service moat that draws high-frequency, high-loyalty guests into hair, brows, and skin, then cross-sells retail. Ulta’s stores average ~10,000 square feet, with ~950 square feet dedicated to salon.

Ulta’s headline edge is loyalty at scale. Ultamate Rewards drives ~95% of sales, with 44M+ active members as of late 2024—an engine for personalization, promotions, and a fast-growing retail media network (UB Media) that monetizes attention and closed-loop data.

Revenue Engines And Profit Levers

Sephora reports through LVMH’s Selective Retailing arm, but we can glean the pattern: heavy prestige mix, outsized fragrance momentum, and rapid growth from its U.S. expansion and European strength. The playbook is classic LVMH: global scale, brand theater, and disciplined retail economics that trade margin on goods for cash-generative volume and traffic.

Ulta breaks out cleanly: $11.296B in net sales, 38.8% gross margin, and a fleet that still delivers positive comps (+0.7%) in a tougher 2024—while investing in e-commerce infrastructure, fast fulfillment, and new store prototypes.

A quiet but important shift: retail media has become a second P&L for both. UB Media (Ulta) launched in 2022 and now counts hundreds of brand partners with expanding formats (CTV, audio, offsite)—a high-margin annuity built on first-party data from the loyalty base. Sephora has built a parallel capability (often referred to as Sephora’s retail media network) that packages its premium audience for brands. The effect on the beauty P&L: vendors fund more of the demand creation; retailers keep more of the ad economics.

Footprint, Formats, And Omnichannel

Sephora’s global scale lets it test, learn, and loop best practices across regions (its fast rebuild in the UK market is a case study). Meanwhile, the Kohl’s partnership gives Sephora suburban convenience at department-store scale—crucial in a country where beauty shoppers often prefer drive-to power centers over pedestrian high streets.

Ulta wins “nearby.” The chain’s U.S. stores sit in high-traffic power centers, and its omnichannel stack is now table-stakes strong: BOPIS, curbside, Store-2-Door, and same-day delivery through DoorDash and Instacart (with loyalty integration). Ulta’s 10-K reveals that 75% of its loyalty members shopped store-only in 2024, while omnichannel members (18% of the base) spend nearly 3× more than store-only guests—underscoring why curbside and same-day matter even for a “physical-first” beauty trip.

Sephora offers same-day delivery via Instacart (and other last-mile partners), plus in-app and web tooling that makes digital an extension of the boutique: virtual try-on, live beauty chats, and event booking. Taken together, both retailers have built the “anytime, anywhere” backbone that lets viral demand convert instantly.

Loyalty: The Real Moat

Beauty Insider (Sephora): Three tiers—Insider (free), VIB ($350/year), Rouge ($1,000/year)—unlock escalating perks: free shipping for members, seasonal savings events (Rouge up to 20% off), birthday gifts, and Beauty Insider Cash redemptions. Sephora rarely publishes membership counts, but the program is central to merchandising and marketing (and to how brands negotiate launches).

Ultamate Rewards (Ulta): Free to join, with Platinum ($500/year) and Diamond ($1,200/year) tiers that accelerate points and remove expiration; members can convert points directly into dollars off any product or service—a tangible “cash-back” feel that many consumers find more motivating than prize catalogs. Ulta states the program captures ~95% of sales; Yahoo Finance recently pegged active members at 44.4 million.

Translation: Sephora’s tiers nudge upmarket behavior and cement exclusivity; Ulta’s points feel like currency and reinforce value. Both funnel mountains of first-party data into retail media, sampling, and personalized offers—deepening the moat with every swipe.

What The Shopper Actually Does

Prestige shoppers like to touch, test, and talk. But convenience is king. That’s why the shop-in-shop strategies matter: Sephora can be “on the way” to a grocery pickup; Ulta can be “next door” to Target. Both retailers push buy online, pick up in store and same-day because beauty is often an impulse solved today. The data tell the story: for Ulta, omnichannel customers spend ~3× store-only; industrywide, ~41% of U.S. beauty dollars have moved online.

Category heat cycles amplify these behaviors. Circana data shows fragrance continuing to lead prestige, hair care steadily premiumizing, and eye/complexion makeup rebounding in fits and starts—all dynamics that reward retailers adept at mix, space, and launch cadence.

Brand Partnerships, Influencers, And The New Launch Machine

Sephora’s launch platform remains the gold standard for prestige: synchronized store theater, editorial-caliber content, and the gravitational pull of Beauty Insider savings events. DTC darlings now often choose Sephora for their first retail step. Glossier’s shift from pure DTC to Sephora (2023) became a blueprint, and in 2025 Rhode—Hailey Bieber’s viral brand—announced its first retail partnership with Sephora (US first, then Canada and UK). When a brand like Rhode hits Sephora floors, the flywheel—from waitlists to windows to Instagram Reels—spins at full speed.

Ulta’s partner model is built on breadth (prestige + mass), discovery (SPARKED at Ulta Beauty for indie brands), and community. It complements this with its UB Collective (influencers and associates) and a robust affiliate program, then points UB Media at the top and middle of the funnel for closed-loop performance.

On influencer economics, both retailers now behave like media companies. Ulta sells audiences via UB Media; Sephora’s retail media operation similarly packages high-intent shoppers for brand campaigns. The consequence is profound: launch budgets increasingly flow through retailers, not just platforms—tightening the bond between retailer and brand and raising the bar for distribution.

Regional Differences: Why Geography Favors Sephora (For Now)

Sephora’s global footprint makes it a multi-continent launch partner, enables cross-market playbooks, and gives it resilience when one region slows (e.g., China volatility). Its return to the UK—with buzzy London flagships and expansion to Manchester—illustrates how the brand can remake a market after a hiatus. Ulta, by contrast, remains primarily U.S. (though management keeps international options on the table).

In the U.S., however, Ulta’s ubiquity is a real counterweight, and its Target shop-in-shops (about 600 by late 2024) gave it complementary reach—though that partnership is slated to sunset in 2026, adding urgency to Ulta’s own expansion and M&A moves (notably, its 2025 acquisition of Space NK to deepen prestige credibility and international know-how).

Pricing Power, Promotions, And The Shape Of Competition

Do Sephora and Ulta set prices? In prestige, brands typically enforce MSRP, but promotion and presentation are where the duopoly pulls levers. Sephora’s tiered Savings Events (Rouge 20%, VIB 15%, Insider 10%) have become semiannual tentpoles; Ulta counters with points multipliers and Diamond/Platinum Appreciation Days. These mechanics preserve margin while giving the shopper a feeling of dealmaking—without turning luxury into a permanent markdown.

More quietly, retail media reshapes trade terms. When a launch’s success depends on paid placements, sponsored search, and offsite look-alike audiences targeted with retailer data, ad budgets shift into the retailer relationship. Brands pay to win the moment of consideration, and that spend helps Sephora and Ulta keep prices stable while growing gross profit dollars.

Meanwhile, mass rivals aren’t asleep. Walmart, Target, and Amazon have pushed deeper into premium beauty assortments and retail media, squeezing the bottom of the prestige pyramid and the top of mass. But prestige-first discovery and services remain the duopoly’s home turf.

Digital And Last-Mile: Owning “I Want It Now”

Sephora and Ulta both built omnichannel that collapses the distance between a TikTok “Get Ready With Me” and a bathroom mirror:

• Same-day delivery: Sephora via Instacart and other last-mile partners; Ulta via DoorDash and Instacart, now tied to loyalty accounts for points earning.

• BOPIS/curbside: Standard at Ulta; Sephora emphasizes pickup at standalones and within Kohl’s, which extends pickup geography in suburbs.

• Apps with utility: Both deploy virtual try-on, shade finders, replenishment nudges, and event booking—features that also feed personalization and retail media. (Ulta calls out a major e-commerce infrastructure upgrade in 2024 to support “immersive commerce.”)

Speed is a revenue strategy; so is data density. Every pickup, delivery, and swipe makes the next offer smarter.

Who Shops Where?

Stereotypes oversimplify. Sephora is often shorthand for prestige-leaning, trend-literate, willing to splurge on skincare, artistry brands, and fragrance with a strong service and sampling layer. Ulta stands for value-savvy, cross-category, salon-engaged shoppers blending drugstore favorites with prestige upgrades. The truth is messy—and converging.

What the hard data says:

• At Ulta, most loyalty members (75%) were store-only in 2024; omnichannel members—18% of the base—spend ~3× more than store-only, validating why same-day and BOPIS matter.

• Industrywide, online now captures ~41% of beauty dollars, but prestige discovery still leans into physical retail—especially for fragrance and shade-specific categories.

In short: Ulta owns more everyday beauty missions; Sephora owns more elevated ones. Both are getting better at stealing the other’s trip types.

The DTC Reality Check

The gold rush of 2016–2021 produced a generation of DTC beauty brands built on performance marketing and micro-community. Today, many of those brands graduate to retail for reach and credibility. Glossier’s 2023 move into Sephora was a watershed; Rhode’s 2025 debut cements the pattern. For many DTCs, Sephora’s theater plus Beauty Insider access is the shortest path to national mindshare. Ulta’s advantage is different: it can incubate indie in SPARKED, widen the audience via Target collaborations (through 2026), and pull mass shoppers up into prestige.

M&A, Makeovers, And What’s Next

Ulta’s 2025 acquisition of Space NK signals a deeper push into European-flavored prestige, private-label curation, and international savvy—useful as it contemplates expansion and seeks to rebalance after the Target partnership ends in 2026. Leadership has also framed 2025 as a “transition year”, with investments into e-commerce, wellness, and media to re-accelerate growth.

Sephora is in remodel mode in North America, standardizing a category-first floor set and re-engineering brand gondolas to be easier to update—an operations win that also sharpens merchandising agility. It continues to scale Sephora at Kohl’s beyond 1,100 doors, sustaining U.S. momentum while its global engine keeps humming.

The Duopoly’s Hidden Power: They’re Media Companies

When retailers sell audiences alongside lipstick, they become media platforms. UB Media and Sephora’s retail media operation deliver measurable, closed-loop advertising tied to SKU-level outcomes. In practice this means launch budgets flow through the retailer, not just to Meta/Google/TikTok. That reshapes negotiation: premium placement, sampling, and search visibility are now pay-to-win channels, and the retailers own the targeting. Expect this to keep expanding margins even if unit growth normalizes.

So…Who Really Owns The Beauty Shopper?

Short answer: they share custody.

• Sephora owns the high-intent prestige moment—the place where a DTC star becomes a national obsession, where fragrance is romance, and where “I want the it brand” turns into a haul. Its global scale, Kohl’s suburban reach, and event-driven loyalty economics make it the launchpad for the beauty conversation.

• Ulta owns the everyday beauty habit—the refill plus a salon appointment, the drugstore favorite and a prestige treat, the points you can feel as cash. With 1,445 stores and loyalty that captures ~95% of sales, Ulta has the frequency flywheel most retailers envy.

And both own the future because they built the pipes—same-day, BOPIS, apps, and retail media—that turn viral desire into same-day revenue, then into next-month loyalty. In a channel where trends move at TikTok speed but routines endure for years, that’s what ownership looks like.

Final Take

The rivalry isn’t zero-sum. Sephora and Ulta are converging on an omnichannel, data-driven, media-enabled model that blurs lines between inspiration, transaction, and loyalty. Sephora will keep setting the prestige agenda; Ulta will keep owning the weekly beauty mission. The real question for brands and investors isn’t which retailer wins—but how to use each playbook to win the shopper’s next trip, next launch, and next lifetime value curve.