Mike Maresca, chief technology and transformation officer at Ulta Beauty, is coming off the high of completing an IT-led modernization project that cost tens of millions of dollars. Next on his plate is expanding the company’s adoption of artificial intelligence, including agentic AI.
“We had to really rethink and modernize our core systems,” says Maresca. “We believe it is powering the omnichannel retailer that we want to be, particularly as we make sure that the inventory is in the right place at the right time for our guests.”
Known as Project SOAR (short for “strengthen, optimize, accelerate, and renew”), the recently-completed, multi-year initiative is described as the most significant IT-led overhaul in the company’s 35-year history. Maresca’s team replaced older SAP legacy systems with new ones that are said to better manage inventory including providing more detailed real-time supply chain data.
Omnichannel retail unites shopping across stores, online, mobile, and social media—ideally creating as little friction as possible for customers despite the increased complexity. The expectations of shoppers has also gotten higher: The brands they want, including the buzzy upstarts they see online, must always be available. Sometimes shoppers want products shipped directly to their homes, but also desire the option to buy online and pick up in stores, or place orders through Ulta’s external delivery partners like DoorDash and Instacart. And then of course, Ulta has to maintain and present beauty and cosmetic products pristinely in physical stores.
“You have to know what’s in the store because you can offer it to your guest,” says Maresca. “We were not up to the minute like we are now. It was very hard to meet the guests’ needs.”
Ulta rolled out SOAR in three phases beginning with corporate functions, before moving to the company’s seven distribution centers, and then last year, finally reaching more than 1,400 stores. Maresca says the push will better equip Ulta Beauty as it expands in Mexico and the Middle East later this year.
Investing in technology to better manage inventory will play a critical role for the retailer during what CEO Kecia Steelman has acknowledged will be a transition year. Last year, Ulta lost market share in the beauty category and in response, is accelerating efforts to bring newer brands into the store and launch an online marketplace to expand offerings to e-commerce shoppers.
Steelman, who was promoted from COO to CEO in January, has already made several C-suite changes, including elevating Maresca from chief technology and information officer. Before joining Ulta in June 2023, he spent nearly three years as chief technology officer at drugstore retailer Walgreens Boots Alliance and 25 years at professional services company Accenture, where he mostly focused on retail clients.
When it comes to generative AI, Maresca says Ulta’s internal use of the technology is skyrocketing through the use of tools like Google’s software coding assistant, Gemini Code Assist, and a test of Microsoft’s Copilot chatbot. “IT is well into its adoption and we’re seeing about 25% to 30% improvement in terms of productivity,” he says of the AI coding tool. “I think any CIO would sign up for that.”
He’s also excited about the potential for agentic AI. Already, Maresca is exploring how AI agents could more efficiently elevate tech help requests from stores, such as when a printer goes down or there’s a networking issue. He’s also excited about agentic AI’s potential to perform tasks in distribution centers, including moving orders across Ulta’s network.
Maresca created an internal AI Center of Excellence, which pulled together experts from across the organization including AI and machine learning engineers to improve business functions and to develop new technology. The hope is that members of the team can get in touch with each business function—sales and marketing, finance, and supply chain, for example—and present generative AI ideas that will resonate with those teams and improve how they work.
In addition to the AI hyperscalers Ulta is working with, another key partnership is with software company Adobe. The goal is to work together to leverage the data of Ulta’s 44.6 million loyalty program members and present them with more personalized marketing messages.
While the project is still fairly new, Ulta wants to generate unique images and text so that shoppers who visit the company’s website or app will see a mix of goods based on their past history along with the products that Ulta wants to pitch. Generative AI tools can make it easier to create more of that personalized content.
Today, all of Ulta’s loyalty shoppers are put into four buckets, but Maresca hopes to make those segments more detailed in the future—but only up to a point. “I don’t think it’ll be 44 million segments, but that is the high-level goal,” says Maresca.
John Kell
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This story was originally featured on Fortune.com
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