Popular US-based beauty retailer Ulta Beauty has said that it will delay opening stores in Canada for an expected six months as the COVID-19 pandemic adds uncertainty and sinks the global economy. Ulta Beauty was set to take Canada by storm and disrupt competitors that until recently were seeing tremendous success in this country.
Chicago Business (paywall) last week reported that Ulta had announced that it is halting its 2020 store expansion plans which would have been 75 new stores open this year. Several of those were expected to be in Canada. Last year, former Globe & Mail journalist Marina Strauss first reported that sources had confirmed that Ulta Beauty was looking to open its first Canadian stores in late 2020 or early 2021.
Ulta Beauty has been referred to as the ‘Home Depot of beauty retailers’ with an expansive offering of brands as well as experiential stores. The retailer was founded in Bolingbrook, Illinois, in 1990 by Terry Hanson and Richard E. George, and it has become the largest beauty retailer in the United States. Ulta Beauty is said to be a one-stop shop that offers mass and prestige beauty, skincare, and haircare products in addition to unique services all under one roof; the company’s motto is “All Things Beauty, All in One Place”.
In the United States, Ulta Beauty operates about 1,200 stores and the retailer’s loyalty program boasts more than 32 million members (twice as many as Starbucks).
Last year, Ulta Beauty retained broker Sam Winberg of Retail CND to find space for the retailer’s first Canadian locations. Inside sources subsequently informed us that the retailer was looking for space in Canada and was speaking to some prominent landlords about opening in malls and other high-traffic areas. In the United States, Ulta Beauty is known to operate in suburban locations including in standalone buildings, though the retailer also operates some mall and downtown street front locations.
When it eventually happens, Ulta Beauty’s entry into Canada will result in intense competition for various retailers. That includes LVMH-owned Sephora, which has seen tremendous success in Canada which has resulted in significant market share. Other retailers that will be hit by Ulta will include department stores such as Hudson’s Bay and Nordstrom, and drug store chains such as Shoppers Drug Mart which have been expanding ‘BeautyBoutique’ concepts nationwide.
COVID-19 has resulted in the closure of most stores in Canada temporarily, and it’s unclear when they will reopen. As the number of new confirmed cases continues to rise, governments across the country have mandated that non-essential retail remain closed. It could be weeks or months before retailers open again, and many could end up never opening depending on the financial impact of prolonged store closures.
A prolonged lack of business could sink some retailers offering beauty brands in Canada. At the same time, some beauty brands have also opened standalone stores in Canada. It remains to be seen if the direct-to-consumer trend in terms of brands opening stores will continue in Canada over the next couple of years — the world of retail is changing quickly and consumer habits are also expected to shift.
And if people increasingly work from home and avoid socializing, beauty brands (as well as fashion and other categories) could see reduced sales in Canada which could result in more store closures as well as a halt on further expansions.