Long before Sephora ventured into Canada, there was Shoppers Drug Mart. The homegrown retailer was also a pioneer in merging mass and prestige way before Ulta Beauty entered the market. Countless US drugstore retailers have tried to duplicate its formula.
Shoppers Drug Mart operates more than 1,300 stores (including Pharmaprix, as they are known in Quebec). The store count far exceeds the 100-plus Sephoras and covers most markets across the country.
The assortments in all stores are typically more upscale than US drugstores, and there are 460 doors with elevated shops within stores called Beauty Boutiques. In the early days, Shoppers Drug Mart secured brands not typically sold in the mass market because its stores didn't overlap with department stores or specialty boutiques. Today, the retailer maintains customer loyalty and an upscale ambiance so that brands have no issue existing under a Shoppers Drug Mart roof.
With many significant retailers retreating from Canada, the beauty pie is divided up by Sephora and Shoppers Drug Mart with sprinkles of regional players. Gwennaëlle Varnier, Vice President of Prestige Beauty, points out that beauty is just one component of the assortment in Shoppers Drug Mart. Shoppers Drug Mart also serves large and small markets—often where it is the only location for beauty products. At this point, Sephora is still building up secondary markets.
Shoppers Drug Mart has penetrated the market. Many Canadians live within 10 minutes of a store. The retailer nurtures strong loyalty—many of its shoppers grew up in the retailer’s aisles and shop there as adults today. Seeing the chain's power, Canada’s largest grocery retailer, Loblaw Companies, acquired Shoppers Drug Mart in 2014.
A distinguishing factor is that local pharmacists own and operate most stores through the retailer's Associate Concept. That opens the door for stores to cater to local market preferences. Shoppers Drug Mart is first and foremost a healthcare provider, but under the direction of Varnier, beauty is gaining prominence. Since she joined in 2019 from France, the category has posted double-digit year-over-year sales. Varnier brings rich experience to her role gleaned from Teoxane Laboratories, Clarins, Dufry Group, and Amorepacific. Varnier continues to prove that pharmacies can be meccas for beauty.
Shoppers Drug Mart is famous for its loyalty program, PC Optimum, which has over 16 million active users (roughly half of the population of Canada). According to Varnier, members earn points on every dollar they spend in any category. “But when they redeem their points, beauty is one of the most popular categories,” she says.
The retailer’s beauty advisors are social stars with their own handles on platforms like TikTok and Instagram. “They are experts in the field. We send them boxes of new products and they decide what they want to talk about. It is very authentic. Some people drive more than two hours to go to someone they saw on social media,” says Varnier.
Not only are the beauty advisors trusted resources, they are also brand agnostic in recommendations. “We give the same amount of love to all our brands,” she says. Varnier says there is a low turnover of its in-store beauty experts—some have been with the retailer so long that their daughters are now sales associates. "They go through all the training with our brands, and they've acquired a lot of knowledge in skincare and fragrances and know how to find the right fit for the customer.”
The merchandise mix is tailored for market needs across Canada's 10 provinces. In its busy metropolitan areas, Shoppers Drug Mart offers its Beauty Boutiques, which feature elegant black fixtures and brands including Chanel, Christian Dior, Clarins, and Lancôme. The smaller-market stores sport an open-sell concept with mid-range brands like Mario Badescu, Florence by Mills, Clinique, and Benefit.
Varnier says Shoppers Drug Mart just launched Kiehl's, which is the country's fourth-largest skincare brand. She hopes it will appeal to a wide audience, especially men. The retailer commands more than 75% of the men's market, according to Varnier.
Canadians are enthusiastic beauty shoppers. “Canada is a skincare-first market. That’s why derm [dermatologist-supported or professional quality] is so important in this country. We over-index in skincare sales," Varnier says. That strength in skincare translates into the popularity of premium brands like Clarins and Lancôme.
Even before the fragrance sales spurt over the past two years in the US, Shoppers Drug Mart had a robust business in premium scents. Sales are growing double-digit, and Varnier estimates the retailer commands a 50% market share. The assortment is a well-thought-out mixture of legacy and emerging brands, including Puig’s iconic Carolina Herrera and Paco Rabanne 1 Million, as well as scents to attract younger shoppers, like Billie Eilish Eau de Parfum. "We do see there is an appetite for niche brands," she adds, highlighting the recent addition of Aqua di Parma and Hermès. "We are an EDP versus an EDT market.”
Hair is an emerging category for Shoppers Drug Mart, and Varnier pushed to get more footage and premium brands. "When I arrived in 2019, it was a no-brainer that we need more haircare," she says. One of the driving trends behind category growth is the skinification of hair, with consumers adapting several steps to ensure their tresses are healthy. The retailer has doubled its space for products for textured hair and expanded scalp care. Virtue and Pattern are two brands in the expanded offer available in about 125 stores and online.
Mirroring trends in America, makeup sales are also perking up as consumers restock supplies. Beyond legacy brands, Shoppers Drug Mart features emerging brands, especially those leaping from direct-to-consumer to retail. Shoppers Drug Mart sells Kylie Cosmetics, which Varnier says is a huge shopper draw in skincare and makeup and helps attract younger customers. The retailer's exclusive Quo Beauty brand is also geared toward a younger audience and includes more than 200 eye, lip, and face products.
Varnier is always on the lookout for new brands. "We try to be strategic. We tend to go out for the brands rather than them coming to us.” Leveraging her French heritage, she has her ear to the ground on what is happening in Europe and the US. “Canada is not always the first market where brands launch,” she says, citing dual language and Canada’s strict regulations under Health Canada. “I stay close to the market and see brands that are little nuggets I can bring to our shoppers,” she says.
Clean beauty has become a standard, she says. To help customers navigate what can be a confusing category, the retailer has a program called Thoughtful Choices at Shoppers Drug Mart.
A good founder story backed up with results catches Varnier's eye the most. One example is a Canadian brand called Evio, which was created by a woman living in a shelter to escape domestic violence.
“Your story should be clear. Being purpose driven is important. How will your brand attract shoppers? Once the story has captured the customer, you have to show up in efficacy. If you have a nice story but it doesn’t work, you are not going to get repeat sales,” she says.
2 Article(s) Remaining