2. Ulta Beauty x Toronto
Prepared for: Paul Gillespie
Presented by:
Taylor Budd
Elizabeth Keary
Julie Marchionda
Natalie Rendall-Gonsalves
Taylor Squires
Due: November 29th, 2016

4. TABLE OF CONTENTS
Company Overview 1
Executive Summary 2
Market Overview 3
Product/Service Offerings 4
Services Menu 5
Channel Strategy 6
Situation Analysis 7
PEST Analysis 8
Marketing Objectives 9
Marketing Strategy 9-12
Communication Strategy 13
Public Relations Strategy 13
Market Analysis 14
Sales Forecast 14
Market Share 14
Contingency Plan 15
Works Cited 16-17

5. COMPANY OVERVIEW
Founded by Terry Hanson and Richard E. George
in 1990, Ulta Beauty is the largest beauty retailer
in the United States and one of the top premier
beauty destinations for cosmetics, fragrance,
skin, hair care products and salon services (Ulta
Beauty 2016). Described by their executives as
the “Home Depot for women,” Ulta Beauty has
built its reputation as the top national retailer by
providing more than 20,000 products from over
500 well-established and emerging beauty brands
across all categories and price points, including
Ulta Beauty’s own private label (Ulta Beauty 2016).
In addition to its wide array of products available
both online and in-store, Ulta Beauty prides itself
on providing All Things Beauty, All in One Place™
by including a full-service salon in every store
featuring hair, skin, nail, and brow services (Ulta
Beauty 2016).
Ulta Beauty combines retail stores, salon services,
and e-commerce into one reportable segment
(Vault 2016). In 2013, Ulta opened 125 stores
in the United States (New York Times 2014).
Today, it operates 928 retail stores across 48
states and plans to grow its US stores network
to approximately 1200 by 2019 (Ulta Beauty
2016). As mentioned in their annual report, Ulta’s
e-commerce business represents approximately
6% of their total sales and grew 47.5% in fiscal
2015. The retailer’s long-term goal for Ulta.com is
to increase their e-commerce business to 10% of
total sales by continuing to enhance the site with a
collection of tips, tutorials, and social content (Ulta
Beauty 2015).
One of Ulta Beauty’s most valuable assets is its
customer loyalty program and CRM platform:
Ultamate Rewards (Ulta Beauty Annual Report
2015). In 2015, Ultamate Rewards reached 18.2
million active members by year-end and accounted
for approximately 80% of the company’s sales
(Ulta Beauty Annual Report 2015). Ulta’s loyalty
program allows consumers to earn and redeem
points on all product purchases. Ultamate Rewards
also gives consumers the opportunity to receive
free gifts on their birthday, get additional points by
signing up for email alerts and by making specific
purchases. By leveraging their loyalty program
in ways that proved to be more personalized
and effective, Ulta Beauty was able reduce their
spending on less productive promotional tactics
and focus on developing stronger targeted email
and direct mail campaigns, exclusive offers for
heavy users and programs to drive trial of new
products (Ulta Beauty Annual Report 2015).
Ulta Beauty’s dedication to product innovation,
exceptional service offering, and convenience has
allowed the US retailer to continuously succeed
in a highly saturated market. Ulta Beauty hit a
company milestone when it made $3.92 billion in
revenue in 2015 (Vault 2016).
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6. EXECUTIVE SUMMARY
When entering the Canadian market, Ulta Beauty will be competing in the premium
beauty industry, the mass beauty industry, and the salon service industry. These
industries are expected to experience a significant amount of growth within the
next five years (Passport 2016). In 2015, the Canadian premium beauty industry
generated 2.78 billion with an expected growth to 3.2 billion by 2020 (Passport
2016). The mass beauty industry generated 5.24 billion and is expected to grow
to 5.4 billion (Passport 2016). Lastly, the hair care industry generated 1.63 billion
with an expectancy to grow to 1.68 billion by 2020 (Passport 2016).
2
Photo courtesy of Google
Recognized for its commitment to personalized service, inviting and interactive
locations, and its industry leading customer loyalty program, Ulta has redefined
what it means to shop for beauty. With a 21.1% increase in sales in 2015 to $3.2
billion, the US beauty retailer continues to plan to grow their operations (Ulta
Beauty Annual Report 2015).
By expanding into the Canadian market, Ulta Beauty will be competing against
three major competitors: Shoppers Drug Mart, Sephora, and Walmart. Although
the market in Canada is not overly saturated for speciality beauty retailers, it is
paramount to note that these competitors operate on a large scale and have very
strong loyalty among their Canadian consumers. In order to be successful, it is
crucial that Ulta Beauty uses calculated marketing objectives and strategies to
position itself in the same way that made it the leading beauty retailer in the US:
All Things Beauty, All in One Place™.
Ulta Beauty will aim to achieve two main marketing objectives when it expands
into the Canadian market. The first is to create brand awareness by introducing
Canadians to the Ulta Beauty experience through highlighting its unique value
propositions such as its vibrant e-commerce platform, product variety, and the
combination of product and salon services in one convenient location. The second
is to gain a 2.0% market share in the Canadian speciality beauty market by 2023.
To fulfill these objectives, there will be the launch of a pop-up shop in the Square
One Shopping Center in Mississauga three months prior to the official launch of
Canada’s first Ulta Beauty location which will open in the surrounding area of the
Square One Shopping Center to fit within Ulta’s standard signature location style
- convenient, high-traffic locations that allow for 10,000 square feet of stand alone
space. In order to maintain hype, desire, and anticipation, the company will utilize
partnerships with Canadian beauty influencers, exclusive products offering, and
advertising through a mediums such national TV, radio, and digital advertising.
According to Ulta Beauty’s annual report, the average Ulta location produced
$450 USD per square foot in 2016, which is $607 CAD. With the average location
being 10,000 square feet, it is estimated that the location at Square One Shopping
Center in Mississauga would generate $6,070,000 in sales within its first year.
MARKET OVERVIEW

7. To put it another way, the premium beauty and personal care industry will grow in value by 27.35%
within the next five years while mass beauty and personal care will grow in value by 14.1% (Passport
2016). In terms of volume, it is difficult to calculate and project an accurate amount due to the number
products that are sold within the industry. However, it was found that Canadian women on average
purchased 61.7 units of beauty and personal care in 2015 (Passport 2016).
According to the NPD Group, the beauty and cosmetic industry in Canada is amongst the highest
performing globally at 35 percent of the country’s sales (NPD Group 2014). In fact, it was found that one
in 10 Canadians said that they would be willing to cut back on other spending in order to spend more
on beauty products (NPD Group 2014).
COMPETITORS
In the US, Ulta Beauty has a multitude of major competitors
due to the fact that they operate in not only the beauty
product industry but also in salon services – a market
that represents approximately $127 billion USD in sales
according to Euromonitor International and IBIS World
Inc. (Ulta Beauty Annual Report 2015). In their annual
report, Ulta Beauty notes that their major competitors for
prestige and mass products in the US include traditional
department stores, specialty stores, drugstore, mass
merchandisers and the online businesses of national
retailers (Ulta Beauty Annual Report 2015). As for salon
services, their main competitors include chain and
independent salons.
In 2015, the retail sales of premium beauty, mass beauty,
and hair care generated approximately 9.65 billion
Canadian dollars (Passport 2016). Looking at Ontario
specifically, it is notable that 56% of consumers said that
they shop at Shoppers Drug Mart regularly for beauty
shopping while another 52% said Walmart (Statista 2016).
It is also important to consider that Sephora was among
the leading beauty retailers for customer satisfaction in
Canada (Statista 2016).
By expanding Ulta Beauty into the Canadian market and
even more specifically, into Toronto, it is evident that
Ulta’s three major competitors would include: Shoppers
Drug Mart, Sephora, and Walmart. Walmart and Sephora
represent the two ends of the cosmetics pricing spectrum,
with Walmart offering more low-cost options and Sephora
offering the premium luxury brands. These retailers hold
24% and 12% of the market share, respectively (Vividata
2016). The combination of Shoppers Drug Mart’s product
offering and Canada’s loyalty to the retailer makes
Shoppers Drug Mart the primary competitor. Shoppers
Drug Mart also dominates the market for beauty and self
care in Canada, holding 34% of the market share (Vividata
2016).
3
Market Share in
Canada
24%
12%
34%

8. TARGET MARKET
Ulta Beauty prides itself on being “your one stop beauty shop.” The beauty retailer carries products from
a variety of price points that are designed to meet the needs of all consumers. From anti-aging skincare
to ethnic hair care, Ulta Beauty’s dedication to product and service variety enables the company to
target many segments within the beauty market. However, when expanding into the city of Toronto, it is
important to understand these segments in order to better grasp who the overall target market is.
According to Vividata, 22% of females aged 18-24 and 19.8% of females aged 12-17 report purchasing
cosmetics in the last 30 days (Vividata 2016). In terms of income, 64% of women who earn an income
between $25,000 and $49,000 report purchasing cosmetics in the last 30 days (Vividata 2016).
The psychographics of our target market is made up of consumers who are lovers of all things beauty
and who have an appreciation for excellent customer service, value and convenience. Our target
market has a good amount of disposable income and above-average knowledge of beauty products.
The majority of our target market falls under the “Comfortable apartment dwellers”, which make up
11.24% of Canadian households, or the “Up the ladder” cluster, which make up 16.62% of Canadian
households (SuperDemographics 2016).
According to SuperDemographics, comfortable apartment dwellers are more concerned with
convenience than they are with price. This cluster includes a high percentage of females who have
a good disposable income and aren’t afraid to spend money. Up the ladders spend a lot of money
on cosmetics. They enjoy being extravagant, but they think that no-name brands are just as good as
name brand products. This cluster is the hybrid of luxury and value, making them the ideal Ulta Beauty
consumer (SuperDemographics 2016).
PRODUCT/SERVICE OFFERINGS
Ulta’s product and service offerings will remain consistent with those offered in the United States. This
consists of all of their makeup products including their exclusive makeup lines and collaborations, their
hair and eyebrow bar as well as their dermatological services. Ulta carries a mixture of mass market
and premium beauty products with a wide price range that is accessible to many different income
levels. Products offered include, but are not limited to, foundation, mascara, concealer, eyeliner, eye
shadow, etc. The variety of products is complemented by the unique, high quality hair, eyebrow, and
dermatological services, which are not offered in this combination by any other beauty retailer.
Another key service offering that is critical to Ulta is their Ultamate Beauty Rewards Program. The
program provides Ulta Beauty customers with the opportunity to earn points on all purchases, redeem
points for products, and receive birthday gifts every year differentiating it from that of Sephora where
you can only redeem deluxe samples with points. In addition, the Ultamate Beauty Rewards program
includes a tiered system based on how much a customer spends giving them more opportunity to earn
points, which differentiates it from the Shopper’s Drug Mart loyalty program.
4

9. 5

10. Ulta Beauty’s primary channel strategy involves the use of their e-commerce platform. In their 2015
annual report, Ulta stated that Ulta.com serves two roles: to generate direct channel sales and to
communicate with consumers in an interactive, enjoyable way that reinforces the Ulta Beauty brand
and drives traffic to their stores and website (Ulta Beauty Annual Report 2015). The reason for their
heavy focus on e-commerce is due to the value of omni-channel consumers. It is reported that Ulta
Beauty’s omni-channel consumers spend two to four times as much as single channel consumers (Ulta
Beauty Annual Report 2015).
Ulta in Canada will begin with a conservative number of brick and mortar stores, starting with only one
in the GTA the at Square One Shopping Centre in Mississauga. The remainder of product distribution
will be done through online shopping on the Ulta website. The brick and mortar stores are critical to the
high quality of customer service that Ulta currently offers, as well as maintaining the customer shopping
experience. However, keeping the location number low will serve to slowly and steadily enter the
Canadian market and avoid over-saturation of locations and under-performance of individual location
sales.
CHANNEL STRATEGY
6
Ulta has chosen to invest and focus in building their order fulfillment
capabilities, which has resulted in increased capacity, faster order
and delivery time, enhanced consumer shipping communications
and improved overall order quality (UIta Beauty Annual Report 2015).
Photo courtesy of Google

11. - Brand awareness is limited as compared to
some global cosmetic brands
- High market saturation forcing individual
companies to have smaller market shares
- Serving underserved suburban areas has the
tendency to take away from larger locations in
bigger cities
SITUATION ANALYSIS
- Wide range of products
- Vibrant E-Commerce platform
- Differentiated salon offerings
-Loyalty program and CRM
-Exclusive products/brands
-Specialty hair and brow bar
- Large stores - average of 10,000sqft
- Strong supply chain management
- Strong partnership with vendors
- Locations in both urban and suburban areas
- Apple Pay and PayPal
- Dermatological services including
microdermabrasion and facial peels
STRENGTHS
WEAKNESSES
OPPORTUNITIES THREATS
-Constant innovation
- Online shopping base, even for city
dwellers
- Launch Canadian app
- Growing market for health and beauty products
- Exclusive collaborations strictly for Canadian
stores
- Exchange rate
- Potential changes to NAFTA under Trump
Administration
- Fast changes in beauty and hair trends
- Minimum wage in Canada vs. the US
- Large range of substitutes available (lots of
competitors)
7

12. PEST ANALYSIS
POLITICAL
With the recent changes in American politics and the possible amendments of the NAFTA Trade
Certificate, there could be issues with getting product from the United States into Canada.
Additionally, in our launch province of Ontario, the provincial government has announced students
do not need to pay back student loans until they are making $25,000 annually. This new legislation
could translate into additional disposable income for a segment of our target.
ECONOMIC
With the exchange rate and the worth of the Canadian dollar it may be hard to be able to offer the
same low and affordable prices in Canadian stores as they offer in the States. With the recent
minimum wage increase in Ontario, there is potential for more spending power if Ontarians are
earning more money.
SOCIO-CULTURAL
Canadians love loyalty programs; the Shoppers Optimum program is one of the most successful
with a new member estimated to join every 23 seconds (Shoppers Marketline Report). Ulta has an
excellent loyalty program, wherein the members of the program account for 80% of the company’s
sales. The rise of beauty gurus and influencers on social media also contribute to the popularity of
Ulta. Without the vast network of social media influencers, many consumers may not even know that
Ulta exists, let alone what the company has to offer.
Cosmetic trends in Canada, such as bold eyebrows and contouring, are on the rise. In 2016, eyebrow
makeup sales grew by 42%, and face makeup sales grew by 50% (Statista 2016).
TECHNOLOGICAL
Growing popularity of online shopping will benefit shoppers who wish to purchase from Ulta, but
are not close to the proposed location. In addition, the rise of beauty-related apps presents to be
an opportunity for Ulta in Canada. We believe it would be a wise decision for Ulta to implement
technology to be utilized by shoppers in-store, to compete with Sephora’s Color and SkincareIQ
systems, as well as their new TIP stores.
“We’re opening 100 stores a
year, setting the right investor
expectations, and offering a great
experience to discover beauty for
those who love beauty” - CEO,
Mary Dillons
8
Photo courtesy of Google

13. MARKETING OBJECTIVES
Upon entering the Canadian market, our first objective is to create brand awareness by introducing
Canada to the Ulta experience: convenience, interactivity, product variety, and the offering of product
and salon services in one location. The goal is to highlight these unique value propositions while also
focusing heavily on the company’s vibrant E-Commerce platform. Enabling customers to understand
what the Ulta experience entails will be critical to breaking into the highly competitive cosmetics
market in Canada.
Our objective is to take 2% of the market share in Canada by 2020, factoring in the introduction of
more stores in our target areas. These target areas would include the suburbs surrounding major
cities in Canada including: Vancouver, Montreal, Edmonton, and further extension to the Greater
Toronto Area. These increased sales over five years, in addition to online sales to service the rest
of Canada will help to reach our target of 2% market share, provided that our flagship store is
successful.
According to Ulta’s most recent annual report, individual stores bring in about $450 USD per square
foot of store space per year (Ulta Beauty Annual Report 2015). Our ideal store size is roughly 10,000
square feet, which would equal to approximately $607 CAD per square foot of store space per year,
or $6 million annually. E-commerce will also play a major role in terms of sales in Canada, in order
to offset the initial lack of physical stores. According to Statisa, the volume of the Canadian makeup
market increases at an annual average of 0.9% and is estimated to reach 61.7 million units in 2018
(Statisa 2016). Therefore, if we are to reach our objective of 2% market share in five years, Ulta’s
units sold in Canada will reach an estimated 1.28 million by the year 2023.
MARKETING STRATEGY
9
PRODUCT
The overall success at Ulta can be attributed to their offerings of innovative and exclusive
products. In the United States, Ulta currently offers over 20,000 products from approximately 500+
well established brands both in-store and online. In the past year the company has included an
additional 26 brands, further developing their relationships with brand partners to promote exclusive
merchandise (Ulta Annual Report 2015). These products are presented in an assisted self-service
environment using centrally produced planograms and promotional merchandising planners (Ulta
Beauty Annual Report 2015).
When entering the Canadian market, a high emphasis is going to be placed on the exclusive brands
that are only available through Ulta. Some of these top performing brands include: IT Cosmetics,
LORAC, Mario Badescu, Laura Geller, and
Mally Beauty with the majority of these brands
offering exclusive products and promotions
that are only available through Ulta. These
exclusive products and promotions like the
LORAC Pro Conceal/Contour Palette and
Brush or the IT Cosmetics Je Ne Sais Quoi
Perfect Pink Duo are going to be positioned
directly against the top-selling products that
Canadians have had access to for years
through Ulta’s competitors. This marketing
strategy will enable Ulta to position itself as
the leader of beauty in Canada as well as the
top destination for new and exclusive product.

14. Another product strategy that will be used to place Ulta at the top of beauty industry in Canada is
its full-service salon that offers a multitude of services ranging from hair to skin to nails, and even
eyebrows. Important messages that will be advertised along with these services include Ulta’s major
partnerships with Rodney Cutler of Redken, Dermalogica and Benefit (Ulta Annual Report 2015). In a
typical Ulta salon, there are eighth to ten licensed salon professionals, including a salon manager, six
stylists and one to two estheticians (Ulta Beauty Report 2015). With the convenience, quality, pricing
and brand recognition that is offered through the Ulta Salon, the company will be able to position itself
in the way that made it such a success in the US: All Things Beauty, All in One Place.™
PRICE
A fundamental aspect of Ulta’s business success is the variety of both mass and prestige products.
This makes Ulta more affordable for customers regardless of their income level. The variety of price
allows for customers to choose how much they are willing to spend on any given product. This pricing
strategy gives freedom to the customer, which leads to stronger customer loyalty. It is also notable
that Ulta Beauty will continue utilizes the use of coupons and will offer an entire section dedicated to
savings on the Canadian website to match what is already being done in the US.
Ulta as a beauty retailer values their guest loyalty and therefore has a well-known and established
customer loyalty program and CRM platform: Ultamate Rewards. There are over 18 million Ulta
Beauty guests who are active members of the program. This database is crucial to understanding
customers’ purchasing patterns and transaction data, which leads to stronger pricing and targeted
marketing for the company. The implementation of this loyalty program will be extremely important in
Canadian locations. The membership is free and is one of the company’s most valuable assets as it
helps increase sales per member, prevalence of purchase as well as the average ticket. In order to
promote this loyalty card in Canada, Ulta will be offering double the points during the first weekend of
the flagship store’s grand opening.
10
Examples of Prices:

15. PLACE
We propose that the first Ulta location in Canada be at the Square One Shopping Centre in Missis-
sauga, Ontario. According to the Oxford website, the property management company for Square One,
73% of the centre’s shoppers are female. On average, a shopping trip to Square One is 84 minutes
in length (Oxford Properties Group 2016). This is ideal as women occupy the largest segment
of Ulta’s target market. In accordance with our proposed target market, the area surrounding
Square One boasts 14.95% of people in the “Comfortable Apartment Dwellers” cluster, and 10%
of people in the “Up The Ladder” cluster (SuperDemographics 2016). Though we plan to cater to
those particular targets, Square One’s geographic location encompasses sizeable percentages
of the following clusters: Affluents, Ethnic Cruisers, Elite Professionals, and Buy Me A New Home
(SuperDemographics 2016).
Currently in the United States, Ulta’s stores are predominantly located in convenient, high-traffic
locations such as power centres and Smart Centres. Ulta locations are approximately 10,000 square
feet, dedicating about 950 square feet to their full-service salon (Ulta Annual Report 2015). In the
US, approximately 98% of Ulta stores feature the most current store design. The locations that open
in Canada will need to uphold that reputation with continuing to enhance their stores and boutique
additions (Ulta Annual Report 2015).
11
Proposed Location: Square One Shopping Centre
PROMOTION
In order to get Ulta’s marketing messages across to the potential Canadian target market, many
techniques will need to be implemented. As an existing retailer entering the Canadian market, it is
crucial to reach the audience through the use of digital advertising, national and local TV as well as
through the press. By reaching all of these particular mediums, it will create excitement for previous
customers and provide enough information to create an interest for those who are not already familiar
with the company.

16. Ulta Beauty has establish a large following on their Facebook, Instagram and Twitter accounts.
Continuing in this success, it would be beneficial to operate Canadian versions of these social media
accounts to reach new audiences. By interacting with Canadian consumers directly, the company
can answer any questions regarding the launch of Ulta Beauty in Canada, and begin to establish
relationships with Canadian consumers.
One of the promotional tactics Ulta will implement is the pop-up shop. The outside of the store will
be the classic Ulta orange with the text, “Ulta x ?” in white. The promotion for the pop-up will be
minimal; a few tweets and Instagram posts will suffice. We intend to create buzz by word of mouth
within Toronto’s beauty community to ensure our target is aware of the pop up shop and will be in
attendance. This tactic is used to create excitement and awareness of Ulta Beauty. Ulta will also be
using other promotional tactics like billboards, ads in subway stations and on public transit, and a
partnership with Glow Magazine for the launch of the freestanding, brick and mortar store.
Lastly, Ulta will be teaming up with local Toronto beauty guru/vlogger, Tasha Leelyn, to help
create more buzz and help with word of mouth promotion. Tasha has over 400 thousand YouTube
subscribers, 26 million views, and has done promotional work for CoverGirl, MuchMusic, Bite Beauty,
The Body Shop, and other large brands. She has also worked with celebrities such as Ellie Goulding
and Hayley Williams and has done events like We Day as well as the movie premier of Star Wars:
The Force Awakens in California.
12

17. COMMUNICATION STRATEGY
Ulta’s marketing communication strategy will, for the most part,
remain consistent with their strategy for the United States, in
order to maintain a strong, differentiated brand identity. The aim
is to position Ulta as an authority of cosmetics, beauty, and self
care products. Ulta Beauty heavily invests in communication
through television, radio, and digital advertising to entice new
customers, and to remind existing customers the benefits and
advantages of shopping with them. (Ulta Beauty Annual Report
2015)
It is important to utilize digital channels to reach our target
market, because this is the main method of communication for
the growing beauty community, particularly beauty influencers.
This includes social media marketing, digital marketing, search
engine optimization, and email campaigns. Additionally, our
most valuable resource is the data collected in our CRM from
customers enrolled in our loyalty program. These 18 million
customers that actively use the loyalty program generate more
than 80% of Ulta Beauty’s annual total net sales (Ulta Beauty
Annual Report 2015). With that being said, the expansion of this
program into Canada will help ensure continuing sales from the
majority of shoppers at Ulta.
Ulta will develop the marketing strategy for Canada based
on the aforementioned factors. In addition, they will aim to
create campaigns that specifically target Canadian shoppers.
Special promotional campaigns like a pre-launch pop up
store, collaborations with beauty influencers and YouTuber
Tasha Leelyn, magazine advertisements in Glow Magazine,
advertisements in high traffic areas such as on the TTC and at
the Yonge-Dundas Square will all work towards launching Ulta
Beauty into the Canadian market. Continuing promotion will
mainly consist of digital marketing, the loyalty program, shopping
events such as Black Friday and Cyber Monday as well as
various other coupons consistent with Ulta in the US.
13
PUBLIC RELATIONS STRATEGY
In terms of public relations strategy, Ulta needs to remain consistent with what they have already put
into place. In the US, Ulta Beauty has a comprehensive public relations strategy that enhances the
company’s reputation as a beauty destination, increases brand awareness, and drives awareness of
new products, in-store events, and new store openings (Ulta Beauty Annual Report 2015). Ulta Beau-
ty is known for its transparency, which gives them an additional advantage over their competi-tors.
Another critical part of Ulta’s public relation strategy involves their charitable efforts on behalf of The
Breast Cancer Research Foundation, something that is very personal for many Canadians and Ameri-
cans alike. Since 2009, Ulta Beauty has raised more than $14 million USD for breast cancer research
through their formal fundraising campaign: A Gorgeous Way to Give (Ulta Beauty 2016).

18. 14
MARKET ANALYSIS
Although the market for beauty and personal care in Canada is not overly saturated, Ulta’s three
major Canadian competitors who have strong customer loyalty are currently dominating it. Altogether,
Shoppers Drug Mart, Walmart, and Sephora make-up approximately 70% of the beauty and personal
care sales in Canada (Vividata 2016).
It is evident that starting the Canadian expansion by opening a single flagship store at the Square
One Shopping Center in Mississauga, Ulta Beauty’s share of the market will be somewhat low until
further expansion can be done and until their Canadian E-Commerce platform can grow. However,
the makeup, hair, and skincare industries totalled $9.65 billion Canadian dollars in 2015 and have an
expectancy to steadily grow over the next five years (Passport 2016). With no news of other global
competitors trying to enter the Canadian market, it is evident that Ulta not only has the chance to
enter and be a viable competitor but also has a strong industry to compete in.
SALES FORECAST
While Ulta now has over 900 stores in the United States, growing from less than 200 in 2013, Ulta’s
entrance into the Canadian market will begin rather conservatively in order to effectively judge the
reaction of consumers to the new retailer (Ulta Beauty 2016).
If Ulta’s sales in Canada are consistent with individual store sales in the United States, the flagship
store should generate just over $6 million CAD in sales in the first year (Ulta Beauty 2016). To break
that number down: the average Ulta location produced $450 USD per square foot in 2016, which is
$607 CAD. The flagship store at Square One Shopping Center will be approximately 10,000 square
feet generating $6,070,000 (10,000 x $607) in sales within its first year.
According to the Government of Canada’s Industry Statistics, Cosmetics, Beauty, and Perfume Stores
see an 8.8% increase in operating revenue every year on average. With that figure in mind, the
following chart will forecast the annual sales of the Ulta Beauty flagship location:
Year Account Increase Annual Sales Forecast
2018-2019 $6,070,000
2019-2020 $534,160 $6,604,160
2020-2021 $581,166 $7,185,326
2021-2022 $632,308 $7,817,634
2022-2023 $687,951 $8,505,585
MARKET SHARE
In the United States, Ulta Beauty currently holds 4% of the $127 billion US beauty market (CNBC
2016). The market for beauty in the United States versus the market for beauty in Canada are quite
different, however. The beauty market in the United States is far more saturated than the market
in Canada, which is dominated by a few strong leaders. It is also worth noting that the beauty
industry in Canada is worth only a fraction of that, approximately $9.65 billion CAD (Passport 2016).
Therefore, based on projected sales going into 2023, it can be estimated that Ulta’s flagship store
alone will hold .001% market share. This does not even take into account the potential opening of
more locations. If Ulta were to open five more stores by 2023, that would increase Ulta’s market
share by 25%. The key to increasing market share is demonstrating that Ulta provides a completely
unique shopping experience from the current giants that dominate the beauty market in Canada.

19. 15
CONTINGENCY PLAN
Despite the fact that the beauty industry is growing annually, there are still certain risks that could
threaten the success of Ulta Beauty’s expansion into the Canadian market.
Shoppers Drug Mart is Ulta’s primary competitor in terms of market share, product range, and re-
ward programs. Currently, Shoppers Drug Mart holds approximately 34% of the market share for
beauty and personal care shopping in Canada in the past 30 days and has one the strongest loyalty
programs in Canada (Vividata 2016). That said, although Ulta’s reward program is extremely suc-
cessful in the US, there is a risk that Canadians will not respond as well to it due to their loyalty to
Shoppers. The impact of this risk would be that Ulta would be unable to carve out as big of a space
in the beauty and personal care market as expected. As a result, it is crucial to implement strong
marketing strategies to help consumers understand the benefits of the Ulta experience. These bene-
fits pertain but are not limited to: product range, unique dermatological and salon services, exten-
sive opportunities to earn points and receive gifts. Essentially, communicating the message to con-
sumers that Ulta Beauty offers more than Shoppers Drug Mart in beauty, personal care and salon
services.
The success of Ulta in Canada could also be affected by the exchange rate from USD to CAD. The
Canadian dollar has been in flux for the past several years and has remained below par. The politi-
cal climate in the United States is also cause for concern due to the potential changes to NAFTA. For
many American companies, the deciding factor of their success in Canada has been the ability to
bring the financial savings that American consumers experience to Canadians. Unfortunately, the fate
of trade agreements and the value of the dollar are out of corporate control.
There are other various market risks against the success of Ulta including fast-changing beauty
trends and the variances in the buying power of consumers. For the most part, these are typical
market risks that are out of the control of individual companies. aside from maintaining brand
awareness, and attempting to provide the best value for customers.

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