Ulta Beauty x Toronto

Prepared for: Paul Gillespie

Presented by:Taylor Budd

Elizabeth KearyJulie Marchionda

Natalie Rendall-GonsalvesTaylor Squires

Due: November 29th, 2016

TABLE OF CONTENTSCompany 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

COMPANY OVERVIEWFounded 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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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).

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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

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).

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Market Share in Canada

24%

12%

34%

TARGET MARKETUlta 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 OFFERINGSUlta’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.

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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

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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

- 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)

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PEST ANALYSISPOLITICALWith 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.

ECONOMICWith 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-CULTURALCanadians 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).

TECHNOLOGICALGrowing 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

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Photo courtesy of Google

MARKETING OBJECTIVESUpon 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

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PRODUCTThe 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.

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.™

PRICEA 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.

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Examples of Prices:

PLACEWe 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).

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Proposed Location: Square One Shopping Centre

PROMOTIONIn 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.

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.

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COMMUNICATION STRATEGYUlta’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.

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PUBLIC RELATIONS STRATEGYIn 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).

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MARKET ANALYSISAlthough 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 FORECASTWhile 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 SHAREIn 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.

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CONTINGENCY PLANDespite 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.

WORKS CITEDBusiness Source Complete (2016). Company Profile: Shoppers Drug Mart Corporation. Business Source Complete. Accessed on: October 20, 2016.

Fortune Magazine (2015). The Secret to Ulta Beauty’s (and CEO Mary Dillon’s Success). Most Pow-erful Women. Web. Accessed on: November 18, 2016. http://fortune.com/ulta-beauty-mary-dillon/

Government of Canada (2016). Cosmetics, Beauty Supplies and Perfume Store: Retail Revenues and Expenses. Canadian Industry Statistics. Web. Accessed on: November 25, 2016.https://strategis.ic.gc.ca/app/scr/sbms/sbb/cis/revenues.html?code=44612&lang=eng#rdp1

Liberal Government of Canada (2016). Post-Secondary Education. Web. Accessed on: November 13, 2016. https://www.liberal.ca/realchange/post-secondary-education/

Passport (2016). Premium Beauty in Canada. Passport. Accessed on: October 15, 2016.

Passport (2016). Mass Beauty in Canada. Passport. Accessed on: October 15, 2016.

Passport (2016). Hair Care in Canada. Passport. Accessed on: October 15, 2016.

Passport (2016) Beauty and Personal Care in Canada. Passport. Accessed on: October 15, 2016.

Statista (2016). Forecasted Market Volume of the Make-Up Industry in Canada. Cosmetics & Per-sonal Care. Web. Accessed on: November 20, 2016. https://www.statista.com/statistics/487482/forecasted-market-volume-of-the-make-up-industry-canada/

Statista (2016). Stores consumers use regularly for personal care and beauty shopping in Canada as of December 2016. Cosmetics and Personal Care. Web. Accessed on: October 22, 2016. https://www.statista.com/statistics/495746/stores-consumers-use-regularly-for-personal-care-and-beau-ty-shopping-canada/

Statista (2016). Statistics and Facts on the Cosmetics Industry in Canada. Cosmetics in Canada. Web. Accessed on: November 20, 2016. https://www.statista.com/topics/2896/cosmetics-in-canada/

SuperDemographics (2016). Lifestyle Clusters. SuperDemographics. Accessed on: October 18, 2016.

SuperDemographics (2016). Target Area: GTA. SuperDemographics. Accessed on: October 18, 2016.

NPD Group (2016). Canadian Consumers Spending Big on Beauty. News. Web. Accessed on: Oc-to-ber 20, 2016. https://www.npdgroup.ca/wps/portal/npd/ca/news/press-releases/canadian-consum-ers-spending-big-on-beauty/

NPD Group (2016). Canada’s Beauty Industry Sees Solid Growth in 2015. News. Web. Accessed on: October 20, 2016. https://www.npdgroup.ca/wps/portal/npd/ca/news/press-releases/canadas-beau-ty-industry-sees-solid-growth-in-2015/

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The New York Times (2014). Sephora and the Upstarts: Beauty Emporiums including Sephora and Ulta Are Riding a Wave of Popularity. Fashion and Style. Web. Accessed on: November 18, 2016. http://www.nytimes.com/2014/05/01/fashion/beauty-emporiums-including-sephora-and-ulta-are-rid-ing-a-wave-of-popularity.htmlOxford Properties Group (2016). Square One Shopping Center. Web. Accessed on: November 18, 2016.http://www.oxfordproperties.com/leasing/en/retail/property/square-one-shopping-centre#keydemo

Ulta Beauty (2015). Annual Reports. Web. Accessed on: November 16, 2016.http://ir.ulta.com/phoenix.zhtml?c=213869&p=irol-reportsannual

Ulta Beauty (2016). Charitable Giving. Web. Accessed on: November 22, 2016. http://www.ulta.com/ulta/common/charitablegiving.jsp

Ulta Beauty (2016). Our Company. Web. Accessed on: November 18, 2016.http://www.ulta.com/ulta/common/about.jsp

Vault.com Inc. (2016). Company Profiles. Ulta Salon, Cosmetics & Fragrance Inc. Web. Accessed on: November 12, 2016. http://www.vault.com/company-profiles/retail/ulta-salon,-cosmetics-fra-grance,-inc/company-overview.aspx

Vividata (2016). Cosmetics and Women’s Products. Vividata. Accessed on: November 15, 2016.

Vividata (2016). Personal Care, Health & Beauty Aids. Vividata. Acced on: November 15, 2016.

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