Cosmetics retailer Sephora is planning to open nearly 50 stores in Canada in the next two to three years, increasing its bricks-and-mortar presence in this country by roughly 60 per cent.
The move is driven by a belief that in-person shopping will return as the COVID-19 pandemic subsides, as well as by the need for speed in delivering e-commerce purchases, Sephora Canada senior vice-president and general manager Gregory Bruyer said in an interview.
“We strongly believe shoppers will be more and more demanding to have fast delivery, whether you live in Toronto, or St. John’s, or Fort McMurray,” Mr. Bruyer said.
Sephora, which is owned by Paris-based luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE, currently handles online orders in Canada at its distribution centres in Vancouver and Toronto. But as the retailer opens more locations, Mr. Bruyer said it is planning to speed up its deliveries by distributing online orders from stores as well.
Shipping from stores is a double-edged sword for retailers: While it can help to speed up deliveries of online purchases, it is also expensive. Products incur more shipping costs going from distribution centres to stores than when they are shipped out from a central hub, and staff must balance serving in-store shoppers with packing up online orders. During the pandemic, many retailers have turned to ship-from-store strategies to make use of stores that were forced to close, and to keep online shoppers happy with faster service.
“COVID accelerated the number of clients who used to only shop in retail, to shop online. The two channels are very blurred,” Mr. Bruyer said. “We don’t think it will be back to normal.”
New Sephora locations will open in smaller cities with populations between 100,000 and 300,000, where its data show that customers are already shopping online. The company is also looking at more locations outside of malls, where its stores have been concentrated in the past. The chain currently has 80 stores in Canada.
After managing the Sephora business in the Middle East, Mr. Bruyer was appointed to the role leading Sephora Canada last March, just before COVID-19 began to reshape the retail industry in North America. Even when stores were permitted to reopen, Sephora was unable to offer product testers and services shoppers were accustomed to. Makeup sales in Canada were affected, Mr. Bruyer said, though sales of skin-care products increased.
As vaccines are distributed more widely, the retailer is planning to offer more services in stores.
“It’s important to provide a different experience in store than you can have online,” Mr. Bruyer said.
The beauty retail space is competitive in Canada, with stores such as Shoppers Drug Mart, owned by Loblaw Cos. Ltd.; department-store chains including Hudson’s Bay Co. and Nordstrom Inc.; and online competition from the likes of Well.ca, Glossier Inc. and Amazon.com Inc.
Last year, U.S. cosmetics retailer Ulta Beauty Inc. suspended its plans to expand into Canada. The popular chain, which competes with Sephora to sell cosmetics, fragrances and skin-care products, had targeted late 2020 or early 2021 for its first Canadian locations. In a regulatory filing, Ulta said it would prioritize its U.S. growth instead, though it continues to see “a long-term growth opportunity” in international markets.
The cancellation of Ulta’s plans meant breaking leases in Canada, at a difficult time for commercial landlords that have been affected by mandated store closings during the pandemic. Mr. Bruyer said he believes the market conditions should lead to changes in lease negotiations for retailers looking to open stores.
“It may take some time with landlords to acknowledge what is going on,” he said. “It’s a true partnership, and at one point there will be some concessions to be made, I believe, on both sides.”
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