In Canada, the beauty retail market is up for grabs

For all its cultural similarities and geographic proximity to the U.S., Canada is still worlds away when it comes to doing business. Higher taxes, stricter employment laws and a more rural landscape mean Canada comes with a new set of challenges. And that’s to say nothing of the additional restrictions that come with launching in Canada’s second-most populated province: Quebec, which requires all documentation to also be translated into French. 

Even otherwise successful beauty retailers have not been able to get past those hurdles. Nordstrom announced it would close its Canadian stores in 2023, and Ulta made plans for a Canadian expansion in 2019 only to balk at those plans post-Covid. But for beauty companies that can manage Canada’s challenging landscape, there is a massive white space to fill. According to 2023 data from Circana, the Canadian beauty market grew 18% from January to September of that year, and Canadian trade agency TFO Canada estimates the local beauty market to be worth $11 billion CAD ($8 billion USD).

Headkount launched in Canada in 2023 and has already brought 50% of its portfolio to Canada through retailers like Sephora, which is steadily expanding across the country. And it’s far from alone: Hailey Bieber’s Rhode launched in Canada in 2023, and on Monday, Naomi Watts’s menopause care brand Stripes entered Canada via the Hudson’s Bay department store.

“Beauty in Canada is growing very quickly, from both a revenue and a units perspective. And within beauty, skin care, in particular, is really dynamic there,” said Cara Kamenev, Stripes president. “There may be a misrepresentation that [the market] is not as innovation driven, but I think it actually is. And I think the consumer really does have a thirst and hunger for the best in innovation.”

But there are still areas of beauty that are underrepresented in Canada. Darcei Giles, a Toronto-based influencer with 1.8 million followers on TikTok where she is known as Miss Darcei, said that she has seen an improvement in the availability of diverse foundation shades available in Canada in recent years, but there’s still room for growth. 

“I used to be the darkest shade of foundation in most ranges, and now there are many shades darker than me,” she told Glossy. “Inclusivity isn’t just about foundations, though.”

In particular, Giles would like to see more Black-owned brands fostered in Canada. While Canada’s population was reported as 69.8% white in a 2021 census, its ethnic and racial diversity is growing; from 2016 to 2021, its share of South Asian, Chinese and Black residents grew from 13.6% to 16.1% of the population.

“Black American brands are abundant in the United States but difficult to import to Canada. I would love to see more support and funding for Black Canadian beauty brands over here,” said Giles. “Lack of Black brands isn’t about lack of talent or interest, it’s about lack of support.” 

For Stripes, launching with an established retailer like Hudson’s Bay was key to establishing support in Canada. The expansion comes after Stripes’ own retooling. Watts’ menopause-care line launched in 2022 and was originally owned by biotech company Amyris, which filed for bankruptcy in 2023. Private equity firm L Catterton picked up the company this June. 

But simply launching at a retailer like Hudson’s Bay is not enough. Watts will make an appearance at the Toronto Hudson’s Bay on August 20 to promote the launch with future appearances planned for later in the year. Floyd emphasized that Canadian consumers are hungry for such education and attention, particularly from emerging lines. Skin care is an especially hot category, constituting the largest, fastest-growing category across Sephora Canada, where harsh seasons often drive consumers to seek out separate skin care for the winter and summer months. 

“They are very excited to come in and see like a Summer Fridays person or a Tower 28 person or a Westman [Atelier] person. They don’t typically get these up-and-comers,” said Floyd of Canadian consumers. “They [instead] get the legacy ones, from the [Estée] Lauder group or the L’Oréal group.”

But unlike in the U.S., there are comparatively few touchpoints to bring a brand to consumers. With more than 1,300 stores across the country, Shoppers Drug Mart, called Pharmaprix in Quebec, is the country’s largest beauty retailer, with a mix of drugstore and high-end brands. Hudson’s Bay, meanwhile, has 86 stores country-wide, while luxury department store Holt Renfrew, which carries the likes of Byredo and Tom Ford Beauty, has just seven stores across Canada. 

The comparative lack of brick-and-mortar stores is unsurprising given Canada’s landscape. Unlike in the U.S., much of the population is concentrated in just a handful of major cities. Online shopping is crucial to fill the gap where rural consumers may not be in reach of a brick-and-mortar store, noted Kamenev.  

“That’s where omnichannel comes in,” she said. “[Stripes] is launching on dot-com with Hudson’s Bay, which is a trusted retailer. Even if a woman’s not near a store where we’re distribute, she can shop online quite easily from a retail outlet she trusts in the Canadian market.”

Shoppers offers the most coverage across Canada, but while it has introduced new brands in recent years — like YouTuber Susan Yara’s Naturium skin care earlier this year and its revamped in-house label Quo Beauty with makeup artist Hung Vanngo in 2020 — it is not exclusively a beauty destination. Floyd noted that Gen X shoppers are accustomed to replenishing their beauty products in a drug store environment like Shoppers, but younger consumers are looking for discovery — and with no Ulta to compete with, Sephora is picking up the slack. 

The retailer opened its first Canadian store in Toronto in 2004, but expansion was cautious. It opened its first store in Montreal, Canada’s second-largest metropolitan area, in 2012. Sephora has since picked up the pace: In 2022 alone, the beauty giant opened 14 stores in Canada, with its Crossroads Station Shopping Centre location in Winnipeg, Manitoba marking its 100th Canadian outpost. To celebrate the milestone, Sephora donated $100,000 to Native Women’s Association of Canada. 

For now, Rhode, one of the hottest beauty brands around, is only available DTC in Canada through its own website. Bieber has already shown the value of in-person experiences through a much hyped-up Rhode pop-up in New York — but given Canada’s appetite for newness, perhaps a Toronto appearance from Bieber would be equally successful.