Taking a hint from Canadian drug stores

Consumer Suzanne Lee grew up in upstate New York, but moved to Ontario many years ago. Recently, upon visiting her hometown, she stopped at a local drug store for her favorite skin care product. She was surprised to find it wasn’t sold there.

(To view the full Beauty Trends Report, click here.)

“Funny, I never noticed until now how much better our drug stores are in Canada for beauty,” Lee acknowledged. “I was told my brand was a department store line in the United States.”

Her observations are spot-on. The United States and Canada may share borders, but the two countries have few similarities when it comes to cosmetics and fragrances.

Mass market cosmetics retailers have long envied the access Canadian retailers have to beauty brands that won’t distribute to American counterparts.

More European-inspired than American-influenced, Canada’s leading drug stores sell such brands as Clinique, Clarins, Lise Watier, Biotherm and Lancôme — names U.S. merchants only dream of stocking.

Service is superb — more Sephora than self-selection. And the stores pump out the sales and profits to boot. Estimates are that Canadian beauty departments produce sometimes twice the sales per sq. ft. of American mass beauty doors. Average beauty departments in U.S. stores typically generate less than 6% of total store sales, where Canadian units can hit almost 10% of overall cash register rings.

There are myriad reasons why Canadian stores get what U.S. stores can’t. Dating back 30 years, Canadian shoppers didn’t have as much access to department stores that were privy to premium brands. Often the population was so spread out it was prohibitive to pop into a department store to restock the makeup bag.

Consequently, those lines went where shoppers were — often in drug stores. One Shoppers Drug Mart beauty advisor explained it this way: “The high-end lines are a huge success here because they reach all corners of the population — not just cities.”

But the attractiveness stemmed from more than just getting to customers, but also from the fact that the environment in drug stores was better suited for the lines that often require hands-on service to demonstrate the value of spending more.

Over the years, other premium options have flourished in Canada, most notably Sephora, which has more than 30 units spread through eight provinces. Ulta Beauty hasn’t crossed the border yet, but could challenge the Canadian mass beauty universe if it did since the company also fuses mass and class. For now, consumers appear quite happy to shop at their local drug store.

The discount format hasn’t flourished as fast in Canada. In fact, Target retrenched when it found challenges getting enough foot traffic to support its stores.

Keeping Canada’s pharmacies abreast of trends thanks to constant visits from beauty companies is a major boost to the stores. Representatives from various lines make the rounds to stores. “They help train, offer demonstrations and help with displays,” said the Shoppers Drug Mart beauty expert. In the United States, buyers confirmed visits to stores are limited if at all.

Loic Steinbach, VP of Vitry USA, said Canadian retailers benefit from the high levels of service. “In Canada, there is an associate who greets you immediately. You will never find a consultant cleaning shelves. There is a difference in the approach of the cosmetics service in the stores.” During busy hours, many retailers even staff the beauty area with several consultants, he said.

Other business-building tools employed in Canada include financial incentives for beauty advisors, as well as plentiful demonstrations. Steinbach also said Canadian merchants turn their valuable front- and center-of-store real estate over to beauty. When it is located at the door, rather than on another floor or off to the side, customers must pass through beauty to get to the pharmacy counter — a good ploy since beauty often is an impulse purchase.

One obstacle in the United States to getting the best beauty staff is the lack of commissions with mass merchants lacking the funds to attract top-level people. However, as witnessed by the numbers, finding money in the budget could pay off.

To be sure, such U.S. drug chains as Walgreens and CVS are working feverishly to burnish service in America. CVS is removing housekeeping duties so beauty consultants can work one-on-one with customers. Its consultants also will be equipped with such tools as iPads.

Walgreens also is adding a new level of super-trained consultants to further enrich its customer interaction levels. The hope is that, over time, the United States will continue to attract new brands while enticing shoppers who have migrated to such specialty stores as Sephora back to chains.

Rite Aid and Target, as well, have upped the ante in service within beauty.

Still, U.S. retailers often head north for ideas and concepts to import into their departments. “There are a lot of things happening in Canada that could be done in the United States,” Steinbach said.