Cosmetic and Beauty Supply Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 8,400 cosmetic and beauty supply retailers in the US sell cosmetics, perfumes, toiletries, and personal grooming products. Stores may carry a wide selection of products or a limited number of brands or categories. Some stores offer salon services. Full-service or exclusive distributors serve salons and salon professionals by selling “salon-only” or “professional-only” products at wholesale prices. Open-line stores serve retail consumers and salon professionals and carry a mix of products. The industry includes national and regional chains, franchises, and independent operators.
Trends and Fads Drive Demand
Fashion-related trends and fads drive demand for new cosmetics and beauty supplies.
Competition from Alternative Sources
Cosmetic and beauty supply stores compete with a variety of alternative sources, including traditional retailers (mass merchandisers, drug stores, department stores, supermarkets), salons, direct sales organizations, manufacturer-operated retailers, home shopping networks, and online-only retailers.
Industry size & Structure
The average cosmetic and beauty supply store operates out of a single location, employs about 20 workers and generates $2-3 million annually.
- The cosmetic and beauty supply retailing industry consists of about 8,400 firms that employ about 180,000 workers and generate about $22 billion annually.
- The industry is concentrated; the top 50 companies account for about 78% of industry revenue.
- Large companies include Sally Beauty Holdings; Sephora; Ulta Salon, Cosmetics, and Fragrance; and Perfumania Holdings. Large companies may have international operations.
- Some cosmetic and beauty supply manufacturers have retail operations. Estee Lauder has retail stores for M.A.C, Origins, and Aveda brands.
- The industry includes national and regional chains, franchises, and independent operators.
Industry Forecast
Cosmetic and Beauty Supply Stores Industry Growth
Recent Developments
Jan 14, 2025 - Ulta, Instacart Partner for Same-Day Delivery
- In January 2025, Ulta Beauty announced a partnership with delivery company Instacart to offer customers same-day delivery in as little as an hour, according to Retail Dive. Customers will be able to connect their rewards account to Instacart and earn points on their purchases. Ulta already has a partnership since 2021 with delivery service DoorDash. According to a company statement to Retail Dive, “Complementing the existing relationship with DoorDash, together, both partnerships allow us to enhance the overall beauty shopping experience for our guests through added convenience and flexibility. The newly inked partnership with Instacart also allows Ulta Beauty to tap into new potential guests through its established community of users, providing even more opportunities for beauty lovers to shop for their Ulta Beauty Essentials when and where they chose.” Rival Sephora also offers delivery through Instacart and DoorDash, partnerships struck in 2020 and 2022, respectively.
- Consumer confidence levels declined in December 2024, falling by 8.1 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 104.7 in December 2024 from 112.8 in November 2024. Dana Peterson, chief economist at The Conference Board, noted that those remaining most confident on a six-month moving average basis confidence were those aged under 35 and those in the income category of over $100,000. Per Peterson, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” Purchasing plans for homes decreased while plans to buy new cars and big-ticket items rose in December 2024 on a six-month average basis.
- Gen Z shoppers experienced the most substantial growth in brick-and-mortar beauty spending, an increase of 41% to $4.9 billion spent in 2024, according to a new report from NielsenIQ in Global Cosmetic Industry titled “Beauty Behavior Through the Generations.” Gen Z may be opting for a faster shopping experience in-store versus waiting for an online purchase to be delivered. The report also noted that Gen Z shoppers are most likely to shop at Sephora and Ulta regardless of income, unlike low income shoppers in other generations. Gen Z prefers brands that demonstrate social responsibility and offer clean beauty products made without ingredients such as aluminum, sulfates, and parabens. Beauty industry dollar sales grew 9.3% from 2023 to 2024, per NielsenIQ. Millennials contribute the most to overall beauty sales, while Millennials and Gen X have strong online penetration for beauty and personal care purchases.
- Retailers are facing a nearly 30% increase in the rate of returns compared to last year, which could cut overall profit margins on the industry’s $1.2 trillion in global sales, according to Salesforce data reported in PYMNTS. Shoppers have already returned $122 billion in merchandise, per the report. According to Salesforce’s Consumer Insights Director Caila Schwartz, “Retailers had a robust holiday season, but a 28% rise in the rate of returns compared to last year is a cause for some concern.” AI tools are expected to be important in minimizing revenue losses on returns and reengaging with shoppers, per Schwartz. Returns volumes have increased in part due to the growth in online shopping and shopper practices such as “bracketing,” involving ordering multiple sizes or variations with the intention to return unwanted items, according to Hannah Bravo, head of Loop Returns. She said retailers are taking different approaches to managing returns such as offering longer return windows, charging fees related to item returns, and letting customers keep low-value items instead of returning them.
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