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
Oct 16, 2024 - Prices Fall Slightly Year Over Year
- Prices for cosmetics, perfume, bath, nail preparation, and other implements were 0.5% lower in September 2024 compared to the previous year, according to the Consumer Price Index by the US Bureau of Labor Statistics (BLS). Prices for the category were up 0.2% from the previous month. Health and personal care stores, including cosmetic and beauty supply stores, fell almost 2% in June 2024 compared to a year ago and declined 4.2% from the previous month, according to the US Census Bureau. Personal consumption expenditures rose 2.6% in June year over year and were up 0.2% from the previous month, according to the Bureau of Economic Analysis. Employment by cosmetics, beauty supplies, and perfume retailers increased 6.4% in July 2024 compared to a year ago, according to the Bureau of Labor Statistics. Average wages for nonsupervisory employees at cosmetics, beauty supply, and perfume retailers grew 10.9% in July 2024 year over year, reaching $21.19 per hour.
- The US cosmetic and beauty supply stores industry is projected to grow at a CAGR of 3.2% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. The report noted that consumer confidence is expected to improve in the forecast period, which bodes well for the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. On a positive note, inflation is subsiding, which supports a moderate increase of real disposable income by about 1.9% in 2024 and 2.4% in 2025.
- US online retail sales are projected to grow from $1.2 trillion in 2024 to $1.8 trillion in 2029, with a CAGR of 8.4%, according to a new Forrester online retail sales forecast reported in Chain Store Age. US online retail penetration is expected to reach 29% by 2029, an increase of 23% from 2024. Big retail players Amazon and Walmart are projected to continue their growth in total and online retail sales in the US, expected to account for a quarter of total retail sales and two-thirds of online retail sales by 2029. US click-and-collect sales, which include curbside pickup and “buy online and pickup in store” (BOPIS) options, became very popular during the pandemic. Click-and-collect sales are forecast to be 29% of US omnichannel retailers’ ecommerce sales by 2029. Non-durable goods categories, including cosmetics, have online growth potential as their aggregate online retail penetration is half that of durable goods categories, with growth of high single-digit or double-digits expected in the next five years. According to the Forrester report, online retail penetration for clothing, flowers, footwear, pets, and toys is forecast to exceed 50% by 2029.
- Prestige beauty sales were up by 8% in the first half of 2024 year over year, with fragrance becoming the fastest growing segment in the channel, according to a recent Circana report. Fragrance revenues increased 12%, and skincare rose 7% in the prestige channel. Sales in the mass market channel remained flat, per Circana. One bright spot in the mass fragrance market during the first half of 2024 was private label brands, popular with younger consumers, which grew more than 50%. Makeup is the largest prestige beauty category, with sales up 5% in the first half of the year over the previous year. Hair product sales in the prestige channel grew 10% in the first half of the year, with styling and treatments becoming the fastest-growing segments, per the report.
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