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 7,900 cosmetic and beauty supply firms in the US operate 17,400 stores that 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.

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 Internet-only retailers.

Trends and Fads Drive Demand

Fashion-related trends and fads drive demand for new cosmetics and beauty supplies.

Industry size & Structure

The average cosmetic and beauty supply store operates out of a single location, employs about 15-16 workers and generates $2-3 million annually.

    • The cosmetic and beauty supply retailing industry consists of about 7,900 firms that employ about 122,000 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; 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 15, 2022 - NRF: Holiday Spending to Hold Up Despite Inflation
                                • Despite high inflation and rising interest rates, the National Retail Federation (NRF) expects consumer spending to remain resilient this holiday season. While the NRF acknowledges consumers are feeling the pinch of higher interest rates and inflation, it believes economic fundamentals – including job growth, rising wages, and savings accumulated during the pandemic - will sustain consumer spending. The NRF also points to US gross domestic product growth of 2.6% in the third quarter as evidence that the US economy hasn’t slipped into recession. The NRF forecasts holiday spending will rise between 6% and 8% over 2021 levels to reach between $942.6 billion and $960.4 billion. The outlook for 2022 is down from the 13.5% rise seen in 2021 but is better than the average 4.9% growth seen over the last decade.
                                • Amid inflation, 38% of consumers said they plan to spend less on gifts this holiday season than last year, according to a survey by Morning Consult released in November. About 45% of shoppers said they planned to spend about the same as they spent in 2021. The most popular gift category is gift cards, with 56% of survey respondents saying they planned to give them. Gift cards are not as affected by inflation as goods and allow for greater control over spending. Other popular gifts include apparel (39% of gift buyers), toys (36%), money (33%), and holiday food and alcohol (29%).
                                • In November, beauty brand Sephora announced it had struck a deal with DoorDash to provide on-demand delivery from more than 500 of its stores in North America. Door dash has added a beauty tile to its website where customers can find Sephora products. Earlier this year, DoorDash inked a deal to execute deliveries for Sally Beauty Supply.
                                • Personal care products, including cosmetics and beauty supplies, are among a group of items for which inflation tends to be “sticky,” and prices for such products could remain high even after overall inflation begins to abate, according to The Wall Street Journal. The Atlanta Fed designates an item “flexible” when its price changes more often than about every four months, while products labeled “sticky” take more than four months to see prices move. Personal care products, home furnishings, and appliances are among products deemed sticky by the Atlanta Fed, while flexible categories include fresh fruits and vegetables, shoes, and clothing.
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