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 8,000 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 8,000 firms that employ about 175,000 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
Apr 8, 2024 - Growth Expected for Industry
- The US cosmetic and beauty supply stores industry is projected to grow at a CAGR of slightly over 3% from 2024 to 2028, slower than the overall economy's growth, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The report noted higher consumer confidence levels, which bodes well for the retail and wholesale industries. Consumer sentiment has also seen a degree of improvement following sustained lower levels. Factors limiting spending are high prices and interest rates, though both are expected to improve in 2024. Post-pandemic, consumer spending has shown slower gains of 2.5% in 2022 and 2.2% in 2023, supported in part by savings amassed by households from federal pandemic relief programs. According to the forecast, "2024 may bring further deceleration, but improving consumer sentiment may support moderately strong gains in household spending, together with rising wage rates and lower inflation."
- The National Retail Federation (NRF) released its 2024 retail sales forecast, projecting an increase of between approximately 2.5% and 3.5% to $5.23 trillion and $5.28 trillion in sales. The projected growth aligns with the 10-year pre-pandemic average annual sales growth of 3.6% and compares with the 2023 annual sales growth of 3.6%, which reached $5.1 trillion. Non-store and online sales (included in the total figure) are expected to grow at a higher rate of 7% to 9% year over year, to a range of $1.47 to $1.5 trillion, compared to $1.38 trillion in 2023. A tight labor market is expected to cool in 2024, with about 100,000 fewer jobs on average per month projected in 2024 compared to 2023. The NRF forecast excludes automobile dealers, gas stations, and restaurants to focus on core retail.
- According to a recent ConsumerSignals survey by Deloitte, about 75% of consumers worldwide have made at least one splurge purchase to treat themselves in the past month. The average amount spent on the last splurge purchase was $45. The survey examined consumer spending behavior and found that the three main drivers for splurge purchases were comfort (22%), relaxation (15%), and practicality/usefulness (12%). The most popular categories for splurge purchases included food and beverage (43%), clothing and accessories (18%), personal care (11%), electronics and accessories (8%), toys and hobbies (6%), health and wellness (5%), home and kitchen (3%), and household goods (3%). According to the Spending Intentions index, global total spending intentions remained consistent in January compared to December and were significantly higher than a year ago.
- Consumer confidence levels were essentially unchanged in March 2024, after a dip in February 2024 following three consecutive months of growth, according to data from The Conference Board. The Conference Board’s consumer confidence index was 104.7 in March 2024 from 104.8 in February 2024. According to Dana Peterson, Chief Economist at The Conference Board, “Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future.” Peterson added that confidence rose among householders 55 and over but fell for those under 55. Plans to purchase homes, autos, and large appliances decreased slightly on a six-month basis.
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