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

                                Mar 16, 2023 - Foot Traffic to Beauty Stores Jumps
                                • Foot traffic to beauty and self care stores increased by 35.2% in January 2023 compared to January 2020, according to a new report by titled “5 Retail & Service Categories Holding onto Pandemic Gains in 2023." Year-over-year visits in January 2023 were up 25.5%, as consumers looked for affordable splurges as inflation drives prices up. found visits to Ulta were up 43.8% in January 2023 compared to January 2020 and up 31.5% compared to January 2022. While the category was negatively affected during the early days of the pandemic as isolation and masking reduced demand for new makeup purchases, the segment bounced back as the country began reopening. According to the report, “The growing focus on health and wellness products alongside the return of other key categories like makeup appear to be helping players in this space turn short term gains into longer term strength.”
                                • Sales for health and personal care stores increased by 8% unadjusted year over year and 0.9% month over month seasonally adjusted in February 2023, according to data released by the National Retail Federation. Overall retail sales were up 5.4% in February 2023 over a year ago and down 0.4% from January 2023, according to the US Census Bureau. NRF’s retail sales calculation, which excludes car dealers, gas stations, and restaurants, showed an increase of 6.5% unadjusted year over year and 0.5% month over month in January 2023. According to NRF Chief Economist Jack Kleinhenz, “Sales growth has slowed in recent months, but consumers’ economic health still looks good. February is typically the slowest month of the year, so monthly fluctuations are expected. Sales are higher than last year and that’s due in large part to the strong labor market, which means more income and spending.”
                                • US prestige beauty sales made a strong showing in 2022, growing 15% year over year to reach $27.1 billion, according to NPD Group data in Premium Beauty News. Makeup products contributed the most sales revenue gains of the prestige beauty market, increasing by 18% in 2022. In the makeup category, lip products were the fastest-growing segment, with sales surpassing pre-pandemic 2019 levels by double-digits. The hair segment increased by 22% in 2022, led by masks and targeted treatments. The fragrance segment grew by 11% in 2022, with eau de parfums, parfums, and higher-end artisanal fragrance juices performing well. The skincare category grew by 12% in 2022, with body products growing at more than three times the rate of facial products. NPD also showed that the prestige beauty market experienced a greater shift back to stores in 2022, with year-over-year brick-and-mortar retail share growing.
                                • More than 60% of retail companies are operating with a shortage of frontline staff, according to a study published in Chain Store Age. The survey of more than 500 global business leaders, commissioned by digital frontline workplace company WorkJam and conducted by Forrester Consulting, found that only 8% of companies plan to invest in improving the frontline experience in the next year to address their labor shortages despite the deficit. More than 80% of decision-makers across industries and geographies want to leverage technology to improve the frontline experience. However, more than 70% of retail decision-makers say digital transformation initiatives have yet to reach the frontline. Frontline employees are also expressing their dissatisfaction with the current conditions. Per the survey, 74% say frontline employees are rejecting work conditions that went unchallenged two years ago, and 80% say frontline turnover has increased, which challenges companies to deliver a positive customer experience.
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