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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                May 8, 2024 - Sales Grow in March
                                • Health and personal care store sales, which includes cosmetic and beauty supply stores, were up 4.5% unadjusted year over year in March 2024, according to the CNBC/NRF Retail Monitor released by the National Retail Federation. The category was up 0.03% seasonally adjusted month over month. Total retail sales, excluding automobiles and gasoline, were up 2.7% unadjusted year over year in March 2024 and up slightly seasonally adjusted month over month. Six out of nine retail categories were higher in March compared to a year ago, led by online sales, sporting goods stores, and health and personal care stores. According to NRF President and CEO Matthew Shay, “As inflation for goods levels off, March’s data demonstrates steady spending by value-focused consumers who continue to benefit from a strong labor market and real wage gains.” The CNBC/NRF Retail Monitor uses actual, anonymized credit and debit card purchase data compiled by Affinity Solutions.
                                • Consumer confidence levels fell in April 2024 from March 2024, marking a third consecutive month of weakness, according to data from The Conference Board. The Conference Board’s consumer confidence index was 97 in April 2024 from 103.1 in March 2024. According to Dana Peterson, Chief Economist at The Conference Board, “Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income.” Peterson added that confidence declined among consumers of all age groups and for all income groups except those in the $25,000 to $49,999 range. Plans for vacations, home purchases, and large appliances decreased on a six-month basis.
                                • 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.
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