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 Internet-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 165,000 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

                                Feb 10, 2024 - Employment Costs, Levels Up
                                • Employment levels for the cosmetics and beauty supply store sector have surpassed levels from the pre-pandemic era, increasing by 3.6% in November 2023 over November 2019. Employment levels have recovered after dipping sharply in 2020 during the early pandemic. Industry wages have risen 20% from 2019 to 2023 as retailers boost wages to remain competitive in a tight labor market. Consumer spending levels grew in the last half of 2023, with a 3.1% increase in the third quarter and a 2.8% increase in the fourth quarter, according to Reuters.
                                • Prestige cosmetics sales in the US have flourished in the past two years, growing by 14% in 2023 and 15% in 2022, according to Circana data reported in Premium Beauty News. Sales reached $31.7 billion in 2023. In comparison, mass market beauty sales in 2023 climbed 6% year over year. Makeup was the fastest-growing category in dollar sales in the prestige channel, while the fastest-growing category based on units sold was skincare. The top performer in the prestige makeup category was lip makeup, such as tinted lip oils and balms. Face serums and creams, body sprays, and body lotions were among the top-performing prestige skincare products. “The beauty industry is strong and the outlook remains positive for both the mass and prestige sides of the business in 2024,” said Larissa Jensen, Circana’s global beauty industry advisor.
                                • Consumer confidence levels rose in January 2024 for the third month in a row, following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index increased to 114.8 in January 2024 from 108 in December 2023. According to Dana Peterson, Chief Economist at The Conference Board, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.” Peterson added that the gains in consumer confidence were largest in householders aged over 55. Plans to purchase homes, autos, and large appliances declined slightly on a monthly and six-month basis.
                                • Lookfantastics' 2023 Beauty Trends Report found that MAC Cosmetics, Sol de Janeiro, and Drunk Elephant were among the best-performing beauty brands based on buying behavior and online and social media searches, according to Cosmetics Business. With several popular product launches in 2023, MAC Cosmetics was named the biggest beauty brand of the year. The product had 214,000 on-site searches, 4 million searches on TikTok, and 6 million searches on Google. The "biggest exploding brand" was Drunk Elephant, with a 480% increase in Lookfantastic site searches since 2022 after being highlighted in a social media influencer's video. Sol de Janeiro's Bum Bum Cream was called the most popular beauty product, with 130,792 on-site searches and 664,000 TikTok searches since 2022. The report projects that K-Beauty's "glass skin" micro-trend will continue to evolve in 2024 into hair care in new oil and serum formulations.
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