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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                Coronavirus Update

                                May 9, 2022 - Lipstick Sales Rebound
                                • Between more time spent at home and mask-wearing, lip makeup sales took a hit during most of the pandemic. As conditions normalize, lipstick sales are improving. In the first quarter of 2022, US lip makeup sales increased 48% compared to Q1 2021, according to market research firm NPD Group. Lip makeup was the strongest prestige beauty category in Q2 2022, but other categories also saw significant growth, including blush (sales up 45%), bronzer (+38%), and makeup remover (+30%).
                                • Workplace occupancy, an indicator of demand for cosmetic and beauty supplies, was 43.4% for the seven-day period ending on April 27, up slightly from 43.1% for the seven-day period ending on April 6, according to data gathered from swipes of access control cards in buildings with security systems provided by security firm Kastle Systems. However, workplace occupancy is not returning to pre-pandemic levels as quickly as some other in-person activities. US airport screenings, movie ticket sales, and dining out were all near or above 90% of pre-pandemic levels in April 2022.
                                • Real disposable income, an indicator of demand for discretionary purchases like cosmetic and beauty supplies, decreased 0.5% month over month in March 2022, according to the US Bureau of Economic Analysis. Consumer spending increased 1.1% month over month in March following a 0.6% rise in February. Consumer spending has remained durable, despite the highest inflation in 40 years. However, there are signals that consumers may have reached the limit of their capacity to absorb higher prices. About 43% of consumers surveyed by NPD Group in February said they would delay less important purchases if prices keep rising.
                                • Beauty and personal care products manufacturer Estee Lauder expects net sales will increase between 7% and 9% in fiscal 2022. The Company’s previous forecast called for fiscal 2022 revenue growth of between 13% and 16%. Estee Lauder reduced its revenue outlook amid weaker sales in China due to the increase in COVID-19 cases and the resulting restrictions and supply chain disruptions. Despite the challenges, the company’s net sales increased 10% in its third fiscal quarter ended March 31, 2022. Haircare sales were up 15% year over year, makeup revenue increased 9%, and skincare products saw 6% growth.
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