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

                                Mar 12, 2024 - Slower Growth for Employment Levels, Wages
                                • According to the Bureau of Labor Statistics (BLS), employment levels for the cosmetics, beauty supplies, and perfume retailers sector were essentially flat in December 2023 from December 2022, following several years of high growth post pandemic. Employment levels for the industry have mostly 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. Wage growth has been slowing recently, as average hourly wages fell to their lowest level for 2023 in Q4, per the BLS. Additionally, Reuters reports that consumer spending levels grew in the last half of 2023, a 3% increase in the third quarter and 2.8% in the fourth quarter.
                                • 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.
                                • 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 fell in February 2024 after increasing for three consecutive months, according to data from The Conference Board. The Conference Board’s consumer confidence index fell to 106.7 in February 2024 from 110.9 in January 2024. According to Dana Peterson, Chief Economist at The Conference Board, “The decline in consumer confidence in February interrupted a three-month rise, reflecting persistent uncertainty about the US economy. The drop in confidence was broad-based, affecting all income groups except households earning less than $15,000 and those earning more than $125,000.” Peterson added that the decline in consumer confidence was largest in householders over 55 and those under 35. Plans to purchase homes, autos, and large appliances decreased slightly on a six-month basis.
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