Cosmetics, Beauty Supply & Perfume Stores Industry Profile

The cosmetic, beauty supply, and perfume store (beauty store) industry includes about 13,000 stores with combined annual revenue of around $10 billion. Major companies include Sally Beauty Supply, Ulta, Sephora, and divisions of Limited Brands (Bath & Body Works) and L’Oreal (The Body Shop International). The industry is concentrated: the top 50 companies have almost 75 percent of industry revenue.

Companies specializing in professional beauty products may restrict sales to salons and salon professionals, due to manufacturer policies. Salons may resell products to the public or use products for customer treatments.

COMPETITIVE LANDSCAPE

Demographics, consumer spending, and fashion trends drive demand. The profitability of individual stores depends on the ability to generate store traffic and effective merchandising. Large companies can offer a wide selection of products, and have advantages in purchasing, distribution, and marketing. Small companies can compete effectively by selling specialty products, providing superior customer service, or serving a local market. The industry is labor-intensive: average annual revenue per worker is about $104,000.

Major competitors include department stores, mass merchandisers, drug stores, TV shopping networks, Internet retailers, distributors, supermarkets, manufacturers, and salons. In addition, some beauty stores compete with dermatologists and plastic surgeons in the high-end market for cosmetics and skin care.

PRODUCTS, OPERATIONS & TECHNOLOGY

Cosmetics, face cream, and perfume make up about 75 percent of industry sales, while 20 percent come from hygienic products such as deodorant, hair, and shaving products. About ...