The cosmetic, beauty supply, and perfume store (beauty store) industry includes about 10,000 stores with combined annual revenue of almost $7 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 $85,000.
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
Major products sold in beauty stores include hair and shaving, deodorant, hand, oral, and baby hygiene products (65 percent of sales), and makeup, facial care, and ...
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