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U.S Retail Cosmetic Industry

Retail Industry
The retail industry generates over 4.2 trillion dollars in annual sales and is the second largest sector within the United States and the largest sector worldwide. Wal-Mart, Home Depot, Kroger, Target and Costco are the top US retailers. Wal-Mart is the worlds leading retailer with over 7,000 stores and contains over 400,000 employees; Carrefour in France is the world?s second largest retailer. Retail accounts for 12% of all establishments within the US and 95% of these establishments are single owned. However, these stores only generate less than 50% of all sales within industry (about.com)

U.S. Retail Cosmetic Industry
The U.S. cosmetic industry is a 35 billion dollar market (US Fed News, 2005). Retail cosmeceutical sales reached over 12.4 billion in 2004, a 5.4% increase from the previous year. This figure is expected to reach 16.5 billion at the retail level in 2010 which reflects a strong 4.8% compound annual growth rate (Packaged Facts: The US Cosmeceuticals Market 2005).

In 2004, 61% of cosmeceuticals retail dollar sales were attributed to merchandisers, supermarkets and chain drug stores which make up the mass channels within the industry. At the same time, prestige stores such as spas, department stores, and salons accounted for 39%, see Table 1 below (Packaged Facts: The US Cosmeceuticals Market). Overall, retail cosmeceuticals sales increased by 21.5% from the year 2000-04. Makeup sales within the mass retail segment increased by 26%; makeup sales reached $316 million, with most growth occurring in the year 2003 (Packaged Facts: The US Cosmeceuticals Market 2005).

Cosmeceutical Retail Dollar Sales
Table 1

In 2004, make up used for the lip, eye and face accounted for 25.3% of cosmeceutical market share retail dollar sales with 12% distributed via mass outlets such as supermarkets, drugstores and merchandisers and the other 13.3% via prestige outlets such as department stores, spas and salons (Packaged Facts: The US Cosmeceuticals Market). The make up category (face, lips and eyes) is expected to reach $4 billion by 2010, accounting for a healthy 26.5% expansion between the years 2004-2010, generating a 4% annual growth rate (Packaged Facts: The US Cosmeceuticals Market).

Within the Makeup sector, prestige channels such as Sephora have experienced higher growth then mass channel outlets with gains of 31%, equating to $394 million and a CAGR of 7% between 2000-2004; during this same time period, mass retailers gained 26.9% equating to $316 million and most growth occurring during 2003 (Packaged Facts: The US Cosmeceuticals Market).