According to a report from IBISWorld, the economic recovery will be the most powerful driver for the beauty, cosmetics and fragrance stores industry, where major players L Brands—which owns the Bath & Body Works, Victoria's Secret and Henri Bendel retail brands—Sally Beauty Supply, Ulta and LVMH-owned Sephora operate, over the five years to 2018.
IBISWorld forecasts consumer confidence will continue to grow, prompting consumers to spend more money on discretionary goods, such as beauty and cosmetic products. Consequently, from 2013 to 2018, industry revenue is forecast to grow at an average annual rate of 5.2% to $16.8 billion. Also, the number of store locations is expected to rise at an annualized rate of 4.3%, reaching 126,534 stores in 2018.
IBISWorld also projects the top four companies (mentioned above) will maintain their position in the market and account for an even larger portion of the industry by 2018 (compared to the 70.0% in 2013). Smaller players and potential entrants will likely have a hard time establishing themselves in this environment.