Beauty sales look good despite inflation

While inflation has affected other discretionary categories, many beauty retailers have seen sales grow, as consumers go out more in public and employers guide workers back to the office.

September 01, 2022
  • James Cook

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I’m standing in the beauty aisle of my local drugstore, taking photos of each row of mascara. No, this isn’t a new type of retail research. I’m just texting the pictures to my wife, who will then tell me which mascara to buy. Technology is a wonderful thing – we can now all be a live personal shopper.

Today, inflation is taking its toll on us shoppers. We’re making fewer trips to the store, and when we go, we’re spending less. But this beauty aisle I’m standing in is one of the few places that many of us still seem to be spending. Despite persistent inflation, the beauty category has remained resilient.

It makes sense. We’re all going out more than we were in the pandemic. To concerts, dinners or drinks with friends, and yes, even back to the office. And when you’re out, looking good is important!

Drug stores are popular for cosmetics, but beauty is a small share of their revenue

Most popular shopping destinations for cosmetics



Drug stores are top destinations for beauty shoppers, but cosmetics make up only 2.3% of drug store revenue, according to IBISWorld. Beyond the pharmacy, the beauty category is led by three major players: Ulta Beauty, Bath & Body Works and Sephora.

Beauty, Cosmetics & Fragrance Stores 2021 Industry Revenue: $29.3bn



Ulta to eventually be in 40% of Target stores

Ulta Beauty has seen significant year-over-year foot traffic growth every month since March 2021, according to data from Ulta said in May that it planned to open 50 net new stores in fiscal year 2022. Since then, the company reported sales nearly 35% above pre-pandemic levels in the most recent fiscal year. 

Ulta Beauty Store Count



Target has partnered with Ulta to open hundreds of branded store-in-stores, with plans to eventually have them in 40% of all Targets. In May, Target CEO Brian Cornell said that the beauty category saw double-digit sales growth, which was stronger than other categories.

Kohl’s wants a Sephora in every store

Sephora, which is owned by LVMH, reported a strong rebound in 2021.

Sephora Store Count



For its part, Sephora has chosen to partner with Kohl’s to create its own branded store-in-stores.

Kohl’s has been hit by inflation, with shoppers choosing to spend less on categories like apparel and footwear. Same-store sales in the most recent quarter fell by 7.7%. But shoppers are still spending on beauty, and Kohl’s plans to capture that growth.

In 2021, Sephora and Kohl’s agreed to a ten-year partnership. Kohl’s will have Sephora- shops in at least 850 stores by 2023 and will open smaller Sephora shops in the remaining 300 stores, so that eventually all Kohl’s will have a Sephora presence.

  • “Sephora at Kohl’s” stores are 2,500 square feet and feature approximately 100 brands. Located prominently in the front of the store, Kohls has reported that they are driving new shoppers to Kohls stores.

But not all beauty chains are reporting growing sales

But while some beauty chains are doing well, others are seeing falling sales. Bath and Body Works saw sales decline 5.1% year-over-year in its second quarter. Sally Beauty’s most recent quarterly sales were down by 6%. 

But while they both are in the Beauty category, these two chains are not the same as Ulta and Sephora. Sally Beauty is a leading resource for salon professionals; 41% of its sales last year were made to pros. And Bath and Body Works is more focused on personal care -  selling lotions, soaps, and candles.

In contrast, Ulta and Sephora are the most cosmetics-forward chains in the category, and right now that appears to be what shoppers want.

Back at my local drugstore, I get a text from my wife.  She’s chosen a Neutrogena Healthy Volume mascara. The prices for our weekly groceries may be climbing, but that doesn’t mean we’re skimping on cosmetics.  After all, part of feeling good is looking good!



Contact James Cook

Sr Director, Research - Retail