In recent years, beauty product manufacturers have faced significant losses due to unfavorable economic conditions, including high inflation and increasing economic uncertainty. Many cosmetics and beauty products are considered discretionary, causing sales to weaken when disposable income drops. Heightened inflationary pressures in recent years pushed consumers to postpone purchases to downgrade to more affordable products, contributing to revenue losses between 2020 and 2022. Rising prices and heightened consumer uncertainty have led to higher selling prices and smaller basket sizes, protecting producers from sharper revenue losses. Since 2020, revenue has weakened by an estimated CAGR of 3.9% to reach $39.3 billion in 2025, including a 2.7% drop that year alone. During such times, consumers tend to opt for more affordable options, leading to a surge in imports to meet domestic demand. Imported beauty products have gained a larger share of the domestic market, especially those from countries like France, Italy and South Korea, which are perceived to offer higher quality. The growing demand for innovative, inclusive, sustainable and technical products—especially anti-aging and luxury items—creates growth opportunities for domestic manufacturers. Also, companies like Glossier, which leverages social media marketing and the heightened demand for US-made products, have successfully reached international consumers, driving an increase in exports. The ongoing economic recovery is expected to benefit domestic beauty product manufacturers. As consumer confidence and disposable income climb, spending on discretionary items like beauty products will likely increase, supporting manufacturers' performance. The forecast decline in the world price of zinc, a key material for manufacturers, will support producers' profit gains. Similarly, the expected depreciation of the US dollar will enhance the performance of domestic producers both domestically and internationally. However, uncertain trade conditions over the coming years will prevent downstream wholesalers and retailers from planning for future demand, preventing sharper gains. These factors are set to cause revenue to accelerate at an annualized 1.3% to $41.9 billion through the end of 2030.

Consumers often purchase beauty products from large beauty, cosmetics and fragrance stores like Sephora and Ulta because of their broad product range, expertise and loyalty programs. The pandemic boosted performance as consumers took advantage of more leisure time and became more invested in their wellness a beauty routines. Despite elevated inflation in 2022, skyrocketing sales of hair and beauty products buoyed revenue amid volatile economic conditions. Stores have benefited from premiumization trends, resulting in a growing willingness to spend on premium beauty and cosmetic products, with customers valuing the long-term benefits of using luxury products. Additionally, recent economic growth has largely benefited beauty stores. Revenue for beauty, cosmetics and fragrance stores is expected to swell at a CAGR of 5.0% to $69.0 billion through the end of 2025, including a jump of 1.6% in 2025 alone. Traditional cosmetics retailers have endured high competition from various sources, including drugstores, department stores, supercenters and online retailers. Prominent competition prevents retailers from charging higher prices, as consumers can easily switch stores and brands. The expansion of e-commerce has negatively impacted retailers operating at a smaller scale, as many of them lack the capabilities and sales volume to offer online shopping, resulting in lower profit and pushing many smaller retailers out of the industry. Online shopping also allows customers to easily compare prices across retailers, intensifying competition. Beauty stores aim to combat substitutes by improving the in-store shopping experience, carrying products that appeal to new potential customers and strengthening their own e-commerce capabilities. The growing popularity of environmentally friendly and cruelty-free products will spur growth in new markets, creating opportunities for traditional retailers. Rising per capita disposable income and consumer spending will also boost cosmetics sales. However, specialty beauty stores will struggle as more consumers favor online retailers, including stores that aren't in the industry, like Amazon, Target and Walmart. E-commerce will continue to be one of the fastest-growing competitive threats to specialized stores as consumers opt for the convenience and wide selection of online products. Alongside these trends, revenue is expected to climb at a CAGR of 1.7% to $75.0 billion through the end of 2030.

Cosmetics and toiletries retailing revenue is expected to edge upwards at a compound annual rate of 21% over the five years through 2025-26. Despite intense and increasing competition from department stores, online rivals and even clothing shops like H&M and Primark, beauty shops have fought back by expanding their in-store offerings. Shifting consumer attitudes towards social constructs and a growing emphasis on inclusivity have cast a wider sales net and opened retailers up to a bigger market. As people keep flocking to social media sites to share photos and videos online, sales to the younger generations are on the rise as they seek to keep up with what they see online.

Despite the positive news, price competition remains intense as incomes bite. While Britons are still prioritising self-care and looking for little pick-me-ups while they're forced to cut back on bigger luxuries (also known as the lipstick effect), some people are trading down from well-known fan favourites for cheaper, more generic goods. Alongside eating into sales, rising wages and inflation have pressured retailers' bottom lines. Shrinkflation and skimpflation tactics, as well as structural changes, are being deployed to avoid drastic price rises. In 2025-26, revenue is forecast to climb by 1.1% to £8.5 billion, while the average profit margin is expected to be 18.7%.

Over the five years through 2030-31, revenue is expected to mount at a compound annual rate of 4.9% to £10.8 billion, while profit is anticipated to remain steady. Shops are likely to continue to face competitive pressures from department stores and online-only retailers. Still, cosmetic retailers will continue to benefit from favourable long-term demographic and social trends, including an ageing population and growing interest in male skincare. Innovation will likely centre on natural and sustainable products, supporting specialist cosmetics and toiletries sales. Meaningful beauty is set to become a top priority; shoppers' expectations will grow and authenticity in marketing will be key to gaining trust and custom.

Pharmaceutical, cosmetic and toiletry goods retailers have experienced significant revenue fluctuations in recent years, driven by a range of economic and consumer forces. Early sales surges at the height of the pandemic stemmed from heightened focus on health and hygiene, which increased demand for pharmaceuticals and self-care products. Retailers with robust digital platforms thrived as consumers shifted to online shopping. However, this initial boom was soon tempered by persistent cost-of-living pressures, rising inflation, and the winding back of government assistance, leading to more volatile trading conditions. Industry revenue has climbed at an annualised 2.8% over the five years through 2025-26 to $4.7 billion, including growth of 1.2% in the current year. Competition from department stores, supermarkets and online-only retailers has disrupted the trading landscape for industry retailers. Expanding product ranges have enabled competitors to stock more cosmetics and personal care products, often at competitive prices. Investments in omnichannel retailing, broadening of product mixes toward high-margin and eco-conscious offerings, and continued public health funding have all supported profitability, even as consolidation and store network optimisation have become increasingly common responses to competition. Looking ahead, government funding increases for Pharmac and healthcare initiatives like easier access to medicines and extended prescription periods, are set to lift industry revenue and service diversification, particularly as the population ages and chronic illness rates rise. Easing inflation and falling interest rates should restore some disposable income, which bodes well for discretionary purchases. However, competitive pressures from supermarkets, discount retailers and online-only players will remain fierce, likely further limiting new market entrants and driving consolidation. Opportunities will be strongest for those who innovate—whether by championing ethical and sustainable products, targeting niche and culturally diverse markets or leveraging digital tools and social media to connect with consumers. Ultimately, retailers embracing diversification, omnichannel sales and premium offerings will be best positioned to capture evolving market demand and achieve sustainable growth. Industry revenue is forecast to rise at an annualised 1.2% over the five years through 2030-31 to reach $5.0 billion.

Perfume and fragrance stores have been subjected to wider economic volatility, influencing spending on discretionary goods. Many consumers consider fragrances to be discretionary purchases, tying sales to consumer confidence and disposable income fluctuations. Sales took a hit in 2020 and 2022, as the pandemic and rising inflation pushed consumers to pull back on non-essential purchases, harming fragrance sales. However, a hike in sales in 2021 amid the economy reopening, pent-up demand and consumers resuming in-person activities supported perfume sales. Perfumes and fragrances are a relatively affordable luxury, causing some customers to spend more on these products in recent years as a treat to themselves. More recently, slowing inflationary pressures have supported revenue gains, benefiting perfume stores. Revenue for perfume and fragrance stores is expected to expand at a CAGR of 2.0% to $7.5 billion through the end of 2025, despite a forecast dip of 0.7% in 2025. Price competition at the retail level has heightened in recent years as online platforms enable consumers to shop around for lower prices and better deals, driving buyer power and pushing retailers to offer more competitive deals, promotions and benefits. These changes in retail have pushed smaller stores to focus on a niche, making them more competitive against large sellers like Sephora and Ulta. Supply chain disruptions and fluctuations in demand for fragrances negatively impacted retailers. However, despite growing purchase costs, the ongoing recovery has made stores more profitable. Moving forward, sales are expected to climb at a modest rate, fueled by higher disposable income and greater consumer confidence in the future of the economy. Higher costs will stifle product development at the upstream manufacturing level and enhance price-based competition at the retail level, as stores offer incentives like sets and discounts to offset the impact of fewer product launches and attract buyers. Retailers will continue to leverage online shopping to strengthen in-store foot traffic and drive sales. The fragmented nature of the industry will enable smaller stores with greater flexibility to remain competitive by meeting demand for specialized scents, with other retailers specializing in the male fragrance market. Revenue is expected to swell at a CAGR of 1.2% to $8.0 billion through the end of 2030.