The beauty products industry has annual sales of $10 billion. Just like every industry, there are a few large chains that dominate the market.
When it comes to buying beauty store, there are several companies, such as Sally beauty Products, Ulta and Sephora, that you will want to look for because they are among the top manufacturers.
The top 50 companies in the industry account for about 75% of their total revenue, but small businesses still have a piece of the pie, so here are some tips for buying a beauty store.
As well as locating your target market.
When looking at beauty stores, it is important to determine who their target customers are. Some beauty stores target hair stylists, salon owners and other professional service providers. If this is the type of beauty store you are considering, check out the businesses around the store. Are there many beauty salons nearby? If your beauty store is near where hair stylists and beauty professionals work or live, they are likely to become your loyal customers. If they don't have anything left over from a day's work, they'll go to the nearest store to restock.
Another type of beauty store is consumer-oriented. Sephora and Ulta are such stores, and Sally Beauty Supply caters to professionals and consumers alike. If you are pursuing this type of beauty store, your location is also important. You have a better chance of building a loyal customer base if your location is near other shopping destinations such as grocery stores, shopping centers, etc.
Stock
In my experience, the most successful beauty stores are those that keep up with the latest trends. Of course, as a man, I don't understand why you need a new nail polish color every season, but I can assure you that all women do, so make sure the stock you want to buy is up to date. If something has been sitting on the shelf for a few months, make sure you don't buy it at full price because at some point, you may need to get a discount to move it.
When it comes to beauty products, customers want to know the latest trends, so knowing what's in stock will be one of your biggest operating expenses. In addition, with any retail business, you need to make sure that you have a good system in place to manage inventory and make sure that it doesn't go with the employees and is updated as needed.
Know what you're selling
This is an industry where you have to know the products you sell. If you are not a professional esthetician or someone who is not familiar with the industry, you may have a hard time getting into the beauty products industry because you have a lot of product knowledge to learn right from the start.
Customers will come in asking for advice about products and need your opinion. If you can find a solution to their problem, you will gain their trust immediately. If your solution works; even better! Customer service is very important in this industry.
As I said before, this is a competitive industry and you will be competing with some of the big brands, so as a small beauty store, you need to make sure you and your staff have enough product knowledge and provide excellent customer service to compete with the larger stores.
In addition to product knowledge, some beauty stores that only work with professionals also sell salon equipment and design. This is another area, so when considering a beauty store, look at what the current owner does in this market. If they are in this market, decide if you want to stay in this market. If so, again, you need to learn more about the latest trends. If they are not already in this market, this could be a potential space once you get in.
Marketing Management
Take a look at the current owner's marketing strategy. In the beauty products industry, you have to utilize social media. Much of this industry is visual. Social media is the perfect medium to sell your products and position yourself as an industry expert.
Looking Ahead
Based on this article, you can see that buying a beauty store is not just about looking at the financials. There are a number of areas to consider before making a purchase. Considering these issues ahead of time while conducting all other standard due diligence will help your beauty store purchase process go as smoothly as possible.
IBISWorld says that in the next five years, beauty store owners will have to rely on the introduction of new products to stimulate sales. Competition from discounters such as Wal-Mart and drugstores is intensifying, so while revenues remain strong, the organization expects competition in the beauty store market to increase.