G4271B Cosmetic and Toiletry Retailing in Australia Industry Report

AU INDUSTRY (ANZSIC) REPORT G4271b
Cosmetic and Toiletry Retailing in Australia

Fresh scent: Demand for wellness products is set to create a stable foundation for
revenue growth
Arna Richardson | February 2021
IBISWorld.com +61-3-9655-3800 info@IBISWorld.com

Cosmetic and Toiletry Retailing in Australia G4271b February 2021
Contents
About This Industry...........................................5 Competitive Landscape...................................27
Industry Definition..........................................................5 Market Share Concentration....................................... 27

Major Players................................................................. 5 Key Success Factors................................................... 27
Main Activities................................................................5 Cost Structure Benchmarks........................................ 27
Supply Chain...................................................................6 Basis of Competition................................................... 30
Similar Industries........................................................... 6 Barriers to Entry........................................................... 31
Related International Industries....................................6 Industry Globalization..................................................32
Industry at a Glance.......................................... 7 Major Companies............................................ 33
Executive Summary....................................................... 9 Major Players............................................................... 33

Other Players................................................................36
Industry Performance..................................... 10
Operating Conditions...................................... 41
Key External Drivers.....................................................10
Current Performance................................................... 12 Capital Intensity........................................................... 41
Technology And Systems........................................... 42
Industry Outlook............................................. 16 Revenue Volatility........................................................ 44
Regulation & Policy...................................................... 45
Outlook......................................................................... 16
Industry Assistance..................................................... 46
Performance Outlook Data......................................... 18
Industry Life Cycle....................................................... 18 Key Statistics.................................................. 47
Products and Markets..................................... 20 Industry Data................................................................47

Annual Change.............................................................47
Supply Chain................................................................ 20
Key Ratios.................................................................... 47
Products and Services.................................................20
Demand Determinants................................................ 22 Additional Resources...................................... 48
Major Markets..............................................................23
International Trade.......................................................24 Additional Resources.................................................. 48
Business Locations..................................................... 25 Industry Jargon............................................................ 48
Glossary Terms............................................................48
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Covid-19
Coronavirus IBISWorld's analysts constantly monitor the industry impacts of current events in
real-time – here is an update of how this industry is likely to be impacted as a result
Impact Update of the global COVID-19 pandemic:
• Temporary store closures due to lockdown measures are expected to negatively

affect industry revenue in 2019-20 and the first half of 2020-21 following second-
wave lockdown measures in Victoria.
• Declining discretionary incomes and weak consumer sentiment will likely

constrain demand in 2020-21. Consumers will likely move away from prestige and
organic cosmetics in favour of lower-priced mass-market brands and products.
Demand is also anticipated to move towards clean or ethical beauty brands, as
consumers change their beauty routines due to health and wellness trends
following the COVID-19 pandemic.
• The COVID-19 outbreak has irrevocably changed the try-before-you-buy nature of

cosmetic sales in specialty cosmetic stores. The pandemic has put an end to
conventional cosmetic testers due to contagion risks. Industry operators will
therefore likely increasingly emphasise digital interactions with consumers, and use
new technologies including augmented and virtual reality.
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About This Industry

Industry Definition Industry firms sell cosmetics, perfumes, toiletries and personal grooming products.
Industry retailers include specialty cosmetics stores, perfume and fragrance stores,
and beauty supply stores.
Major Players Mecca Brands Pty Ltd
Australian Pharmaceutical Industries Limited
Main Activities The primary activities of this industry:

Cosmetics retailing
Bath, shower and skincare products retailing
Perfumes and fragrances retailing
Hair care products retailing
Men's grooming products retailing
Oral hygiene products retailing
The major products and services in this industry:

Hair-care products
Make-up and skincare products
Fragrances
Personal care products
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Supply Chain
SIMILAR INDUSTRIES
Cosmetics, Perfume and Online Shopping in Australia Cosmetics and Toiletry Pharmacies in Australia
Toiletries Manufacturing in Wholesaling in Australia
Australia
RELATED INTERNATIONAL INDUSTRIES
Beauty, Cosmetics & Perfume & Fragrance Stores Online Perfume & Cosmetic Pharmacies & Drugstores in
Fragrance Stores in the US Sales China
Cosmetics & Toiletries Beauty, Cosmetics & Pharmaceutical, Cosmetic

Retailers in the UK Fragrance Stores in Canada and Toiletry Goods Retailing
in New Zealand
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Industry at a Glance
Key Statistics Key External Drivers % = 2016-2021 Annual Growth
$4.3bn 1.4%
Female population aged 18 and older
0.3%
Real household discretionary income
Revenue
0.2% 2.4%
Annual Growth Annual Growth Annual Growth Consumer sentiment index Demand from supermarkets and grocery
stores
2016-2021 2021-2026 2016-2026
-2.8% 11.8%
Demand from department stores Demand from online shopping
0.2% 1.7%
Industry Structure
$192.6m
Profit POSITIVE IMPACT
Annual Growth Annual Growth
Capital Intensity Concentration
2016-2021 2016-2026 Low Low
3.6%
MIXED IMPACT
4.5% Life Cycle

Mature
Revenue Volatility
Medium
Profit Margin
Regulation Technology Change
Annual Growth Annual Growth
Medium Medium
2016-2021 2016-2026
Barriers to Entry Globalization
0.7% Medium Medium
NEGATIVE IMPACT
3,900
Businesses Industry Assistance Competition
None High
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
Key Trends
-0.3% -0.7%
The local prices of global brands have fallen, bringing them
more in line with international levels
18,461 Intensifying competition has contributed to a decline in

industry participation
Employment
The entry of prestige retail brand Sephora has helped draw
Australian consumers back into stores
2016-2021 2021-2026 2016-2026
Industry firms will offer more DIY beauty products in line with
-1.1% -1.4% new at-home wellness trends
Retailers will increasingly rely on new technologies such as
augmented reality and virtual reality
$625.9m Green trends are projected to stimulate changes in the
Wages industry's product portfolio
Increasing demand for customised and eco-beauty products
is driving revenue growth
2016-2021 2021-2026 2016-2026
-1.9% -0.7%
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Products & Services Segmentation
16.7% 53.0% 10.9% 19.4%
Hair-care products Make-up and skincare Fragrances Personal care products

products
Cosmetic and Toiletry Retailing
Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS
Low Imports
High Profit vs. Sector Average
Low Customer Class Concentration
Low Capital Requirements
WEAKNESSES
Medium & Decreasing Barriers to Entry
None & Steady Level of Assistance
High Competition
High Product/Service Concentration
Low Revenue per Employee
OPPORTUNITIES
High Revenue Growth (2016-2021)
High Performance Drivers
Demand from supermarkets and grocery
stores
THREATS
Very Low Revenue Growth (2005-2021)
Low Revenue Growth (2021-2026)
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Executive The Cosmetic and Toiletry Retailing industry sells thousands of

Summary cosmetic and toiletry brands through specialty cosmetics stores.
New products have been a key driving force in the industry's performance over the
past five years. Fusion and eco-friendly lines have stimulated demand in an
otherwise mature, saturated market. The recent launch of new experiential stores to
capitalise on the hands-on nature of cosmetics and entice online shoppers back
into stores has also supported demand and given the industry a new service-based
revenue stream. Several operators have targeted millennial consumers who are
willing to experiment with new, multifunctional or fusion products and independent
brands in a personalised, hands-on retail environment.
These developments have supported industry growth over the past five years.
However, the COVID-19 pandemic has interrupted this growth, with the temporary
closure of many cosmetic stores underlying a revenue contraction in 2019-20.
While most consumers are expected to return to stores in 2020-21, supporting
revenue growth of 2.1%, the nature of instore shopping experiences will likely
change. The COVID-19 pandemic appears to have marked the end of instore
cosmetic testers and associated touch-and-try marketing strategies. Overall,
industry revenue is expected to grow by an annualised 0.2% over the five years
through 2020-21, to $4.3 billion, due to the negative effects of the COVID-19
pandemic.
Revenue growth is projected to be driven by new customised beauty products and

growing demand for eco-beauty products, cruelty-free beauty brands and new
wellbeing products over the next five years, as beauty and wellness trends continue
to converge. In the wake of the COVID-19 pandemic, consumers are anticipated to
increasingly prefer beauty products with a clean image, reflecting the increased
emphasis on hygiene and safety. Industry revenue is forecast to grow by an
annualised 1.7% over the five years through 2025-26, to $4.6 billion. However,
heightened competition will likely limit industry revenue growth, as operators
continue to contend with external competition from online rivals. Shopping patterns
that have changed due to the pandemic will likely result in more cosmetic retailers
integrating their offline and online channels to provide a seamless shopping
experience. Others will adopt new technologies designed to boost digital
interaction. New augmented or virtual reality apps may also be used to replace
physical testers.
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Industry Performance
Key External Demand from supermarkets and grocery stores

Drivers Specialty cosmetic, beauty supply and perfume stores face growing pressure from
supermarkets, which have expanded their cosmetics and personal grooming
product ranges over the past five years. Supermarkets have continued to make
inroads into the industry, due to consumers demanding both value for money and
convenience, largely at the expense of specialty retailers. Demand from
supermarkets and grocery stores is expected to slightly increase in 2020-21.
Female population aged 18 and older

Despite the growing array of personal-care items for men, female consumers are
still the largest target market for cosmetics retailers. As the number of females
aged over 18 years increases, demand for industry products also tends to rise. The
female population aged 18 years and over is expected to rise to an estimated 10.4
million people in 2020-21.
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Changes in household discretionary income influence demand for industry
products. As discretionary incomes fall, consumers tend to substitute higher value
products with lower cost items, often delaying purchasing discretionary items such
as perfumes. Conversely, consumers can splurge on premium brands and higher
end cosmetics when discretionary incomes rise, providing industry retailers with an
opportunity to expand. Real household discretionary income is expected to fall in
2020-21, due to the weak economic environment during the COVID-19 pandemic.
Demand from department stores

Industry retailers compete against department stores, which stock a range of
cosmetics, toiletries and perfumes. Department stores often rely on marketing and
promotional campaigns, including gift-with-purchase offers, to encourage
consumers to purchase cosmetics and toiletries. Demand from department stores
is expected to decrease in 2020-21, partially lessening the competitive challenges
facing specialty cosmetic and toiletry retailers.
Demand from online shopping

The growing number of online-only cosmetics retailers represent one of the
industry's greatest external threats. More Australian consumers have been
benefiting from discounted prices, parallel imports and the greater range of brands
that many online retailers offer. Amazon's recent entry into the industry has
increased this external challenge. Furthermore, the COVID-19 pandemic and
associated lockdown and social distancing measures have encouraged more
consumers to shop online. Online cosmetics sales are expected to continue
growing in 2020-21, negatively affecting industry retailers.
Consumer sentiment index

Consumer sentiment can reflect changes in demand for industry products. When
consumer sentiment is positive, consumers tend to purchase more expensive
products. When sentiment is low or negative, consumers are more likely to
downgrade or postpone purchases. The consumer sentiment index is expected to
rise but remain negative in 2020-21, due to the economic effects of the COVID-19
pandemic.
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Current Operators in the Cosmetic and Toiletry Retailing industry have

Performance contended with various challenges over the past five years.
Many challenges have been associated with the mature and saturated nature of the
market. Rival external retailers, including bricks-and-mortar stores and a growing
number of pure-play online retailers, have negatively affected industry retailers'
sales. In particular, supermarkets and online discount cosmetics stores have
benefited from variations in consumer sentiment and associated shifts in
discretionary spending over the period. Falling discretionary income over the past
five years has encouraged some consumers to purchase value-for-money mass-
market products from supermarkets and online stores.
The COVID-19 outbreak is the latest challenge for the industry, with many stores
temporarily closing due to lockdown restrictions and social distancing measures in
March 2020, and in August 2020 for stores located in Victoria. A drastic fall in
customer numbers and the temporary suspension of paid in-store services, such as
in-store makeovers, due to health concerns and contagion risks also contributed to
a revenue decline in 2019-20. Changed consumption patterns during the pandemic
have also affected revenue. For example, stay-at-home and social distancing
restrictions have increased demand for at home-beauty and pamper treatments,
while mandatory face mask requirements have seen increased demand for above-
the-mask products such as eye make-up, but lower demand for lipsticks. These
factors have weakened industry revenue growth. Industry revenue is anticipated to
rise at an annualised 0.2% over the five years through 2020-21, to total $4.3 billion.
However, revenue is expected to rise by 2.1% in the current year, as industry
operators attempt to partially regain lost ground, while also adopting to the new
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operating environment for beauty retailing. For example, the COVID-19 pandemic
has essentially ended conventional instore cosmetic testers due to potential
contagion risks. The pandemic has also driven many cosmetics consumers online
to websites hosted by pureplay cosmetic online rivals outside the industry.
Modest growth
Prior to the COVID-19 pandemic, revenue for specialist cosmetics

retailers grew modestly.
An increasing range of innovative cosmetics and personal-care products stimulated
demand and drove growth in the mature market, alongside new independent brands
and growing consumer interest in Korean beauty products. New items have
included natural, organic and green products; face masks and spa-at-home
products; fusion items such as cosmeceuticals and nutricosmetics; beauty
gadgets; and a growing array of high-definition cosmetics. Upstream cosmetic
manufacturers' efforts to encourage consumers to upgrade purchases to niche and
premium products, including eyebrow make-up, and contouring and highlighting
products, have filtered into the retailing market. More manufacturers and retailers
have harnessed the power of social media, including websites such as Instagram,
Facebook and Snapchat, and online beauty blogs and videos, to sell their products.
Volatile consumer sentiment has reflected consumer purchasing patterns over the
past five years. The growing range of private-label, mass-market and discounted
parallel import products has attracted value-conscious consumers. In particular, the
cheap product offerings of many online retailers have drawn consumers away from
traditional bricks-and-mortar stores. Supermarkets and lower end department
stores have also been offering mass-market cosmetic and personal-care products
at attractive prices, drawing consumers away from specialty cosmetic stores.
These trends have adversely affected the volume of products sold through mass-
market industry stores.
In response, some industry operators have introduced digitally enhanced store-

based experiences to draw customers back to their stores. Sales from these new
experiential beauty retail stores, which tend to have higher pricepoints, have
contributed to industry revenue growth over the past five years. For example,
Australia-based beauty retailer Mecca Brands is opening connected stores that
feature digital displays, interactive displays and selfie studios. The entry of prestige
retail brand Sephora has also encouraged Australian consumers back into industry
stores. Sephora, which is owned by the France-based luxury goods retailer LVMH,
opened its first Australian store in December 2014. The company has since
expanded to operate 20 Australian stores and a local ecommerce platform.
Price and profit pressures
The local prices of many key global brands have fallen over the past
five years, bringing them more in line with international levels and
reducing average prices.
A flood of parallel imports and higher consumer confidence in online sales have
also reduced unit prices. Rival large-scale pharmacies and discount outlets have
been selling fragrances and cosmetics at heavily reduced prices, exacerbating this
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trend. Falling prices and growing external competition have placed downward
pressure on industry profit margins. However, industry operators have introduced
new premium products and associated beauty services with higher added value to
help offset these trends. Industry profit has therefore risen slightly over the past five
years.
Changing players
The industry includes a range of operators, from boutique

specialists offering bespoke cosmetics and artisanal fragrances to
discount mass-market outlets selling parallel imports.
The number of industry operators and associated employment numbers have
contracted over the past five years. This trend reflects intensifying industry
competition and a saturated market. It also reflects a changing operating
environment. In January 2019, Crabtree & Evelyn was reported to have closed its 12
Australian stores as part of a global decision to close all of its retail stores as the
company moved to purely online operations. In the following month, more than half
of collapsed cosmetic chain Napoleon Perdis' stores were reported to close
immediately amid tough retail conditions. In October 2020, Australian
Pharmaceutical Industries announced the closure of 14 Priceline stores due high
rent costs in CBDs and shopping centres, and low customer numbers during the
COVID-19 pandemic.
New competition
Growing external competition has heavily influenced the industry's

performance over the past five years.
Competition has intensified as retailers outside the industry, including
supermarkets and department stores, have stocked more cosmetic products and
fragrances. Supermarkets have been a significant threat to the industry over the
period. Many consumers have moved away from specialty retailers' premium
products and towards mass-market products, reflecting a growing desire for value
for money.
The increasing number of dedicated online cosmetic and fragrance retailers, and
general online retailers has further threatened the industry's performance over the
past five years. In addition to heavily discounted prices, online retailers can attract
consumers with offers such as free postage, gifts with purchases and discount
coupons. Many online retailers also use mobile apps for promotions. These
growing competitive forces are projected to continue in the short term, negatively
affecting the industry's operating environment.
Historical Performance Data

Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2012–13 3,945 904 4,527 3,938 20,589 N/A N/A 675 N/A
2013–14 3,950 906 4,676 4,068 20,330 N/A N/A 680 N/A
2014–15 3,999 876 4,550 3,988 20,071 N/A N/A 679 N/A
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Demand
2015–16 4,239 904 4,526 3,958 19,525 N/A N/A 688 N/A
2016–17 4,259 922 4,505 3,961 19,065 N/A N/A 667 N/A
2017–18 4,318 941 4,574 4,024 19,482 N/A N/A 660 N/A
2018–19 4,389 910 4,598 4,071 19,595 N/A N/A 659 N/A
2019–20 4,191 864 4,513 4,000 18,909 N/A N/A 637 N/A
2020–21 4,279 880 4,403 3,900 18,461 N/A N/A 626 N/A
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Industry Outlook
Outlook The operating environment for firms in the Cosmetic and Toiletry
Retailing industry is forecast to be noticeably different following the
COVID-19 pandemic.
The previous try-before-you-buy
cosmetics retail operations will be
no longer viable due to potential
contagion risk. The industry is
instead anticipated to increasingly
rely on tech-driven marketing
strategies and no-touch smart
stores. Changed consumer
behavioural patterns following the
pandemic will also influence the
products stocked by industry
operators as consumers increasingly
focus on holistic health and
wellness, and clean beauty products.
As lockdown and social distancing
measures have resulted in many
cosmetic consumers moving online
to cosmetic websites operated by
rival pure-play online cosmetic companies, changed shopping patterns will continue
to affect the industry's operating environment.
Despite these challenges, underlying economic, demographic and social trends will
benefit industry demand. Ongoing development of new hybrid and niche products, a
growing range of eco-beauty products and the rising popularity of local independent
brands are forecast to drive revenue growth. Similarly, new service-based revenue
streams will increasingly cater to consumers wanting cosmetic experiences. Future
industry success will also likely be driven by business models that reflect growing
consumer demands for sustainability, traceability and transparency. These values
have become even more important as a result of the COVID-19 pandemic.
Industry revenue is forecast to rise at an annualised 1.7% over the five years
through 2025-26, to $4.6 billion. However, industry enterprise, establishment and
employment numbers are forecast to decline over the period. Industry profit
margins are anticipated to remain modest over the next five years, due to intense
internal and external competition.
New strategies and technologies
The COVID-19 pandemic marked the end of stores using

conventional instore cosmetic testers to encourage consumer
purchases.
Over the next five years, industry operators will increasingly rely on new
technologies such as augmented reality and virtual reality apps, which allow
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consumers to test products prior to purchase. Several operators are forecast to

open new experiential or digitally enhanced stores, which rely on new instore
technologies such as augmented reality mirrors and skin diagnostic tools. In
addition, some beauty stores may use artificial intelligence tools to provide
personalised beauty regimes, catering to personalisation trends and consumers
wanting bespoke solutions that match their specific skin care, hair care and colour
cosmetic needs.
Industry operators are also projected to harness new technologies to provide

consumers with a seamless and compelling shopping experience across instore
and online channels. Several retailers will therefore likely pursue omnichannel
strategies through online operations that complement their store-based activities.
This will help industry firms compete against external rivals. Continued growth
among pure-play cosmetic online retailers, which have recently benefited from
consumers undertaking more online shopping during the COVID-19 pandemic, is
projected to increase competition and put pressure on revenue for traditional
bricks-and-mortar retailers. Amazon's recent entry into the industry will likely
exacerbate the competitive threat of online retailers over the next five years. These
developments will further fuel the rise of digital beauty and change the profile of the
industry, as both industry operators and their external competitors move online.
In addition, industry players are forecast to increasingly rely on new technologies to

connect with consumers. A greater reliance on innovative marketing strategies,
particularly through social media and mobile applications, is also anticipated to
influence the industry's performance over the next five years. More specialty stores
are projected to encourage customers to share their instore experiences on social
media.
Customers and products
The COVID-19 pandemic has prompted many consumers to revise

their beauty and self-care routines in view of the extra time spent at
home, and an inability to access physical beauty stores or salons
due to associated lockdown measures.
Many of these newly established routines will likely continue after the pandemic, as
consumers take a more holistic approach to beauty and wellness. For example,
industry firms are anticipated to offer more DIY beauty products in line with new at-
home wellness trends. Others are projected to stock a greater range of skin health-
care products, as consumers increasingly emphasise personal hygiene.
Green trends, and the associated eco-beauty and clean-beauty movements are also
projected to stimulate change in the industry's product portfolio over the next five
years. Some retailers will likely alter their product lines to cater to growing demand
for products containing natural or certified organic ingredients, products made from
sustainable sources or vegan ingredients, products free from various chemicals,
and products with a smaller environmental footprint. Industry firms are projected to
offer an expanding range of ethical products and products promoting biodiversity
principles over the period. Following trends occurring elsewhere in the cosmetics
and toiletries supply chain, industry retailers are anticipated to adopt new business
models and strategies based on corporate social responsibility, traceability,
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sustainability and zero waste. Cruelty-free products are anticipated to gain ground,
following the ban of cosmetic products tested on live animals from 1 July 2020.
Performance Outlook Data

Demand
2021–22 4,377 891 4,379 3,889 18,255 N/A N/A 620 N/A
2022–23 4,455 902 4,354 3,875 18,097 N/A N/A 616 N/A
2023–24 4,508 913 4,311 3,846 17,832 N/A N/A 611 N/A
2024–25 4,574 922 4,256 3,803 17,499 N/A N/A 607 N/A
2025–26 4,644 932 4,206 3,765 17,230 N/A N/A 604 N/A
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS

The market for some product segments is saturated
Consumers wholeheartedly accept industry products
Competition from outside the industry is growing
An ageing population and a more holistic approach to health is driving moderate revenue
growth
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The Cosmetic and Toiletry Retailing industry is currently in the mature phase of its
life cycle, as it contends with increasingly challenging operating conditions. While
several industry players are continuing to roll out stores, establishment numbers are
falling as the market matures and an increasing number of product segments reach
saturation. These trends have led to underperforming stores closing and, in some
instances, entire chains exiting the industry. Industry operators are facing intense
external competition from numerous sources, such as supermarkets, department
stores and pharmacies, which is adding to consolidation pressures. Online-only
retailers also represent an increasingly important rival for cosmetic and fragrance
sales.
Some industry product segments are still experiencing growth, driven by advances
in natural and organic product manufacturing and marketing, and new eco-beauty
brands. This product development is helping to sustain growth in an otherwise
mature industry. In recent years, demand has grown for products containing natural
and certified organic ingredients, vitamins and even probiotics. Demand has also
grown for clean beauty products free from GMOs and chemicals, such as parabens,
sulphates, phthalates and artificial preservatives, alongside cruelty-free products.
An increasing array of products and eco-beauty brands are targeting the growing
number of socially conscious consumers that consider the ethical, social and
environmental consequences of their purchasing patterns, including many younger
consumers. The ageing of the baby boomer cohort is also driving demand for many
cosmetic products, particularly those positioned as healthy-ageing products. A
more holistic approach to skin care and appearance across its customer base will
continue to benefit the industry.
Industry value added, which indicates the industry's contribution to the economy, is
forecast to grow by an annualised 0.3% over the 10 years through 2025-26. This
significantly lags real GDP growth, which is forecast to increase at an annualised
1.8% over the same period. This trend suggests that the industry is
underperforming relative to the wider economy.
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Products and Markets

Supply Chain KEY BUYING INDUSTRIES KEY SELLING INDUSTRIES
1st Tier 1st Tier
Consumers in Australia Cosmetics and Toiletry Wholesaling in
Australia
2nd Tier
Internet Service Providers in Australia
Cosmetics, Perfume and Toiletries
Manufacturing in Australia
Soap and Cleaning Compound
Manufacturing in Australia
Products and
Services
A stream of enhanced, repackaged and reformulated products has

characterised the industry over the past decade.
Numerous changes have also been made to industry participants' product ranges.
These changes reflect the development of new markets and products, such as
cosmeceuticals, age-defying products, male-only lines, teen brands, and the
extension of the industry's consumer base.
Make-up and skincare products
New cosmetics have been launched in all price ranges over the past
five years, reflecting constant product innovations.
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Concerns about ageing, and consumer desire for convenience and make-up on the
go have driven the creation of new products. Operators have also developed new,
instant beauty products designed to give consumers a photo-ready finish. Sales of
concealers, eyebrow make-up, mascara, lip colours and natural-look make-up
products have grown significantly over the period. Contouring and strobing beauty
trends have also stimulated product segment growth, driving sales of highlighting
and high-definition beauty products.
Sales in the skincare subsegment have also increased over the past five years.
Many new products introduced in the skincare subsegment over the past five years
have harnessed wellbeing trends, and the need for ritual and balance. This factor
has become particularly important during the COVID-19 pandemic, as home-bound
consumers have turned to do-it-yourself and at-home beauty products as part of
new at-home wellness trends. Facial oils and vitamin C serums, and face masks
have been among the fastest growing products in the skincare subsegment. In the
wake of the COVID-19 pandemic and the increased usage of hand sanitisers made
with harsh chemicals, sales of hand care products have also increased significantly
over the two years through 2020-21. These developments have partially offset
lower lipstick sales, which have been constrained by stay-at-home restrictions and
mandatory mask-wearing requirements.
This segment is expected to account for 53.0% of industry revenue in 2020-21,

having grown as a share of revenue over the past five years. The rollout of Mecca
Maxima stores and Sephora's entry into the industry have further stimulated
consumer interest in hands-on shopping experiences. However, this trend may now
be set to change following the COVID-19 pandemic, as physical testers are no
longer viable in view of potential contagion risks.
Personal care products
This segment includes bath and shower products, deodorants and

talcum powders, oral hygiene products, men's grooming products,
manicure and pedicure preparations, depilatory products, sponges
and make-up tools.
This segment has increased as a share of revenue over the past five years, driven
by new products and changing consumer behavioural patterns during the COVID-19
pandemic.
Manufacturers have developed a growing range of bath and shower products over
the past five years, which aim to retain consumer interest in an otherwise mature
product segment. Furthermore, many consumers have been moving away from
liquid products and towards traditional bar soap, as upstream manufacturers
reduce their reliance on single-use plastic packaging products. During the COVID-19
pandemic, sales of prestige and luxury hand soaps spiked significantly, as
consumers emphasised personal hygiene routines. Sales of prestige nail products
have also surged in recent months, as home-bound consumers have turned to at-
home manicure rituals to maintain their nails and boost their sense of wellbeing.
The men's grooming segment has also had an influx of new products, as
companies have specifically targeted an increasingly image-conscious male
population. Companies such as L'Oreal, Clinique, Clarins and Nivea have created
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male grooming ranges that include multi-step skincare regime products, including
facial cleansers and facial moisturisers, alongside hand and body lotions.
Fragrance brands have also been extended to include moisturisers, body washes
and deodorants for men. Other new products include beard-care items such as oils
and waxes. While sales of men's shaving products have fallen over the past five
years, overall sales of men's grooming products have risen as men have taken a
greater interest in their personal appearance.
The popularity of teeth-whitening products has stimulated interest in the oral

hygiene product segment over the past five years. However, industry operators
selling day-to-day oral hygiene products, such as toothbrushes, toothpaste and
deodorant, face significant competition from rival distribution channels, such as
supermarkets, pharmacies and convenience stores. In addition, weak sales of
talcum powder have offset sales growth for deodorants, which have been boosted
by new clinical protection deodorants.
Hair-care products
Over the past five years, hair-care product sales have benefited
from salon-inspired brands, products containing particular oils,
such as argan and macadamia, and new products such as dry
shampoos.
Products containing natural ingredients and new sulphate-free products have also
stimulated some growth in an otherwise mature product segment. However,
supermarkets and discount pharmacies have continued to make inroads into the
beauty market by stocking an ever-increasing range of salon and professional
products. As a result, this segment's share of industry revenue has marginally fallen
over the past five years.
Fragrances
The fragrances segment is considered saturated.

However, products developed in conjunction with and promoted by pop stars,
models, actors and fashion labels have managed to boost sales at the start of the
past five years. The array of unisex fragrances, body sprays and mists has also
grown. Despite these trends, this segment's share of industry revenue has fallen
slightly over the past five years, due to cheap parallel imports and the increasing
number of discounted products available online and through discount channels.
Demand This segment includes bath and shower products, deodorants and
Determinants talcum powders, oral hygiene products, men's grooming products,
manicure and pedicure preparations, depilatory products, sponges
and make-up tools.
This segment has increased as a share of revenue over the past five years, driven
by new products and changing consumer behavioural patterns during the COVID-19
pandemic.
22 IBISWorld.com
Manufacturers have developed a growing range of bath and shower products over
the past five years, which aim to retain consumer interest in an otherwise mature
product segment. Furthermore, many consumers have been moving away from
liquid products and towards traditional bar soap, as upstream manufacturers
reduce their reliance on single-use plastic packaging products. During the COVID-19
pandemic, sales of prestige and luxury hand soaps spiked significantly, as
consumers emphasised personal hygiene routines. Sales of prestige nail products
have also surged in recent months, as home-bound consumers have turned to at-
home manicure rituals to maintain their nails and boost their sense of wellbeing.
The men's grooming segment has also had an influx of new products, as
companies have specifically targeted an increasingly image-conscious male
population. Companies such as L'Oreal, Clinique, Clarins and Nivea have created
male grooming ranges that include multi-step skincare regime products, including
facial cleansers and facial moisturisers, alongside hand and body lotions.
Fragrance brands have also been extended to include moisturisers, body washes
and deodorants for men. Other new products include beard-care items such as oils
and waxes. While sales of men's shaving products have fallen over the past five
years, overall sales of men's grooming products have risen as men have taken a
greater interest in their personal appearance.
The popularity of teeth-whitening products has stimulated interest in the oral

hygiene product segment over the past five years. However, industry operators
selling day-to-day oral hygiene products, such as toothbrushes, toothpaste and
deodorant, face significant competition from rival distribution channels, such as
supermarkets, pharmacies and convenience stores. In addition, weak sales of
talcum powder have offset sales growth for deodorants, which have been boosted
by new clinical protection deodorants.
Major Markets
Households are the primary market for the Cosmetic and Toiletry Retailing industry.
However, the industry can be further segmented on the basis of age. These markets
tend to remain stable on a year-by-year basis, with small changes occurring in line
with changing discretionary expenditure patterns. Sustained demand for new
cosmetic products and brands from all market segments has supported the
industry's revenue performance over the past five years. For example, demand has
23 IBISWorld.com
increased for innovative beauty products that promise millennial consumers a

photo-ready appearance. At the other end of the age spectrum, demand for healthy-
ageing beauty products has risen.
People aged 35 to 54
People aged 35 to 54 are the industry's largest market, accounting for 44.1% of
industry revenue in the current year. An increasing array of products have targeted
this cohort over the past five years, many of which are designed to address
concerns regarding ageing. Many consumers in this category have a high capacity
for discretionary expenditure, with both male and female consumers likely to
experiment with new products targeted at them.
People aged 15 to 34
Millennial consumers are another key target market for many cosmetic retailers.
Consumers in this age group are often particularly image conscious, and likely to
spend a significant share of their discretionary income on cosmetics and toiletries.
Several cosmetic stores target millennial consumers, including Mecca Cosmetica
and Napoleon Perdis. Social media strategies also often focus on this market.
However, their actual spending power is lower relative to their older counterparts.
Consumers in this age cohort are also more likely to make their cosmetic
purchases online, seeking the best competitive prices available for international
brands not readily available at Australian retailers.
People aged 55 and over
Baby boomers are generally considered the largest consumer buying group and
wield considerable spending power. Nearly 8.9 million Australians are expected to
be aged 50 and over in 2020-21, representing 33.8% of the total population.
However, many consumers in this age cohort are more likely to purchase their
cosmetics through traditional channels such as department stores, rather than
specialty cosmetic retailers. These purchasing patterns reduce this age cohort's
importance to the Cosmetic and Toiletry Retailing industry.
International Exports in this industry are Low and Steady

Trade
Imports in this industry are Low and Steady
The industry only services the domestic market. While statistics for imports and
exports are not applicable to the industry (as they are included in the Cosmetics,
Perfume and Toiletries Manufacturing industry), imported products meet a sizeable
portion of domestic demand. In 2020-21, the upstream Cosmetics, Perfume and
Toiletries Manufacturing industry is expected to import $2.5 billion worth of
products, satisfying over 80% of domestic demand. Key imported products include
beauty, make-up and skincare preparations (worth $1.2 billion in 2019-20),
perfumes and toilet waters (roughly $479 million) and hair preparations (just over
$375 million).
24 IBISWorld.com
The major import sources for cosmetics and toiletry preparations are the United
States, France, the United Kingdom, Thailand and China. Import penetration varies
significantly between product segments. Import penetration is expected to be
highest in segments where products have high value-to-volume ratios, and transport
costs are therefore proportionally lower, such as for fragrances and perfumes. The
high level of imports reflects the fact that the Australian market is considered too
small to support the domestic manufacture of some products, particularly at the
upper end of the market. These problems arise because of a lack of scale and
difficulties in obtaining suitable, high-quality packaging materials in Australia.
Business
Locations Business Concentration in Australia
NT
QLD
WA
SA
NSW
ACT
VIC
Percentage of Enterprises (%)

TAS
0 12 24 36
Cosmetic and Toiletry Retailing in Australia
Source: IBISWorld
The geographic distribution of the industry reflects Australia's economic, social and
demographic breakdown. In line with this, the three eastern seaboard states (New
South Wales, Victoria and Queensland) are estimated to account for over three-
quarters of industry locations. New South Wales has the largest share of cosmetic
retailers, with 34.9% of industry enterprises. Victoria follows with 23.8% of retailers,
and Queensland trails with 19.1%. These statistics reflect the higher income
associated with the consumer base of each state. They are also in line with the
25 IBISWorld.com
higher population concentration, with these three states accounting for 77.9% of
Australia's population.
Tasmania's share of enterprise numbers is slightly above its share of the population
base, as is Western Australia and South Australia. In contrast, the two territories are
under-represented. These proportions have remained essentially unchanged over
the past five years, despite the initial entry of new players during this time, followed
by the closure of various retail stores and chains in more recent years.
26 IBISWorld.com
Competitive Landscape
Market Share Concentration in this industry is Low
Concentration
The Cosmetic and Toiletry Retailing
industry has low concentration, with the
top four players accounting for less than
40% of industry revenue. This low
concentration level is despite the
existence of local retail chains, such as
Priceline and Mecca Cosmetica, and
international retail chains, such as the
Body Shop, L'Occitane, Lush and Sephora.
Industry concentration has remained
unchanged over the past five years,
despite existing and new players rolling
out stores on a nationwide basis. Low
industry concentration is forecast to
continue over the next five years.
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this
Factors industry are:
Ability to control stock on hand: Industry players must ensure adequate stock controls
are in place to reduce inventory costs and increase stock turnover.
Having a clear market position: Industry players must project a clear and consistent
image to attract discretionary consumer expenditure. In an age of social media and digital
beauty, this factor is becoming more important.
Production of goods currently favoured by the market: Industry players must ensure
that their product mix and pricing strategies are appropriate for their target market.
Experienced work force: Due to the industry’s customer-centric focus and reliance on
one-on-one selling techniques, shop-floor staff must be knowledgeable and experienced.
This factor is particularly important in the prestige segment of the industry.
Attractive product presentation: Store layout and stock display techniques must
encourage customers to experiment and enjoy their instore experience. Store design must
reinforce the company’s image. Retailers are anticipated to increasingly use digital displays
over the next five years.
27 IBISWorld.com
Cost Structure
Benchmarks
Profit
The aggressive price discounting tactics of

online stores and reduced prices in some
product segments (partly due to an influx of
parallel imports) have limited profit margins
over the past five years. However, strong
demand, and the continued introduction of
higher value-added and premium products have
increased industry profit over the past five years.
On an individual store basis, store traffic and the
effectiveness of merchandising can influence
profitability.
Wages
Wages are the industry's second-largest

expense and are expected to account for 14.6%
of revenue in the current year. These costs
reflect the labour-intensive nature of the
industry, with boutique stores typically offering
personalised and one-on-one sales services.
Wages have fallen as a share of industry
revenue over the past five years. This trend
reflects a greater reliance on part-time and
casual labour, which has pushed down average
wages over the period.
28 IBISWorld.com
Purchases
Purchases are the industry's largest expense

and are expected to account for 59.4% of
revenue in 2020-21. Purchase costs have risen
as a share of industry revenue over the past five
years. This rise has been partly due to the
industry's growing range of new, higher valued,
multi-functional and premium products.
Depreciation
Depreciation expenses are expected to account

for 1.5% of revenue in 2020-21, and this
proportion has increased slightly over the past
five years. This trend reflects new, larger or
experiential stores opening, and retailers
adopting new scanners and radio-frequency
security technology to track products and point-
of-sale data.
Rent
Rent is a significant industry expense, as many

players rely on leasing store locations.
Companies need store locations that offer high
visibility and strong foot traffic. High-end
boutique stores typically require prestigious
locations to attract an affluent clientele. Rent
expenses have slightly increased as a
proportion of industry revenue over the past five
years, reflecting escalating rental costs,
particularly in major shopping locations.
29 IBISWorld.com
Other Costs
Advertising expenses are expected to account

for 4.1% of industry revenue in the current year,
reflecting the important role that marketing and
merchandising play in attracting consumers.
These costs have grown as a share of industry
revenue over the past five years, as cosmetic
and toiletry retailers have increasingly relied on
innovative marketing campaigns and samples to
attract consumers to their stores. In some
instances, royalty payments or franchise fees
apply to industry firms and can account for up to
5% of revenue. Overall, other costs have fallen
as a proportion of revenue over the past five
years.
Basis of Competition in this industry is High and Increasing

Competition
The Cosmetic and Toiletry Retailing industry faces high
competition.
Industry participants compete on price, product range, marketing, location and size
of operations, and image and reputation. The industry is also subject to external
competition from online retailers, supermarkets, pharmacies and department
stores.
Internal competition
The competitive pressure faced and the tools employed will often
vary among the various types of brands, such as mass-market
brands, prestige brands, private-label products and professional
brands.
Rising competitive pressures over the past five years have caused the reliance on
branding to grow, with brand recognition now a key variable. Advertising plays an
important role in brand recognition, with players allocating considerable resources
30 IBISWorld.com
to advertising, instore merchandising and promotional activities, and counter and

floor displays. Upstream manufacturers can also provide samples, testers and gift-
with-purchase promotions.
Efforts to grow customer loyalty have also increased, as retailers seek to retain
their customer base. These efforts include the introduction of loyalty cards and
other reward programs and a growing emphasis on customer service. The growing
importance of customer outreach has also seen retailers offer more personalised
approaches, such as member-only events.
In the past five years, retailers have catered for the growing consumer preference
for natural, herbal or environmentally friendly products, and trends favouring
wellness. The desire for locally made products is also being catered to.
External competition
Industry operators face an increasing degree of external

competition from traditional sources, such as pharmacies,
supermarkets and department stores, and emerging threats like
online retailers.
Pharmacies and supermarkets often sell cosmetics and perfumes, placing them in
completion with specialty cosmetic and beauty stores.
Online cosmetic retailers are proving to be an increasingly potent competitive force

for the industry. The number of online retailers continues to grow, supported by
rising Australian consumer confidence in online shopping. With business models
focused on aggressive price offerings and a growing reliance on parallel imports,
online retailers are continuing to capture market share as they successfully appeal
to consumers on both convenience and value grounds. Extra enticements offered
by online shopping sites such as free shipping, discount coupons or a gift with
purchase also serve to lessen the attraction of specialty cosmetic retailers.
Consumers are often able to access a greater number of preferred brands online,
especially from international sites.
Barriers to Entry Barriers to entry in this industry are Medium and Decreasing
The Cosmetic and Toiletry Retailing

industry has medium barriers to entry. Barriers to entry checklist
The rapid entry (and exit) of new players Competition High
over the past two decades is a good
Concentration Low
illustration of the ability of operators to
enter the industry. The existing barriers Life Cycle Stage Mature
primarily centre on the industry's
Technology Change Medium
ownership structure, in particular the
existence of franchises. Regulation & Policy Medium
Industry Assistance None
In addition, the existence of established
players that possess significant
promotional resources and successful brand names is also important. The ability to
31 IBISWorld.com
financially support intensive advertising and marketing strategies designed to

influence potential customers and their purchasing patterns, particularly in the
fragrance segment, is of strategic significance. However, the existence of niche
markets, such as organics, means that small retailers may enter and operate
successfully in an environment with fewer competitive pressures.
Industry Globalization in this industry Medium and Increasing

Globalization
The Cosmetic and Toiletry Retailing industry has moderate globalisation. Several
international franchise retail outlets operate in the industry, including the Body
Shop, Lush and L'Occitane. The industry is part of the broader cosmetics sector,
which is becoming increasingly globalised as the major cosmetic producers seek to
operate on a worldwide basis. This is prompting the entry of new players at all
levels, including retail, along with the advent of global products and brands. Recent
entrants include Sephora, which to date has opened 20 Australian stores, and the
US-based specialty personal-care product retailer Bath & Body Works, which opened
its first Australian store in October 2015 and currently has five stores in operation,
having recently closed one store. In 2018, Korea's oldest and largest beauty
company, Amorepacific Group entered the industry with the opening of three bricks-
and-mortar stores under its natural beauty brand Innisfree as it seeks to capitalise
on the growing Australian fascination with Korean beauty products. In addition, its
global luxury brands Amorepacific and Laneige have recently been launched in
Sephora and Mecca Cosmetica stores. It now operates 11 stores in Victoria and
New South Wales.
Globalisation is slowly increasing in line with the evolving market place. An

increasing volume of cosmetics and perfumes have been sold via the internet over
the past five years. This trend is being embraced by traditional cosmetic retailers,
which are making the transition to clicks-and-mortar operations, and by pure-play
cosmetic online retailers. These operators are seeking to take advantage of the
increasingly global nature of the industry and growing consumer confidence in
buying cosmetics from websites across the globe.
32 IBISWorld.com
Major Companies
Major Players MECCA BRANDS PTY LTD
Market Share: 12%

Mecca Brands Pty Ltd operates in the industry
through two retail chains: Mecca Cosmetica
and Mecca Maxima. The company has over
100 stores in Australia and New Zealand
combined. Products are also sold online and
in seven concession stores in Myer. Mecca
Brands sells over 150 global brands and 6,000
products and employs more than 3,100
people. The privately owned group has
focused on rolling out larger format stores
and developing niche categories over the past
five years. It has started rolling out connected stores that feature digital displays
designed to foster a connection with customers, selfie studios and how-to
interactive displays. In 2016, it launched its own digital publication, the MECCA
Memo, followed by the launch of its own signature line of products MECCA MAX in
2017. It also operates a YouTube channel under the name of MECCA Beauty Junkie
and offers a loyalty program called MECCA Beauty Loop. The company's in-store
services include make-up applications, make-up tutorials, beauty labs, corporate
masterclasses and private night events. Following the outbreak of COVID-19, the
company has offered virtual events and complementary virtual consultations
33 IBISWorld.com
through FaceTime, along with call-and-collect services. Free shipping is currently

being offered with a minimum spend of $25.0.
From its first concept store in 1997, Mecca Cosmetica stores have been designed
as intimate upmarket boutique department stores selling curated luxury beauty
brands, with a strong emphasis on product trials and customer service. The Mecca
Maxima concept store was first launched in 2010, with the brand advertising itself
as the ultimate beauty playground, selling blockbuster beauty brands. Its 553
square metre next-generation store was opened in Brisbane in September 2017.
The brand is now introducing its latest format store, which will take the form of
mega Mecca stores and represent a combined Mecca Cosmetica and Mecca
Maxima store. In November 2019, the company opened its largest store to date, at
570 square metres, in Melbourne.
Prior to 2016, Mecca Brands operated a third brand, Kit Cosmetics. Established in
2005, Kit's competitive point of differentiation was the sourcing and sale of hard-to-
get global brands of skin, hair, body care and grooming products at entry level
prices. It stocked its own range of cosmetic products, which were also sold by
Mecca Cosmetica. Mecca rebranded its Kit Cosmetics concession stores to the
Mecca in Myer banner from October 2015. In August 2020, Mecca entered the
Chinese market through a partnership with cross-border ecommerce platform
Alibaba's Tmall Global.
Financial performance
As a privately owned company, Mecca Brands has limited financial data available.
However, the company has grown exponentially over the past five years, with sales
more than doubling between 2015 and 2018 (latest data available), as the company
rolled out new stores. Ongoing product launches, new service offerings and strong
growth in internet sales have also supported overall revenue growth. In 2018,
company profit margins accounted for 3.9% of revenue, up from 2.7% in 2016.
Company revenue is expected to rise at an annualised 12.4% over the five years
through December 2021, to $515.0 million. This growth rate represents a strong
outperformance of the industry, as the company's product and service offerings
have continued to evolve in line with the changing nature of the beauty sector. This
adaptability has helped the company to sustain a loyal and growing customer base.
Mecca Brands Pty Ltd - financial performance

Year* Revenue Growth
($m) (% change)
2011** 65.0 N/C
2012** 85.5 31.5
2013** 103.5 21.1
2014** 120.0 15.9
2015 188.8 57.3
2016 286.6 51.8
2017 370.1 29.1
2018 444.4 20.1
2019** 488.5 9.9
2020** 467.0 -4.4
2021** 515.0 10.3
Source: Annual Report and IBISWorld
Note: *Year end December **Estimate
34 IBISWorld.com
AUSTRALIAN PHARMACEUTICAL
INDUSTRIES LIMITED
Market Share: 6.2%

Australian Pharmaceutical Industries Limited
(API) was established in 1910, as a buying
group based in New South Wales. API is a
health and beauty company with three core
business units: pharmacy distribution,
consumer brands (with healthcare product
manufacturing in New Zealand) and retailing.
The retailing unit sells health, beauty and
lifestyle products in Australian retail industries
through its retail franchising arrangements. In 2014-15, API's retail register sales
topped $1.0 billion for the first time, up from $840.5 million in 2011-12.
Traditionally, API has primarily been involved in upstream wholesaling activities.

This role changed in October 2004, when API diversified its revenue base and
developed its retail service offerings by purchasing New Price Retail for $112.0
million. The acquisition included the Priceline chain, the Price Attack franchise and
the House chain. However, API has since divested most of these retail businesses.
API has since begun to convert its ownership model to a franchise-based model,
and roll out new franchised Priceline Pharmacy stores. This rollout means that the
number of company-owned stores, and therefore those relevant to the industry, has
been gradually falling. As at August 2020, API had 474 Priceline stores in total, of
which 366 were Priceline Pharmacies. Company stores currently total 107,
following the closure of 14 Priceline stores in 2019-20.
The Priceline chain is expected to hold significant market share in the colour
cosmetics, skincare and hair-care segments. The chain relies on exclusive product
launches and first-to-market products, which sit alongside an extensive product
range of well-known brands and mass-market products with more than 2,000
brands stocked in total. In October 2012, Priceline launched its online store, which
complements its bricks-and-mortar Priceline operations and stocks over 10,000
products. A revamped website was later launched in 2015. In addition, API has
launched mobile phone applications and introduced multimedia screens instore to
highlight special offers. As at February 2020, Priceline had 8.9 million members in
its Sister Club loyalty program, making it one of Australia's largest loyalty programs.
Its Sister Club program was relaunched in 2017, with further changes made to the
program over 2018 and 2019. Priceline is now rolling out its next-generation stores,
which include dedicated playground areas for its beauty products and differentiated
product offerings. The company is currently implementing a more selective product
and category range to improve profit margins. Priceline rolled out its click-and-
collect options in 2019-20, which have been expanded to 333 stores. A click-and-
deliver service was launched in March 2020 following the outbreak of COVID-19,
with 85 company stores participating. Priceline employs more than 650 beauty
advisors.
35 IBISWorld.com
Financial performance
API has contended with a difficult retail trading environment over the past five
years, characterised by restrained consumer expenditure, heavy discounting and
intensifying competition. Total register sales have fallen for the combined Priceline
and Priceline Pharmacy network over the period, despite new store openings. In
2019-20, gross profit for the company's total retail totalled $204.0 million on retail
register sales of $1.08 billion. This compares with gross profit of $239.0 million on
register sales of $1.15 billion in 2016-17. Not all of this revenue is attributable to its
corporate-owned stores.
Growth in API's industry-specific revenue over the past five years has been
constrained by the move to convert company-owned Priceline stores to franchised
Priceline Pharmacy stores. As these franchised stores are now considered
pharmacies rather than cosmetic retailers, their revenue is no longer included in the
industry. In addition, several company-owned stores were closed in locations where
rental costs were deemed too high in 2017-18. Additional stores were closed in
2019-20, including those in CBD locations affected by the dramatic decline in
footfall traffic following the COVID-19 outbreak. API's industry-specific revenue is
expected to contract at an annualised 6.5% over the five years through August 2021,
to $265.0 million, underperforming the overall industry over the period.
Australian Pharmaceutical Industries Limited - industry segment performance*

Year** Revenue Growth
($m) (% change)
2010-11 405.0 N/C
2011-12 395.0 -2.5
2012-13 383.5 -2.9
2013-14 377.0 -1.7
2014-15 374.6 -0.6
2015-16 371.0 -1.0
2016-17 349.4 -5.8
2017-18 340.7 -2.5
2018-19 307.9 -9.6
2019-20 277.5 -9.9
2020-21 265.0 -4.5
Source: IBISWorld
Note: *Estimate **Year end August
Other Players Various international players are present in the Australian market, operating a range
of niche cosmetic stores. Due to a lack of readily available financial information,
some market shares have been estimated on the basis of store numbers. None of
these players are expected to have a market share exceeding 5%.
SEPHORA AUSTRALIA PTY LTD
Market Share: 5.0%

Global beauty giant Sephora entered the Australian market in December 2014 with a
baseline commitment of 15 stores. As at July 2020, it has 20 stores in operation
(including one store in David Jones in Bourke Street, Melbourne) following a rapid
36 IBISWorld.com
rollout of new stores in Melbourne, Sydney, and Queensland. A multi-brand retailer,

Sephora stores tend to be large and promote brand integrity with over 100 brands,
including new niche brands in addition to traditional department store brands. The
company is an omnichannel retailer that also operates a local online platform and
transactional app. Consumers can also book instore services through its website.
In-store services include its Benefit Brow Bar and a beauty studio. Sephora is part of
the French luxury retail group LVMH Moet Hennessy Louis Vuitton, which operated
1,957 stores and 29 online stores in 34 countries worldwide in 2019.
THE BODY SHOP AUSTRALIA
Market Share: 4.0%

Prior to early 2015, the Body Shop Australia was owned by the Adidem Group as an
independent franchise of the Body Shop International plc, which was part of the
France-based L'Oreal group at the time. The Body Shop Australia opened its first
store in Australia in 1983. Operations have since grown to include 93 stores, an
online shopping service and the Body Shop at Home direct-selling network, with
over 1,000 employees. In February 2015, ownership of the franchise reverted to The
Body Shop International plc, with The Body Shop Australia operations now included
as a company-owned market, as opposed to a franchised market. This change has
given the company more control over local operations. The Body Shop International
plc operates as head franchisee in the United Kingdom, United States, Mexico,
Austria, France, Germany, Canada, Hong Kong and Singapore, while it operates
through independent head franchisees that own and manage their operations in
other markets. In 2014, the Body Shop Australia was the fifth largest in terms of
retail sales.
Calling itself the original ethical retailer, the Body Shop is a well-known global brand
with over 1,200 ethically produced beauty and cosmetic products. About 65% of the
company's products contain community trade ingredients, which the company
claims to be unique in the cosmetics sector. The group is currently reasserting its
position as a socially engaged brand through its Enrich Not Exploit commitment,
which was launched in February 2016. In 2018, the group submitted a petition
signed by 8.3 million people to the United Nations supporting its Forever Against
Animal testing in cosmetics campaign. Like its main rivals, the Body Shop is
focusing on its instore experience while also enhancing its omni-channel presence.
The group's Return.Recycle.Repeat program is on offer in Australian stores.
Internationally, the Body Shop has just under 2,900 stores (of which 1,866 are
franchised stores) in 69 countries. It also operates ecommerce sites in 36
countries, with ecommerce sales accounting for 7.0% of company sales in 2018. In
September 2017, the Body Shop group was sold to Brazilian cosmetics
manufacturer Natura Cosmeticos, which is working on the Body Shop brand. The
company has undertaken a more activist approach and optimised its retail network,
leading to the closure of 170 retail stores since December 2017. It has recently
opened its first Activist Makers' Workshop concept store in London, with the new
concept store to be rolled out across its global portfolio. The Body Shop generated
about 13% of Natura's revenue in 2019. Other international brands owned by Natura
include Aesop and Avon.
37 IBISWorld.com
L'OCCITANE AUSTRALIA PTY LTD
Market Share: 3.0%

Based in Manosque, France, L'Occitane en Provence is a global retailer of natural
cosmetics, skincare and home products created using traditional Provencal
production methods. Founded in 1976, the company listed on the Hong Kong Stock
Exchange in March 2010 in a move designed to finance new store openings. It
currently operates 3,497 retail locations, including 1,569 company-owned stores, in
90 countries throughout Europe, North and South America, Asia and Australia. In
the year through March 2020, the group posted sales of €1.6 billion (A$2.6 billion),
of which 93.7% came from international markets. The company is included in the
top 25 global beauty brands, although it operates six integrated brands (L'Occitane
en Provence, L'Occitane au Bresil, Melvita, Erborian, ELEMIS and LimeLife by
Alcone). In Australia, L'Occitane operates 56 stores, including outlets, airport
locations and one spa. In 2015-16, sales revenue from the company's Australian
operations grew by 14.3% in local currency terms. In 2018-19, revenue grew by a
further 9.0%.
LUSH AUSTRALASIA RETAIL PTY LTD
Market Share: 3.0%

A notable player in the ethical brand movement, the UK-based Lush Cosmetics
Group is a privately owned cosmetics company that produces handmade
cosmetics sold on an international scale. With origins dating back to the 1970s, and
initial sales made through the Body Shop, the Lush group today has just under 930
shops (including 438 company-owned stores) in 48 countries. In Australia, it
operates 35 stores, all of which are wholly owned by Lush, and employs nearly 900
people. In September 2016, Lush relocated its flagship store in Sydney to the Queen
Victoria Building in a space three times the size of its previous flagship store. Since
the launch of its new store design in 2014, Lush has relocated or refitted 12
Australian stores to focus on experiential retail through the use of basins and make-
up stations.
Lush's cosmetic products are handmade in Australia, Europe, Canada, South

America, Singapore and Japan. Raw materials used in its products include fruit and
vegetables, other plant products, essential oils and synthetic ingredients. The
company produces a range of products for hair care, body care, and bath and
shower care. Lush has attempted to source an increasing amount of organic and
fair-trade ingredients, and heavily promotes itself as an ethical brand. About 13% of
the group's revenue is derived from digital sales, with the aim of reaching a 25%
penetration rate. Its digital strategy is based on transparency, emphasising the
ethical and sustainable nature of its products, which are handmade, cruelty-free,
vegetarian and ethically sourced and traded. In March 2019, Lush announced its
products would no longer contain eggs, reformulating six products as it attempts to
access the vegan market. Annual sales in Australia are expected to exceed $100
million. On a global basis, the group reported consecutive years of double-digit
sales growth over the eight years through June 2017, before slowing to single digit
growth in 2018 and 2019 (latest data available).
38 IBISWorld.com
MY BEAUTY SPOT
Market Share: 3.0%

My Beauty Spot operates as a discount fragrance and beauty retailer. Part of the My
Chemist Retail Group, My Beauty Spot currently operates 30 stores across
Australia. It also operates a website, which was launched in September 2009. Other
members of the My Chemist Retail Group include Chemist Warehouse, My Chemist,
ePharmacy, and Discount Vitamin Warehouse, with total group sales now expected
to exceed $4.0 billion each year.
NAPOLEON PERDIS COSMETICS PTY LIMITED
Market Share: 3.0%

Napoleon Perdis Cosmetics opened its first concept store in Sydney in 1995, later
developing a cult status with its high-end professional brand. In April 2010, the
company reported that it was to adopt a franchise business model to expand its
concept store network, which at the time had 57 Australian stores. At the height of
its success, it had 85 Australian concept stores and 100 department store counters
in Myers and David Jones with its products also carried by 750 independent
stockists. In 2004, the company entered the US market, reaching 3,500 distribution
points and US sales of $35 million. However, the company exited in 2015 after its
rapid expansion proved to be unsustainable.
The Napoleon Perdis Group has posted weak revenue growth over the past five
years. Company revenue totalled $95.4 million in 2017-18, up only slightly from
$92.2 million in 2013-14. The prestige brand signed an exclusive agreement with
discount health and beauty retailer Priceline in June 2018, after severing its
partnership with David Jones. It was also set to exit over 240 independent partner
accounts in 2018-19 as part of its new strategic direction, which also involved
growing sales through various ecommerce platforms, including its own website,
which was launched in September 2018.
However, the company called in administrators in January 2019, with company

debts totalling $22.8 million. The company had closed over 20 stores by the end of
2018, bringing store numbers down to 56. An additional 28 stores were immediately
closed, with store numbers falling to 26 by July 2019. High rent, falling foot traffic
and a tough retail environment are considered possible contributory factors. Several
formal offers were made for the company, with Kuba Investments offering a $1.6
million deal in April, which would involve stabilising the Australian operations before
launching the brand in overseas markets including China. Kuba has plans to expand
into Asia and New Zealand, and intended for international sales to exceed domestic
sales by the end of 2020. The brand generated $30 million in sales within six
months of its launch into China through a cross-border ecommerce platform. It is
also seeking to re-enter the US market. Locally, the company opened four new
flagship stores in early 2020, bringing store numbers back up to 30 stores. The
company's 2018-19 financials indicated that revenue had risen slightly to total
$97.8 million, despite store closures. Revenue was slightly higher again at $98.4
million in 2019-20.
39 IBISWorld.com
POLA ORBIS JURLIQUE HOLDINGS PTY LTD
Market Share: 1.0%

Now owned by Japan-based cosmetics giant Pola Orbis, Jurlique was founded as a
family-owned company in August 1985. Jurlique manufactures and markets a
range of natural skincare and aromatherapy products and herbal medicines. With
an emphasis on sustainability and providing seed-to-skin products, many of the raw
materials sourced for these products come from the company's organic and
certified biodynamic herb farm in Mount Barker, SA. Products include facial
skincare, body care, baby care and essential oils. Jurlique products are sold in 15
countries through company-owned stores, department stores, travel retail outlets
and online. Prior to its sale, Consolidated Press Holdings held a 25.0% stake in
Jurlique. In 2019, Jurlique accounted for less than 5% of all beauty care sales for
the Pola Orbis group, which is positioning the brand as a prestige label. Jurlique
currently has 13 retail treatment concept stores operating in Australia, following the
closure of several stores in 2020.
In December 2011, Jurlique was sold to Japanese cosmetics company Pola Orbis
Holdings for $335.0 million. First founded in 1929, Pola Orbis is in the top five
cosmetic companies in Japan and the top 20 global cosmetic companies. In 2018,
the company focused on restaging the Jurlique brand, which has included
redesigning packaging and launching new product lines, including its anti-ageing-
care herbal recovery range. In the following year, it launched a new product series
based on rose extracts developed in-house. It is now focusing on its hero skin care
products, as it seeks to reduce its product range following a structural review. In
August 2020, the company launched a moisturising hand sanitizer product.
Approximately one-third of Jurlique sales were derived from the local market in
2019. However, sales fell by 19% relative to 2018, as the company moved away
from wholesale orders in favour of its directly operated stores. Sales to Hong Kong
and China accounted for a further one-third, with travel retail and sales in the
Japanese, United States and other international markets accounting for the
balance. Australian sales fell by a further 46.6% in the first three quarters of 2020
following the outbreak of COVID-19.
40 IBISWorld.com
Operating Conditions
41 IBISWorld.com
Capital Intensity The level of capital intensity is Low
The industry's low capital intensity reflects the

labour-intensive nature of retail trade, and the
one-on-one selling techniques employed by
the Cosmetic and Toiletry Retailing industry.
Wages and salaries tend to be the industry's
second-highest expense, after purchase costs.
For every dollar industry firms spend on
capital in 2020-21, they will spend an
estimated $9.73 on wages.
Several industry participants have sought to

remodel their stores in an attempt to attract
new customers. These participants include
the Body Shop, Lush and Jurlique, which have
sought to emphasise their particular ethical
and environmentally friendly value
proposition. These moves have led to a
corresponding rise in the capital invested in
the industry. Several operators, including
L'Occitane, Mecca Brands and Sephora, have
made moves to roll out new stores as they
expand their geographic footprint, increasing
capital investment.
Technology And Potential Disruptive Innovation: Factors Driving Threat of Change

Systems Level Factor Disruption Description
A measure for the mix of patent classes

Innovation assigned to the industry. A greater
High Likely concentration of patents in one area
Concentration increases the likelihood of technological
disruption of incumbent operators.
Annualized growth in the number of

enterprises in the industry, ranked against
High Rate of Entry Likely all other industries. A greater intensity of
companies entering an industry increases
the pool of potential disruptors.
A qualitative measure of barriers to entry.

Fewer barriers to entry increases the
Moderate Ease of Entry Potential likelihood that new entrants can disrupt
incumbents by putting new technologies
to use.
A ranked measure of the largest core

Market market for the industry. Concentrated core
Low Unlikely markets present a low-end market or new
Concentration market entry point for disruptive
technologies to capture market share.
Rate of A ranked measure for the number of

Very Low Very Unlikely patents assigned to an industry. A faster
Innovation rate of new patent additions to the
42 IBISWorld.com
Level Factor Disruption Description
industry increases the likelihood of a

disruptive innovation occurring.
The rate of new patent technologies entering the industry is low, which limits the
potential for innovations. A low rate does not mean that innovations cannot occur,
just that the likelihood of some innovation materializing as a threat is lower.
However, the concentration of technologies is high in this industry. This suggests
that industry operators have exposure to potentially unforeseen areas of innovation.
The industry structure creates a moderate level of entry barriers, which is coinciding
with a high rate of new competitors entering the industry. This high rate of entry
creates a significant pool of potentially disruptive entities and the industry structure
does not significantly affect their growth potential.
Major market segments for industry operators are relatively diversified. The spread
of market segments suggests that there are limited entry points other than those
already served my incumbent operators.
Cosmetic retailers are vulnerable to digital disruption, with many

industry participants losing revenue to ecommerce rivals.
Over the past five years, an increasing number of dedicated online stores have been
launched to deal directly with retail customers, both locally and internationally.
These include StrawberryNET, Adore Beauty and Cosmetics Now. Many of these
sites offer discounted products or international brands that are usually harder to
find in Australia. In addition to pure-play cosmetic online retailers, a growing
number of other external retail competitors have been offering cosmetic products
for sale online. Amazon's recent entry into the Australian online market, with its
discounted prices and international brand offerings, will negatively affect the
industry over the next five years. As at January 2021, Amazon had over 50,000
makeup products as part of its wider beauty offering.
Digital technologies have also been giving rise to new digital cosmetic brands,
disrupting the traditional beauty sector. Consumers can now experience cosmetic
brands in new ways, including through augmented reality mirrors. Additionally,
social media platforms are allowing consumers to have a direct and interactive
relationship with a cosmetic brand owner. Consumers can now also share their
looks and experiences. Some cosmetic brands are using social media channels as
marketing and sales channels, promoting this new business model.
The level of technology change is Medium
Little technological change directly affects the Australian Cosmetic

and Toiletry Retailing industry.
The industry has indirectly benefited from technological advances affecting the
retail division, including computer scanning cash registers and electronic data
interchange. Many players rely on point-of-sale data, and others use radio-frequency
43 IBISWorld.com
technology for security purposes. Advances in information technology are also

redefining the relationship between distributor, retailer and customer.
A dramatic rise in online cosmetic sales has significantly affected the industry.
Online sales of toiletries, cosmetics and fragrances are continuing to grow in
Australia and are expected to increase significantly in the future. A growing number
of cosmetic retailers are therefore launching online social media platforms. While
some operators have established websites designed to increase customer
awareness, a growing number are transitioning to clicks-and-mortar operations,
with ecommerce platforms supporting their traditional retail outlet operations. For
example, Body Shop, Lush, Jurlique and L'Occitane products can be purchased
online through dedicated company websites. At the same time, higher online sales
from rival online beauty stores also represent a growing competitive threat to the
industry.
Upstream technological advances in the manufacturing sector also indirectly affect

the industry's performance. New technologies in manufacturing processes can
result in new product innovations, which are marketed and sold by the retail sector.
New products containing active functional ingredients have significantly influenced
the industry. The eco-consumerism movement, where consumers are becoming
increasingly aware of the environmental footprint associated with their purchases,
is also stimulating change.
Revenue Volatility The level of volatility is Medium
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in
logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility
threshold.
The Cosmetic and Toiletry Retailing industry has moderate revenue

volatility.
44 IBISWorld.com
Some cosmetics and fragrances are considered discretionary items, so several

factors affecting discretionary expenditure patterns can influence purchases.
Industry year-on-year revenue growth rates can therefore be influenced by changes
in economic activity, consumer sentiment and household discretionary incomes.
However, other products retailed by the industry are considered essential and are
purchased regardless of financial circumstances. Some consumers respond to
changed personal financial conditions by switching brands and pricepoints, trading
up or down the price line. This has little overall effect on actual volumes sold,
unless the product is considered non-essential or highly discretionary, in which
case consumers may defer potential purchases, affecting both sales volumes and
revenue.
The relative prices of cosmetics and toiletries also influence the industry's
performance. Prices are currently being pushed downwards by growing competitive
pressures and price harmonisation strategies. Changing fashion trends and
consumer purchasing patterns can also influence industry volatility. For example,
purchasing patterns can move towards organic cosmetics or those not tested on
animals. The COVID-19 pandemic is also affecting purchasing patterns. Temporary
store closures in March and April 2020 due to lockdown restrictions forced many
cosmetic consumers online to cosmetic websites operated by rival pure-play online
cosmetic companies, with these changed shopping patterns anticipated to persist
in the current year. The pandemic has also increased the popularity of clean or
ethical beauty brands, as consumers have changed their beauty routines due to
health and wellness trends.
Regulation & The level of regulation is Medium and is Steady

Policy
As part of the retail sector, the Cosmetic and Toiletry Retailing
industry is subject to government regulations governing trading
hours, which vary from state to state.
It is also subject to the General Retail Industry Award, which came into effect on 1
January 2010. This covers minimum wages, scheduling, penalty rates and
redundancy rates, among other things.
The industry is also subject to legislation governing the overall Cosmetics industry.
For example, the Australian cosmetics sector is subject to mandatory labelling
requirements as set out by the Trade Practices (Consumer Product Information
Standards) (Cosmetics) Regulations 1991. Compliance with consumer product
safety and information standards is mandatory. All suppliers, including cosmetic
retailers, must meet these standards. In addition, suppliers must ensure that gods
are safe and of acceptable quality and fit for any disclosed purpose to ensure
compliance with the statutory guarantees provided under Australian Consumer Law.
Over 2014-15, undercover ACCC investigators targeted cosmetic retailers to ensure

they were selling cosmetics in compliance with labelling guidelines. Products that
are classified as therapeutic goods rather than cosmetics (such as antiperspirants
and anti-dandruff shampoos) are subject to different labelling requirements.
Cosmetics and toiletries are defined as substances or preparations intended for
45 IBISWorld.com
placement in contact with any external part of the body, and the mouth and the
teeth. These substances are used with a view to altering the odours of the body,
changing its appearance, cleansing it, maintaining it in good condition, perfuming
and protecting it. Products are classified as therapeutic goods rather than
cosmetics when they claim to treat an ailment or modify a bodily process.
In November 2018, the Federal Government passed the Modern Slavery Act 2018.
The act, which came into force on 1 January 2019, is a new reporting requirement
for larger Australian businesses. Companies that generate an annual consolidated
revenue of at least $100.0 million will have to report on how they act to mitigate the
risks of modern slavery in their operations and supply chains. The first reports will
relate to 2018-19, with most reports being released in 2020. The NSW Government
is also considering its own state-based version of the report, which would make
businesses with consolidated annual revenue of at least $50.0 million have to
report. The NSW Modern Slavery Act 2018 was due to come into force on 1 July
2019, but was delayed for further consultation.
Relevant operators in the Cosmetic and Toiletry Retailing industry will need to
ensure that the products they sell are not manufactured using child labour,
including the use of mica in colour cosmetics and foundations. Mica mining is
currently a controversial issue due to the use of child labour in several Indian mines.
In addition, approximately one-quarter of the world's mica is sourced from illegal
Indian mines. Several global cosmetic companies are part of the Responsible Mica
Initiative, which aims to eradicate child labour and unacceptable working conditions
in the Indian mica supply chain by 2022.
Industry The level of industry assistance is None and is Steady

Assistance
A general tariff of 5.0% applies to toiletries imported into Australia.
Imports from developing countries or from Canada are not taxed. Cosmetic and
toiletry retailers receive little assistance from either the commonwealth or state
governments.
46 IBISWorld.com
Key Statistics
Industry Data
Demand
2012–13 3,945 904 4,527 3,938 20,589 N/A N/A 675 N/A
2013–14 3,950 906 4,676 4,068 20,330 N/A N/A 680 N/A
2014–15 3,999 876 4,550 3,988 20,071 N/A N/A 679 N/A
2015–16 4,239 904 4,526 3,958 19,525 N/A N/A 688 N/A
2016–17 4,259 922 4,505 3,961 19,065 N/A N/A 667 N/A
2017–18 4,318 941 4,574 4,024 19,482 N/A N/A 660 N/A
2018–19 4,389 910 4,598 4,071 19,595 N/A N/A 659 N/A
2019–20 4,191 864 4,513 4,000 18,909 N/A N/A 637 N/A
2020–21 4,279 880 4,403 3,900 18,461 N/A N/A 626 N/A
2021–22 4,377 891 4,379 3,889 18,255 N/A N/A 620 N/A
2022–23 4,455 902 4,354 3,875 18,097 N/A N/A 616 N/A
2023–24 4,508 913 4,311 3,846 17,832 N/A N/A 611 N/A
2024–25 4,574 922 4,256 3,803 17,499 N/A N/A 607 N/A
2025–26 4,644 932 4,206 3,765 17,230 N/A N/A 604 N/A
Annual Change
Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2012–13 0.20 1.87 -3 -3 5 N/A N/A 4.05 N/A
2013–14 0.12 0.13 3 3 -1 N/A N/A 0.80 N/A
2014–15 1.24 -3.30 -3 -2 -1 N/A N/A -0.11 N/A
2015–16 6.02 3.24 -1 -1 -3 N/A N/A 1.29 N/A
2016–17 0.47 2.00 -0 0 -2 N/A N/A -3.06 N/A
2017–18 1.37 2.00 2 2 2 N/A N/A -1.13 N/A
2018–19 1.63 -3.32 1 1 1 N/A N/A -0.14 N/A
2019–20 -4.51 -4.99 -2 -2 -4 N/A N/A -3.39 N/A
2020–21 2.10 1.81 -2 -2 -2 N/A N/A -1.67 N/A
2021–22 2.28 1.25 -1 -0 -1 N/A N/A -0.95 N/A
2022–23 1.79 1.18 -1 -0 -1 N/A N/A -0.73 N/A
2023–24 1.18 1.22 -1 -1 -1 N/A N/A -0.70 N/A
2024–25 1.45 1.01 -1 -1 -2 N/A N/A -0.74 N/A
2025–26 1.54 1.07 -1 -1 -2 N/A N/A -0.48 N/A
Key Ratios
Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per Wages/Revenue Employees per Average Wage
Employee estab.
(%) (%) (%) ($'000) (%)
2012–13 22.9 N/A N/A 192 17.1 4.55 32,770
2013–14 22.9 N/A N/A 194 17.2 4.35 33,453
2014–15 21.9 N/A N/A 199 17.0 4.41 33,850
2015–16 21.3 N/A N/A 217 16.2 4.31 35,247
2016–17 21.7 N/A N/A 223 15.7 4.23 34,996
2017–18 21.8 N/A N/A 222 15.3 4.26 33,862
2018–19 20.7 N/A N/A 224 15.0 4.26 33,621
2019–20 20.6 N/A N/A 222 15.2 4.19 33,661
2020–21 20.6 N/A N/A 232 14.6 4.19 33,904
2021–22 20.4 N/A N/A 240 14.2 4.17 33,963
2022–23 20.2 N/A N/A 246 13.8 4.16 34,011
2023–24 20.2 N/A N/A 253 13.6 4.14 34,275
2024–25 20.2 N/A N/A 261 13.3 4.11 34,671
2025–26 20.1 N/A N/A 270 13.0 4.10 35,044
47 IBISWorld.com
Additional Resources
Additional Australian Bureau of Statistics
Resources http://www.abs.gov.au
Cosmetics & Toiletries

http://www.cosmeticsandtoiletries.com
Australian Trade and Investment Commission

http://www.austrade.gov.au
Industry Jargon COSMECEUTICALS

Cosmetic products that contain biologically active ingredients that claim to have medical
benefits.
COSMETICS
Substances used to enhance the appearance or odour of the human body.
ELECTRONIC DATA INTERCHANGE

A computer system that allows the transmission of data between establishments.
MASSTIGE PRODUCTS
High-quality, mass-market products possessing the appearance of prestige or premium
products.
NUTRICOSMETICS
Nutritional supplements that support the structure and function of the skin.
Glossary Terms BARRIERS TO ENTRY

High barriers to entry mean that new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of depreciation to wages as a proxy for capital
intensity. High capital intensity is more than $0.333 of capital to $1 of labour; medium is
$0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of capital for every $1 of
labour.
48 IBISWorld.com
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation
using the current year (i.e. year published) as the base year. This removes the impact of
changes in the purchasing power of the dollar, leaving only the 'real' growth or decline in
industry metrics. The inflation adjustments in IBISWorld’s reports are made using the
Australian Bureau of Statistics' implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within Australia, regardless of their country of
origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise
consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single
physical location where business is conducted or where services or industrial operations are
performed. Multiple establishments under common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Australian companies to customers
abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in
Australia.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is
considered high if the top players account for more than 70% of industry revenue. Medium
is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside the firm (such as commission
income, repair and service income, and rent, leasing and hiring income); and capital work
done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed
tangible assets are excluded.
49 IBISWorld.com
INDUSTRY VALUE ADDED (IVA)

The market value of goods and services produced by the industry minus the cost of goods
and services used in production. IVA is also described as the industry's contribution to GDP,
or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to
domestic demand. For exports/revenue: low is less than 5%; medium is 5% to 20%; and high
is more than 20%. Imports/domestic demand: low is less than 5%; medium is 5% to 35%;
and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an
industry's life cycle by considering its growth rate (measured by IVA) compared with GDP;
the growth rate of the number of establishments; the amount of change the industry's
products are undergoing; the rate of technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are
mostly set up by self-employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s
profitability. It is calculated as revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of
the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to
±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
50 IBISWorld.com
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AU INDUSTRY (ANZSIC) REPORT G4271b

Cosmetic and Toiletry Retailing in Australia

IBISWorld.com +61-3-9655-3800 info@IBISWorld.com

About This Industry...........................................5 Competitive Landscape...................................27

Industry Definition..........................................................5 Market Share Concentration....................................... 27

Industry at a Glance.......................................... 7 Major Companies............................................ 33

Executive Summary....................................................... 9 Major Players............................................................... 33

Products and Markets..................................... 20 Industry Data................................................................47

• Temporary store closures due to lockdown measures are expected to negatively

• Declining discretionary incomes and weak consumer sentiment will likely

• The COVID-19 outbreak has irrevocably changed the try-before-you-buy nature of

About This Industry

Major Players Mecca Brands Pty Ltd

Australian Pharmaceutical Industries Limited

Main Activities The primary activities of this industry:

Bath, shower and skincare products retailing

Perfumes and fragrances retailing

Hair care products retailing

Men's grooming products retailing

Oral hygiene products retailing

The major products and services in this industry:

Make-up and skincare products

Personal care products

RELATED INTERNATIONAL INDUSTRIES

Cosmetics & Toiletries Beauty, Cosmetics & Pharmaceutical, Cosmetic

4.5% Life Cycle

18,461 Intensifying competition has contributed to a decline in

Products & Services Segmentation

16.7% 53.0% 10.9% 19.4%

Hair-care products Make-up and skincare Fragrances Personal care products

Major Players % = share of industry revenue SWOT

Executive The Cosmetic and Toiletry Retailing industry sells thousands of

Revenue growth is projected to be driven by new customised beauty products and

Key External Demand from supermarkets and grocery stores

Female population aged 18 and older

Real household discretionary income

Demand from department stores

Demand from online shopping

Consumer sentiment index

Current Operators in the Cosmetic and Toiletry Retailing industry have

Prior to the COVID-19 pandemic, revenue for specialist cosmetics

In response, some industry operators have introduced digitally enhanced store-

Price and profit pressures

The industry includes a range of operators, from boutique

Growing external competition has heavily influenced the industry's

Historical Performance Data

New strategies and technologies

The COVID-19 pandemic marked the end of stores using

consumers to test products prior to purchase. Several operators are forecast to

Industry operators are also projected to harness new technologies to provide

In addition, industry players are forecast to increasingly rely on new technologies to

Customers and products

The COVID-19 pandemic has prompted many consumers to revise

Performance Outlook Data

LIFE CYCLE REASONS

Consumers wholeheartedly accept industry products

Competition from outside the industry is growing

Products and Markets

A stream of enhanced, repackaged and reformulated products has