Business in the US Cosmetic Retailing Industry

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Table of Contents

Competitor Analysis
SWOT analysis
Works Cited

Competitor Analysis

Existing competitors

US cosmetics retailing industry tends to expand within the domestic and international markets because of the rising level of discretionary income in the developed and developing countries (Polla 1). The major players in the US cosmetics retailing industry include Ultra Salon, Cosmetics & Fragrance Inc., Sephora, L Brands Inc., and Sally Beauty Holdings Inc. Prominent mass retailers include Walgreens, Target, and CVS (Howell, 106). Famous boutiques include Macy’s and Dillard’s (Mills 1). They are my major competitors. The key economic drivers of the industry incorporate the per capita disposable income of adults aged between 20 to 64 years. The competitive profile matrix is indicated below:

If the factor is a:	Rating is:
Major weakness	1
Minor weakness	2
Minor strength	3
Major strength	4

Competitive profile matrix
		My business		Macy’s		Dillard’s
Critical success factors	weight	Rating	Weighted score	Rating	Weighted score	Rating	Weighted score
Product diversification	0.2	4	0.8	3	0.6	2	0.4
Product quality	0.2	4	0.8	2	0.4	3	0.6
Marketing	0.3	3	0.9	2	0.6	2	0.6
Customer loyalty	0.1	3	0.3	3	0.3	3	0.3
Cost leadership	0.2	4	0.8	3	0.6	2	0.4
Total	1.0		3.6		2.5		2.3

Potential competitors

Potential competitors include Hypermarcas and AmorePacific (Keenan 1). If they enter the market, the competition will increase (Howell 106). They will eat into our market share. To keep up with this, we will have to be innovative and differentiate our products.

Business Strategy

Desired image and position

My enterprise aims to be a leader in the US cosmetic retailing market. The business’s mission is to improve our products and to advance shopping awareness and necessity. Its principal purpose is to offer our customers what they require at the quickest time possible.

Company goals and objectives

The company’s objectives are as follows:

To expand its presence in urban centers globally
To increase customers’ interest and accomplishment by offering them the prospect to get familiar with first-hand extraordinary designer clothes on a weekly basis.
To increase retail stores from the start of the year 2016 by 80%

The cost of establishing the enterprise is shop is $263,000. The majority of the expenses will be used in purchasing raw materials. The business will hire ten employees to operate. They will comprise of one supervisor and subordinate staff. The workers will be needed to have more than one year of experience in a similar environment.

SWOT analysis

Based on the above information, a SWOT analysis of the US cosmetic retailers should be obtained. To understand competition in the particular segment, I must evaluate this report (Dess 78). The analysis will help my company to identify the intensity of competition and the profitability of the sector.

	Helpful	Harmful
Internal factors	Strengths Innovation	Weakness Personal management factors and organizational management factors
External factors	Opportunities Rising level of discretionary income in the developed and developing countries	Threats Competition

Competitive strategy

Cost leadership

Owing to increased competition and dwindling profits, my business will utilize a cost leadership strategy. To achieve this, I will retail my cosmetic merchandise at a lower price compared to my rivals. Through this strategy, I will guarantee my clients affordable and quality products hence attracting many customers compared to my competitors (Howell 123). As such, many cosmetic retailers sell their products at higher prices. The strategy will enable my business to win customer loyalty guaranteeing long-term viability.

Differentiation

I will also utilize a differentiation strategy in my business to survive the ever-increasing competition. My company will differentiate our products and services to gain a competitive advantage over our competitors (Champniss 11). One major way of fulfilling the above is through value addition. My enterprise will focus on improving our cosmetic product’s package to enhance its aesthetic appeal (Champniss 12). All our merchandise will be packed in impressive packages designed to surpass our customers’ expectations.

Focus strategy

The business will also utilize a focus strategy to get ahead of its rivals. The approach will allow us to research the market segments that the enterprise can major to compete efficiently. The method compares market features with the business’s competitive advantages to identify markets that will enable the company to concentrate its resources effectively, leading to anticipated sales volumes, proceeds, and incomes. I will also focus on only serving female clients to differentiate ourselves from our rivals. In my locality, a few beauty and cosmetics shops focus only on particular communities such as religion, age, sex, or political minorities. If my shop focuses on specializing in satisfying only the women’s community, I will attract many clients and enhance my market share. The market segment presents an opportunity for the business.

Given the rates of the segment’s expansion, cosmetics retailing in the US and around the world is expected to grow in the future. For example, the sales of US cosmetics are supposed to increase by 3% through 2017. Based on its growth rate, innovation, change, and customer acceptance, the segment’s stage of growth is that of maturity.

Works Cited

Champniss, Guy. Brand valued: how socially valued brands hold the key to a sustainable future and business success, Chichester, West Sussex: Wiley, 2011. Print.

Dess, George. Strategic management: text and cases, New York: McGraw Hill/Irwin, 2012. Print.

Howell, Marvin. Actionable performance measurement: a key to success, Milwaukee, Wis.: ASQ Quality Press, 2006. Print.

Keenan, Joe. How ULTA Beauty is Developing Loyal Customers. 2015. Web.

Mills, Nancy. More than Cosmetic –The New Face of U.S. Beauty Retailing. 2008. Web.

Polla, Ada. The Changing Face of Beauty Distribution. 2015. Web.

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