The Cosmetic Industry Week 2 Assignment

The Cosmetic Industry 4 The Cosmetic Industry Week 2 Asssignment

The cosmetic, beauty and personal care industries are growing at a high rate, with the cosmetic market expected to gain up to $429.8 billion by 2022 (Allied Market Research). According to research, the beauty industry in the United States generates close to $70 billion in revenue annually (Duncan, 2008). This shows beauty, personal care, and cosmetic businesses are among the most lucrative around, with women as the primary consumers. The most significant advantage is that chances of operating a successful cosmetic and beauty business are high due to the large customer base. At one point, everyone consumes cosmetic products starting from hair, skin and sun care products to deodorants and fragrances.

The major challenge, however, is the existing or possible competition, change in consumer preferences as well as potential regulatory changes (Allied Market Research). This paper presents a business design outline for a medium-sized beauty shop operating on both wholesale and retail basis. Starting a cosmetics store is not as hard because the business is not such labor or capital intensive. The trick is getting the correct brands preferable by the target market, proper recordkeeping, and marketing. To capture a bigger market, the business will deal with a broad category of cosmetics including skin and haircare products, deodorants, makeup and fragrances for both genders.

The company will operate under the name ''Perida cosmetic store, '' based in Nevada U.S.A but to expand the operations to other cities through opening other franchise stores. The business will first operate on personal savings and an acquired loan. Ensuring excellent inventory and cash flow systems is essential to achieve accountability as well as make sure what customers need is available through timely restocking. The initial step is to understand that profits and cash are two separate things and the time lag between cash receipt and sales (Accounting Coach). The management will come up with a well-structured cash flow and inventory management plan detailing the most proper cash flow and inventory management system and strategies.

Besides, we will invest in a model that will ensure appropriate forecasting of sales, cash inflows and outflows, and the latest technology to conduct an inventory check. Pricing is an essential factor that provides leverage to wholesale and retail businesses. Usually, consumers will shop around for the most affordable options. To maintain our position in the market, we will ensure prices charged are competitive with those of other stores. Additionally, customers prefer different payment options, and we will make sure we provide a variety of payment options to suit all clients.

All the account details will be available on business websites and marketing platforms. Supply and distribution: The required stock will be sourced from wholesale beauty product distributors in Dubai and Korea. More specifically from ''Chinabrands' a wholesale cosmetic distributor based in Dubai and other wholesale stores offering competitive purchase terms around the U.S. Our business will offer a variety of purchase options including on-premises and online purchases. We will invest in business vans to provide transportation in case of wholesale purchases and avail customer care desks to take care of client concerns as part of the after-sale services.

Besides, to ensure excellent performance, employees will be offered incentives and competitive compensation. Cosmetics businesses are very profitable, but just like every other business, it requires well-designed strategies of operation before commencing business. A proper market analysis should be carried out to assess any potential market risks so that proper measures are taken in advance. References Duncan, E. (2008). Topic: Cosmetics Industry in the U.S. Retrieved from Cosmetics Market by Category (Skin & Sun Care Products, Hair Care Products, Deodorants, Makeup & Color Cosmetics, Fragrances) and by Distribution Channel (General departmental store, Supermarkets, Drug stores, Brand outlets) - Global Opportunity Analysis and Industry Forecast, Update Available On-Demand. Retrieved from . Inventory Systems and Cost Flows Accounting Coach. (n.d.). Retrieved from Angel Investor/Venture Mock Presentation Part 1 The Elevator Speech An elevator speech is a brief description of a company, idea, or product. It explains a concept to enable any listener to understand it within the shortest duration (Burns, 2016).

Paper For Above instruction

The rapid growth trajectory of the cosmetic industry underscores its lucrative nature and resilience amid changing consumer preferences and regulatory environments. This paper develops a comprehensive business plan for a medium-sized cosmetic store called "Perida Cosmetic Store," positioned in Nevada, USA, with aspirations for regional expansion through franchising. The plan emphasizes strategic considerations such as inventory management, pricing, supply chain logistics, financial planning, and marketing to ensure sustainable growth and profitability.

Industry Overview and Market Context

The global cosmetic market is projected to reach approximately $429.8 billion by 2022, driven by expansive consumer interest across demographics. In the United States alone, this industry generates close to $70 billion annually, with women constituting the primary consumer base (Allied Market Research; Duncan, 2008). The persistent demand for skin, haircare, sun protection, deodorants, fragrances, and makeup creates a broad market scope. Moreover, increasing awareness about personal grooming, beauty enhancement, and the influence of social media trends further bolster industry growth. Despite the attractiveness, the industry is highly competitive, with challenges including product differentiation, evolving consumer tastes, regulatory compliance, and maintaining price competitiveness.

Business Model and Operational Strategy

"Perida Cosmetic Store" will operate as a hybrid wholesale-retail entity, sourcing products from established international distributors, specifically "Chinabrands" based in Dubai and other US-based wholesale suppliers. This diversified sourcing ensures a broad product portfolio, catering to various customer preferences. Initial capital will derive from personal savings supplemented by a bank loan, enabling inventory procurement and operational setup. The store aims to stock a variety of cosmetics — including skin and haircare, deodorants, fragrances, and makeup — for both men and women.

Effective inventory management is critical. The store will implement advanced inventory tracking systems utilizing the latest technologies for real-time stock monitoring and demand forecasting. Ensuring proper cash flow management is equally vital; this involves meticulous planning of receivables, payables, and timely restocking. This aligns with the understanding that profit margins differ from cash flow, making precise cash flow forecasting necessary for operational stability (Accounting Coach).

Pricing strategy will be competitive yet profitable, aligning with market standards and offering flexible payment options, including credit cards, digital wallets, and installment plans. Transparent pricing and varied payment methods will cater to diverse consumer segments, improve customer satisfaction, and foster repeat business. Data on financial transactions and inventory levels will be maintained digitally and made accessible via business websites and marketing platforms to enhance transparency.

Supply Chain and Distribution Logistics

The supply chain will leverage international wholesale distributors, notably "Chinabrands" in Dubai and other US-based firms offering favorable purchasing terms. The store will maintain a stock of popular products to reduce stockouts and meet customer demand promptly. Transportation logistics will include investment in business vans to facilitate wholesale product pickups and customer deliveries. After-sale support will be emphasized through dedicated customer care desks to address concerns promptly and enhance customer loyalty.

Human Resources and Marketing

To ensure high performance, employees will be motivated through incentives and competitive compensation packages. Training programs will improve customer service skills, product knowledge, and sales techniques. Marketing efforts will encompass digital marketing, social media campaigns, and loyalty programs to build a strong brand presence and attract new clients. The online presence will facilitate online shopping, ordering, and customer engagement.

Financial Planning and Forecasting

The financial plan includes detailed projections of revenues, costs, and cash flows. By employing sales forecasting models, the business will estimate monthly and annual sales, identify peak periods, and adjust inventory and staffing accordingly. The use of technology for financial management will enable real-time monitoring of cash inflows and outflows, ensuring liquidity and profitability. An initial capital injection will support expansion and operational costs, with plans to reinvest profits into the business for sustained growth.

Expansion and Exit Strategies

The long-term vision includes expanding into other cities through franchising, leveraging brand recognition and operational expertise. An exit strategy has been developed, favoring Initial Public Offerings (IPOs), which will enable the business to raise capital publicly, experience growth, and provide liquidity to investors and owners (Hawkey, 2017). Prior to the IPO, valuation assessments will be conducted, and underwriters will be engaged to ensure a favorable market entry. This approach aligns with strategic growth objectives, ensuring continued expansion and sustainability.

Conclusion

Establishing a successful beauty and cosmetic retail business in a competitive landscape demands strategic planning across multiple facets: inventory management, pricing, supply chain logistics, financial planning, branding, and customer experience. "Perida Cosmetic Store" aims to capitalize on industry growth by adopting effective operational strategies, leveraging technology, and planning for scalable expansion. An emphasis on customer satisfaction, competitive pricing, and strong supplier relationships will position the store as a reliable, profitable entity in the rapidly expanding cosmetics market.

References

• Allied Market Research. (2021). Cosmetics Market by Category and Distribution Channel - Global Opportunity Analysis and Industry Forecast. Retrieved from https://www.alliedmarketresearch.com
• Duncan, E. (2008). Topic: Cosmetics Industry in the U.S.
• Accounting Coach. (n.d.). Inventory Systems and Cost Flows. Retrieved from https://www.accountingcoach.com
• Hawkey, J. (2017). Exit Strategy Planning: Grooming your business for sale or succession. Routledge.
• Burns, R. E. (2016). The Vital Importance of the Elevator Speech. Bridgewater Review, 35(2), 33-34.
• Additional scholarly articles on industry trends, supply chain management, financial planning, and franchising strategies from reputable sources such as Journal of Business Venturing, Harvard Business Review, and industry reports.