Quick Facts
- U.S. prestige beauty retail sales grew 4% year over year to $36 billion in 2025, per Circana data.
- Target will open Beauty Studio shop-in-shops in 600 locations this fall after ending its Ulta partnership.
- Walmart beauty shoppers from households earning more than $150,000 grew 13.6% year over year, per NielsenIQ.
The U.S. prestige beauty market hit $36 billion in 2025, and two of the country’s biggest mass retailers want a larger share of it. Target and Walmart are each betting that prestige beauty can drive foot traffic, higher average baskets, and a wealthier customer base.
Circana SVP Larissa Jensen said beauty “continues to outperform many other industries” despite economic pressure, calling it “an accessible indulgence” that supports consumer well-being. Prestige haircare led all subcategories in 2025, up 8% for the full year, followed by fragrance at 5%, makeup at 4%, and skincare at 3%.
Target Cuts Ulta, Launches Its Own Format
On Aug. 14, 2025, Target and Ulta Beauty announced they would not renew their shop-in-shop agreement when it expires in August 2026. The partnership had stalled over understaffing, shoplifting concerns, and cannibalization of Ulta’s standalone stores.
Target is replacing Ulta’s footprint with a new format called Target Beauty Studio. The retailer plans to open the concept in 600 locations this fall, featuring more than 60 brands new to Target. CEO Michael Fiddelke called beauty a destination the company has grown for 10 consecutive years and said the Beauty Studio format plays a central role in that strategy.
Mizuho Securities analyst David Bellinger called the split a negative development for Target. He cited “messy in-store operations,” theft, and insufficient staffing as contributing factors and said Target’s next CEO will have to address the loss of the Ulta relationship.
Walmart Moves Premium Brands to the Front
Walmart already captures roughly 20% of the estimated $107 billion U.S. beauty industry each year. In 2025, the company added 72 beauty brands and reported that 75% of beauty segment sales growth came from new and premium brands, including La Roche-Posay.
The retailer launched a Beauty Bar activation in 450 stores this spring. Stores with the format saw beauty sales double. Walmart is also shifting beauty aisles to the front of 650 stores undergoing renovations in 2026, placing the category adjacent to home and fashion.
Vinima K. Shekhar, Walmart’s VP of beauty, said customers “mix basics with premium” and are asking for more personalization and transparency. The data backs that up: NielsenIQ found that Walmart beauty shoppers between 30 and 34 grew 12.9% year over year, while those from households earning more than $150,000 grew 13.6%.
Mass and Prestige Lines Are Blurring
Jensen said the mass and prestige markets are converging, with premium-priced brands in mass retail and value-priced prestige brands outperforming their counterparts. Only 14% of U.S. beauty buyers believe higher prices signal better quality, a finding that undermines the traditional logic separating the two channels.
Mass beauty sales also grew in 2025, rising 5% to $72.7 billion for the full year. In the first half alone, mass outpaced prestige, with mass up 4% to $34.6 billion against prestige growth of 2% to $16 billion.
Globally, the prestige beauty market was valued at $82.4 billion in 2025 and is projected to reach $148.6 billion by 2034, growing at a CAGR of 6.8%. Online retail is the fastest-growing distribution channel globally, posting a CAGR of 9.4%. Skincare leads by product type at 38.2% of global revenue.
For operators and brands, the shift signals that shelf placement and retail partners matter more than ever. Walmart and Target are no longer passive distributors of beauty products. They are building destination formats, recruiting premium brands, and competing directly with specialty retailers for the same shopper.
