Buyers line up outside Ulta Beauty before the opening of 6 am on Black Friday.
Aimee Dilger | LightRocket | Getty Images
Retail of beauty products and bargains is expected to be the biggest winner in 2021, as consumers return to physical stores and become comfortable with socializing again, according to new research from an investment firm.
The Wells Fargo retail team recently interviewed 1,000 consumers in the United States to get a better idea of their post-pandemic buying behaviors. When asked what products they are most likely to buy first, after the pandemic, respondents selected makeup more often, with 40%. It even surpassed the “leisure suit”, chosen by 37%.
One of the biggest beneficiaries of this early recovery to beauty may be Ulta, said analyst Ike Boruchow.
Ulta Beauty’s shares have risen about 70% in the last 12 months. The company has a market value of US $ 16.96 billion.
Ulta said it expects same-store sales to grow in a range of 15% to 17% this year from 2020 levels. But it warned that its performance will continue to be affected as long as the social distance measures remain in place.
Wells Fargo expects sweat-eliminating household and sports consumption rates to decline this year. Both categories have outperformed in the past 12 months, with consumers trapped at home stocking sportswear for their fitness routines and redecorating their rooms and yards with new furniture and accessories.
In Wells’ survey, only 31% said they expected to buy athleisure in the short term and 33% said the same about household products.
According to Boruchow, other winners in 2021 could be clothing retailers Urban Outfitters, Ralph Lauren and Gap, along with low-priced companies Burlington Stores, Ross Stores and the owner of TJ Maxx, TJX.
The off-price sector was in shambles before the pandemic. But his focus on bargain hunting in stores hindered performance during the health crisis, as many Americans stayed at home. These companies also have less online presence.
When more buyers return to stores to renovate their wardrobes, analysts like Boruchow expect Burlington, Ross and TJX to regain market share in the clothing market.
—CNBC’s Michael Bloom contributed to this report.