Buyers line up outside Ulta Beauty before opening at 6:00 on Black Friday.
Aimee Dilger | LightRocket | Getty Images
Retailing for beauty and bargains is poised to be the biggest winner in 2021 as consumers return to brick-and-mortar stores and feel comfortable socializing again, according to a new survey by an investment firm.
Wells Fargo’s retail team recently surveyed 1,000 consumers in the United States to better understand their post-pandemic shopping behaviors. When asked which products are most likely to buy first, post-pandemic, respondents most often chose makeup, at 40%. That even surpassed the “exit clothing”, which was chosen by 37%.
One of the biggest beneficiaries of this anticipated return to beauty could be Ulta, said analyst Ike Boruchow.
Ulta Beauty shares have increased by about 70% in the last 12 months. The company has a market cap of $ 16.96 billion.
Ulta said it expects sales in the same store to grow by 15% to 17% this year, starting with 2020 levels. But warned that its performance will continue to be affected as long as social distance measures remain in place.
Wells Fargo expects consumption rates for sweat-removing sports and household products to slow this year. Both categories outperformed in the last 12 months, with home-based consumers stocking up on athletic clothing for their fitness routine and redecorating their bedrooms and backyards with new furniture and accessories.
In Wells’ poll, only 31% said they expect to buy sports in the short term, and 33% said the same about household goods.
According to Boruchow, other winners in 2021 could be clothing retailers Urban Outfitters, Ralph Lauren and Gap, along with cheap companies Burlington Stores, Ross Stores and owner TJ Maxx TJX.
The priceless sector was in tears before the pandemic. But his focus on bargain hunting in stores hampered performance during the health crisis, as many Americans stayed home. These companies have even less online presence.
When more shoppers return to stores to refresh their wardrobes, analysts like Boruchow expect Burlington, Ross and TJX to regain their clothing market share.
—CNBC Michael Bloom contributed to this reporting.