Serbia’s Cosmetics Retail Market Expands as Competition Intensifies

Serbia’s cosmetics and personal-care retail sector continued to expand in 2025, with the number of specialised retail companies increasing and consumer demand becoming more diversified across beauty, skincare, hygiene and wellness categories.

According to CompanyWall data cited in the market analysis, Serbia had 558 companies registered for retail trade in cosmetics and toilet products in specialised stores during 2025, compared with 510 companies in the previous year and 471 companies in 2023.

Despite broader market participation, the sector remains highly concentrated. Established chains, pharmacy operators, online sellers and specialised beauty retailers compete across different consumer segments, while purchasing power continues to influence growth potential.

Sector Revenue Shows Uneven Growth Pattern

The financial performance of the cosmetics retail segment reflects both expansion and pressure on profitability. Sector revenues reached approximately 22.0 billion dinars in 2025, compared with 27.1 billion dinars in 2024 and 21.4 billion dinars in 2023. Profitability also fluctuated significantly. Companies in the segment generated around 1.61 billion dinars in profit in 2025, following 3.67 billion dinars in 2024 and approximately 1.01 billion dinars in 2023.

The changes indicate a market with sustained consumer demand but significant sensitivity to inventory costs, rent expenses, labour costs, exchange-rate exposure, promotional activity and supplier purchasing conditions. Cosmetics consumption has increasingly become part of regular household spending rather than occasional discretionary purchases. Skincare, haircare, perfumes, make-up, hygiene products and wellness-related personal-care items are now purchased across multiple price segments.

Premium products continue to attract consumers in major cities and shopping centres, while affordable everyday products remain the main volume driver for mass retailers, pharmacy-linked formats and discount channels.

Lilly Maintains Market Leadership

The largest player in Serbia’s cosmetics retail sector remains Lilly Drogerie, which generated nearly 15.6 billion dinars in revenue in 2025 and recorded approximately 1.18 billion dinars in profit. Although revenue was slightly lower than the previous year, the company maintained strong profitability and increased employment from 280 to 318 employees.

Lilly’s performance reflects the advantages of an established domestic chain with extensive brand recognition, store network coverage and customer familiarity. In cosmetics retail, consumer decisions are influenced not only by product assortment but also by convenience, location, loyalty programmes, discounts and confidence that preferred products will be available.

Premium Segment Expands Through Sephora

Sephora Cosmetics represents a different segment of the market, focused on premium and selective beauty products. The company increased revenue from approximately 1.9 billion dinars in 2023 to more than 2.4 billion dinars in 2025, while maintaining profit at around 283 million dinars. Employment increased from 66 to 75 employees.

The coexistence of Lilly and Sephora demonstrates the segmentation of Serbia’s cosmetics market. Consumers increasingly combine different purchasing channels, buying everyday hygiene products from mass retailers, premium perfumes from specialised stores, dermocosmetics from pharmacies and niche skincare products through online channels. This fragmentation creates opportunities for specialised operators but also increases the challenge for new entrants seeking to build customer loyalty and purchasing scale.

Smaller Retailers Build Focused Positions

Several smaller operators recorded growth by targeting narrower market segments. Belodore nearly doubled revenue over two years, increasing from approximately 286 million dinars to more than 466 million dinars, while also expanding employment.

Pure Market grew from a small revenue base to nearly 100 million dinars, accompanied by higher profit and gradual hiring.

Ladria Cosmetics also ranked among the more visible operators based on 2025 performance. The market gap between these companies and the largest retailers remains substantial. In 2025, the leading five operators recorded the following revenues:

• Lilly Drogerie: 15.6 billion dinars
• Sephora Cosmetics: approximately 2.42 billion dinars
• Belodore: 466.3 million dinars
• Ladria Cosmetics: 104.4 million dinars
• Pure Market: 97.4 million dinars

The difference between the largest chains and smaller competitors highlights the importance of supplier relationships, purchasing power and access to prime retail locations.

Pharmacy Chains Expand Into Beauty Products

The competitive landscape is also changing as pharmacy operators increase their presence in cosmetics, skincare and personal-care categories. Large pharmacy chains are expanding beyond medicines and medical products into dermocosmetics, beauty products and wellness-related categories.

The model benefits from existing customer trust, store traffic and access to consumer purchasing data. Customers purchasing supplements, baby products, sunscreen or dermatological skincare can also become buyers of broader cosmetics categories. The growth of pharmacy-plus formats, including concepts such as Super Dr.Max, reflects the increasingly blurred line between pharmacies and traditional drogerie retailers.

Shopping centres and retail parks are particularly important locations for these concepts because they seek tenants capable of generating repeat customer traffic.

International Expansion Faces Market Constraints

Large international cosmetics chains remain cautious about entering Serbia despite category growth. Retail expert Žarko Grozdanić has assessed that there are currently no concrete announcements of major new cosmetics or drogerie chains entering the Serbian market.

Potential investors consider purchasing power, logistics, regulations, supplier structures, customs procedures, rents, labour costs and long-term scalability before committing to expansion.

Serbia’s position outside the European Union’s single market creates additional operational complexity for international retailers. Import procedures, product labelling requirements, compliance obligations, customs documentation and supply-chain integration increase entry costs compared with EU markets.

Purchasing Power Shapes Retail Strategies

Consumer purchasing power remains one of the main factors influencing market development. Serbia has a sufficiently large consumer base to attract international interest, but average spending remains below many European Union markets.

Premium products can perform strongly in Belgrade, Novi Sad and selected shopping centres, while nationwide expansion requires formats capable of serving different income groups. This supports the development of lower-price, high-volume retail concepts alongside premium beauty formats.

The case of Müller illustrates the challenge. The German drogerie chain has reportedly reviewed Serbian market data, but entry is not close to implementation. The company has recently focused expansion efforts on markets including Czechia and Slovakia, where logistics, regulation and purchasing power align more closely with its operating model.

Discount and Asian Beauty Segments Gain Attention

A possible entry of Fix Price, if based on its existing international model, could increase competition in affordable cosmetics, household products, personal-care items and value-oriented branded goods. Such a format would target a different consumer segment from premium retailers but could pressure mass-market operators and smaller independent stores.

Asian cosmetics represent another developing category. Korean and Japanese skincare products have gained global popularity due to product innovation, packaging and skincare routines.

Broader adoption in Serbia remains limited by pricing. Imported niche skincare products often remain too expensive for mass-market consumers despite strong international demand. Growth opportunities are therefore more likely to develop through specialised online stores, curated retail sections, pharmacy skincare categories and premium urban locations.

Future Growth Focuses on Hybrid Retail Models

For investors, opportunities may increasingly come from specialised rather than traditional large-chain expansion. Potential growth areas include pharmacy-beauty combinations, affordable personal-care retailers, niche perfume stores, online-first brands with physical collection points, private-label cosmetics and local natural-product producers.

Serbia has smaller domestic manufacturers of natural cosmetics, soaps, skincare and herbal products, but many face challenges related to distribution, packaging standards, marketing investment and access to retail channels. Building stronger domestic brands would require investment in certification, branding, quality control and repeat-purchase strategies.

Digital Channels Reshape Consumer Behaviour

Online sales and social media are changing how consumers discover and purchase cosmetics products. Smaller brands can reach customers without building extensive store networks, while social platforms can generate demand before products enter traditional retail channels. Maintaining visibility requires continuous investment in digital marketing, influencer activity, product availability and customer engagement. Retailers with strong loyalty systems and customer data have an advantage because they can convert digital interest into repeat purchases.

Physical stores remain important because cosmetics purchases often involve product testing, browsing and professional advice. Successful operators are increasingly combining retail locations with digital services rather than treating them as separate channels. The 2025 market figures show a sector with significant consumer demand but uneven financial performance. Revenue remains above 2023 levels but below the 2024 peak, while profitability has been affected by operating costs and competitive pressure. Serbia’s cosmetics market is expanding, but future growth will depend on differentiation, purchasing efficiency, digital integration, supplier relationships and the ability to match products and pricing with increasingly segmented consumer demand.