Following a reported four percent increase in sales over the previous year, the toiletries and cosmetic industry is turning heads more than ever as a result of its 2006 cosmetic sales.

Driven not only by increased volumes in cosmetic sales but by the availability and widespread acceptance of more upscale product in the retail market, the boom in cosmetic sales is proving a boon to drug stores, who have positioned themselves at the forefront of this wave of demand, with many stocking upscale beauty brands on their shelves and putting store consultants in their aisles.

According to the new study Beauty Retailing USA 2006 by business consulting and market research firm Kline & Co., the increase in the toiletries and cosmetic industry was the largest growth spurt in the past five years. While the department stores and food stores continue to lose share in the cosmetic products market, the battle between drug stores and big box retailers, such as Target and Wal-Mart, is heating up. "Companies like CVS and Brooks pharmacy are pairing boutique style service with the convenience of the local drug store as a way to compete with big box retailers," says Susan Babinsky, senior vice president and head of Kline's Consumer Products consulting practice. "They're hoping that this draws women back to the drug store, especially those looking for premium products that could previously be found only in spas and specialty shops."

In recent months, Walgreens, with the help of beauty marketing company Excelsior Beauty, introduced the European Beauty Collection in about 1,000 of its top beauty stores. The collection is comprised of seven exclusive skin care lines from France, Germany, Spain, Switzerland and Greece.

Based on the success of the initiative, it is likely to be expanded to additional Walgreens locations. The cosmetic products have an average price tag of $27 a unit. Walgreens currently has about 20,000 beauty advisors nationwide.

In addition, select CVS, Brooks and Duane Reade stores have in recent years implemented European style skin care boutiques that sell higher end skin care brands, such as those from Vichy Laboratories and L'Oreal and Avene from Pierre Fabre. The centers are staffed with trained beauty advisors who can help customers choose the cosmetic products that best meet their skin care needs.

By adding these high-end brands, drug stores are hoping to gain a piece of the booming professional cosmetic products market. According to Kline & Co., sales for this product segment are approaching $1 billion and have been growing at double digit rates over the past five years.