Hair Color Business: Great Growth

By Web Editor | 03/20/2008 5:10:00 PM

 

by Cyrus Bulsara

The hair color category has been one of the saving graces of the U.S. professional salon industry. This is true for both hair care service revenues and for product sales in particular. During the 2002-2007 period, when the all hair care products taken together grew only 3.2 percent, hair color product sales grew at 6.3 percent, nearly double the overall market growth rate.

Hair color remains the largest major hair care category, showing consistently excellent and solid growth. It also propels hair care service revenues at salon level, with hair color revenues growing at around 5 percent over the last five years. At $644 million in 2007, it is the largest salon hair care product category.

In the salon, hair color is projected to grow at approximately 5.5 percent over the next five years, with most of the business, understandabley, on the service side. In 2007, $590 million in product sales came from service or backbar products, while $54 million came from sales of salon-retail hair color refreshers designed to keep hair color “salon fresh” between services.

This projected growth is based on the demographic and fashion trends that have fueled the color business over the last 15 years. Salon gray coverage for an aging U.S. population will continue to grow, as the youngest of the baby boomers enter their mid-forties and millions remain in their high-spending fifties and early sixties. Young women and men alike use fashion color in following trends, like the shiny blonde “Beckham bob.”

New technology accelerates growth, and much is coming through the pipeline this year. Groundbreaking R&D innovations like Procter and Gamble’s “10-minute hair color,” initially launching this month in the mass retail market, will be adapted to salon color to drive traffic and volume.

Finally, at-home hair color refreshers—shampoos and conditioners that contain pigments, reflectors and conditioners that extend times between salon visits—are a secret profit asset, projected to grow salon retail hair color at double-digit rates.

Fastest Growth
Service Type 2006 2007 % Increase
Cutting & styling 25.85 26.55 2.7
Hair coloring 12.54 13.20 5.3
Perming & relaxing 8.64 8.81 2.0
Total of hair care services 47.0 48.6 3.3

Going Up

In 2007, hair color services at salon level grew by 5.3 percent from $12.54 billion to $13.20 billion.

At the grassroots salon level, some new forces are working to expand color business. While several chains have integrated simple color services into their traditional cut-and-go operations, the real story is happening among independent contractors. Booth rental salons are the major new salon industry growth phenomenon in hair color.

Growing rapidly in all areas of the country except the Northeast, booth rental salons have increased their share of market. It is estimated that 30 to 35 percent of all U.S. salons now engage in some form of booth rental operation, either under single or joint ownership/management. This growth is fuelling sales of hair color and all hair care products at freestanding beauty stores like Sally Beauty and is responsible for the expansion of professional-only, full-service distributor stores like those under Sally Beauty Systems Group and L’Oréal’s Beauty Alliance.    

In the consumer-oriented beauty market of the Southwest, the opening of upscale booth rental salons housing 20 to 40 professionals is driving growth in volume and revenue. From Texas to California, these nouveau independents offer consumer-pleasing one-stop beauty with a mix of hair, skin, nail, body and cosmetics services. In these areas, booth renters have created and led hair coloring service price increases of between five to seven percent.

With their sophisticated decor, these salons are raising the bar for the client experience at an affordable pricepoint. Their independent stylists generally possess more hair color experience than the youthful staff at the value-positioned salon chains, and are drawing from their client segment, with most of the large chains seeing a slowing of their same-store service revenue growth.

At the high end, salons use color to communicate the artistry and expertise of their staff, much as the “$400 hair cut” positioned Manhattan salons as the best of the best. Urban, celebrity-serving salons have prompted consumer acceptance of color services at $300 and higher.

Permanent hair color remained one of the largest growing segments in 2007, due to strong and increasing demand for gray coverage by an aging population. Fashion colors and the use of
highlift products for blonding and highlights for young adults are other major growth drivers.

In 2007, dollar shipments of permanent hair color in both liquid and crème/gel form together total $343 million and constitute 53 percent of hair color sales.

Color by Numbers
Segments—2007 $s-Millions % of Total
Permanents — creme 194 30.1
Permanents — liquids 149 23.1
Semi/Demipermanents 130 20.2
Bleaches/lighteners 67 10.4
Color refreshers 54 8.4
Temporaries 32 5.0
Toners 18 2.8
Total 644 100.0

Crèmes and gels constitute 30.1 percent of the category and permanent liquids contribute 23.1 percent. Crèmes and gels have now surpassed liquids, reflecting a shift among U.S. hair colorists to these platforms, which are the preferred form of hair color in Europe. Ease of application appears to be the major factor in the move away from liquids. 

Semi- and demipermanent products are now rather flat, although at 20.2 percent they form the second largest segment of salon color. Clients, especially those covering gray, want more permanence than the average four to five weeks that these formulas provide as a base service. Some colorists market no-lift, no/low-ammonia and peroxide colors as a gateway service, then graduate clients to permanents. Others incorporate the demis as end refreshers in their permanent color retouches. 

Bleaches and lighteners rank third and constitute a 10.4 percent share of hair color with sales of $67 million. These lifters experienced double-digit growth in 2007. The segment is showing excellent vitality, mainly due to innovative crème, gel and paste formats for both on- and off-the-scalp lightening. A few of the new entries add tint and tonality during lightening.

Color refreshers also show good growth for a segment share of 8.4 percent. These mainly consist of salon retail products for use between hair color services. Most major hair color marketers now sell refreshers in shades that complement their permanent color lines.

Temporaries constitute only five percent of the category and, like toners/correctors, remain flat.

 

Trend Drivers

Leading U.S. hair colorists, distributors, salons and style magazines agree that trends are a powerful driver of hair color business. Top-selling concepts are “dimension” and “shine,” particularly at darker color levels. Popular lowlights in eggplant, mahogany or burgundy look fresh when achieved with new brunette, red and pure-gloss shades in permanent and demipermanent products.

Softer, natural-looking colors with strategically placed highlights, duo-lights and
lowlights remain the backbone of color practice in most major metro salons. New-technology brunette and red shades and gel/crème lighteners with tonality are particularly effective for this work.

A new generation of lifters designed to lighten dark shades without exposing warmth are popular dimensionalizers for Hispanic and Asian clients.

trends: shade palette activity
Black/Dark Brunettes/Reds .............................................High Activity
Blonding/Highlights ........................................Medium to high activity
Lowlights/Duo-lights .......................................Medium to high activity
Neutrals/Gray Coverage ...................................Medium to low activity

African-American clients favor chunky highlights over a dark base, achieved with highlift permanents or lighteners with tone to reach a burnished gold.

The monochromatic look, which is actually a tone-on-tone color combination of two or three shades using demi- or semipermanent color, has resurfaced as an important trend to complement the new bobs.

The new lighteners that feature tonality have strengthened dimensional blonding, still the highest-profit service in the salon. Manufacturers are particularly interested in extending this technology, with more sophisticated products due for launch later this year.

 

Futurecast

Among all the good news, there is one caution. Clients resist making salon visits for hair color services every four to six weeks, turning toward retail touch-up kits, color refreshers, etc., to fill in between appointments. The trend is particularly marked among gray coverage clients who, as they age, require more frequent visits. Both salons and manufacturers will have to address clients’ need to return on the traditional six to eight week cycle to keep consumers from sampling non-salon color alternatives.

Despite this, hair color remains one of the most vital and burgeoning growth categories in the U.S. salon industry and serves as a major service revenue builder and traffic driver. Hair color services push the sales of shampoos, conditioners, styling and other specialty products at salons, mega salon stores and beauty stores. By itself, hair color is keeping the salon industry in a growth mode, looking as beautiful as freshly colored hair.

A 25-year veteran of both consumer and professional beauty industries, Cyrus Bulsara is president of Professional Consultants and Resources, a full-service strategic consulting company specializing in beauty, salon, cosmetics and consumer products. PCR is one of the leading sources of industry data, competitive intelligence and background research and has worked with Modern Salon since 2000 to perform original research, forecasting and trend analysis for the annual “State of the Industry” report. For more, visit www.proconsultants.us.


 

 

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