Hair care — once the smallest of all categories sold in high-end and specialty stores — is now one of the most dynamic, posting double-digit growth and outpacing other sectors of the business.
Currently, hair care sales in the prestige channel are $2.6 billion, or about 12 percent of total beauty volume, according to data from The NPD Group, which predicts that by 2024, the category will double in size. According to NPD, 90 percent of U.S. consumers show strong interest in purchasing hair products or expanding their hair routines.
“Hair is the only category that NPD predicts will grow double digits through 2024,” said Larissa Jensen, vice president and industry adviser for beauty at NPD. “We’re not as bullish on other categories.
“The biggest driver is premiumization,” she continued, “very much like what’s happening with fragrance, where consumers are purchasing products that command a higher price point. This is not necessarily inflationary, as it is consciously making this choice to buy products that cost more.”
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Also notable is that the popularity of the category has resulted in a decrease in the discounting that is widespread in other areas of the business. “Overall we’ve observed that price promotions have softened across every category, but it is most dramatic in hair,” Jensen said. “Consumers are willing to invest.”
From $36 for a color-protecting Kérastase shampoo to $75 for a 50-ml. bottle of K18’s Molecular Repair Hair Mask to $550 for Dyson’s Airwrap, shoppers are showing they are ready to shell out big bucks for efficacious products.
“What was a growing category has exploded,” said Priya Venkatesh, senior vice president, merchandising, skin care and hair care, at Sephora. “What draws customers to hair is exciting newness, either from existing or new brands, and there have been a lot of new brands.”
While both specialty and department store retailers are contributing to the sales gains in prestige hair, it is the former — namely Ulta Beauty and Sephora, along with Amazon, that are driving the exponential growth. The forced closure of salons during the COVID-19 pandemic started the boom, as consumers became extremely engaged in taking care of their hair at home out of necessity rather than choice.
Ulta Beauty, whose retail footprint includes salons, is said to be the top player, while Sephora and Amazon are neck and neck for the second spot. Amazon seems to have had more success in working directly with professional and prestige hair care brands than in other categories, due to its willingness to help control the third-party distribution of the brands it works with directly, said one source, who spoke on the condition of anonymity.
But even as salons have reopened, the retail momentum has continued, with prestige hair sales almost evenly divided between brick-and-mortar and online transactions, according to NPD.
“The lines are so blurred because people are willing to shop anywhere,” said Britta Cox, cofounder of K18. “It doesn’t really matter what your income level is — everyone wants the best quality product that delivers real results and the price they are willing to pay is based on the efficacy of products. When times are hard, as they are with the pandemic or the war, people want to do little things that make them feel good.”
Brand-wise, both professional nameplates, once historically sold only in salons, as well as newer indies geared primarily toward retail, are doing well.
“Professional and prestige used to be distinctly separate. Now we’re seeing more cross-over,” said Jessica Philips, vice president of merchandising at Ulta Beauty. “The lines are blurring. What we know about our guests is that they don’t see the lines as distinctly drawn. They see brands on a continuum and their baskets are a combination of brands.”
Of the top 10 brands at retail, seven of them are professional, according to Leslie Marino, president of the professional products division at L’Oréal US, who said that the authority derived from the hairdresser provides a key boost to the brands. “What’s interesting is the dynamic growth is coming from the pro heritage,” she said, “similar to the makeup artist boom. The same thing is happening in hair — the authority of coming from a hairdresser combined with highly active ingredients.
“Consumers want prescriptive, personalized and customized regimens for their hair,” she continued, “and they are getting the information online or on shelf or in a salon. They are knowledge hungry.”
The availability of information — once relegated primarily to the professional channel — has helped give rise to today’s multichannel reality. “We can be a synergistic omnichannel brand and we are doing well at managing channel conflict,” said JuE Wong, the chief executive officer of Olaplex, the hair care unicorn that went public last year. “Our professional channel gives us credibility, through the science of their service and the elevation of their artistry. The retail gives you brand recognition and awareness, and direct-to-consumer gives us brand insight and gives consumers 24-7 convenience.”
Wong noted that 35 percent of consumers come to the brand via a professional and that 50 percent of its d-to-c consumers buy in brick-and-mortar, as well. “That synergy is very telling,” she said. “You can’t really argue with that.”
“The pie is getting bigger and that bodes well for both the professional and specialty markets,” agreed Martin Okner, president and chief operating officer of dpHUE. “It’s an exciting time for specialty and that will continue. But the role of the stylist is one that differentiates hair, and that is where we and other brands have to embrace the role of the stylist in the consumer journey.”
Not surprisingly, in a category growing at about 46 to 48 percent per year, there are a lot of hot segments, with people adopting multistep regimens that go far beyond wash and rinse.
“One of the categories that benefitted from the upgraded in self-care during the pandemic was hair — particularly treatments, masks and products that deliver a specific result,” said Colin Walsh, the CEO of Ouai Haircare, the haircare brand started by star stylist Jen Atkin, which Procter & Gamble acquired late last year. “It’s an upgrade. Consumers understand they now have science-driven formulas that can deliver results. It’s moved from just being a commodity.”
The more specific the product, the better. “As customers get more educated in the category, they’re looking for things like specialty shampoos,” said Venkatesh. “Hair health is really driving the growth. The category is growing like skin and makeup — people want what is right and they are open to using more products and investing more time and money in their hair care routines.”
Fast-growing brands at Sephora include Olaplex, Briogeo, Bread Beauty Supply, Kérastase, JVN by Jonathan Van Ness, K18 and Dyson.
“Hair oils are also on fire. People are using pre-wash treatments and post-wash styling treatments,” Venkatesh continued. “We just launched JVN, which is clean and planet positive with a huge sustainability angle — that has also seen really customer engagement.”
At Ulta Beauty, content is driving the business. “We’re seeing styling and self-expression and all of these cultural moments coming back,” said Philips. “The styling aspect is like makeup in that it’s so transformative. We’re really seeing that clicking,” she continued, noting that tools, especially the Dyson Airwrap (“we haven’t seen anything like the sales we have seen this year”) are flying.
But it’s not just styling. The skinification of hair care fueled by a renaissance in product and ingredient innovation, is boosting sales for multiple brands, including Olaplex, Bumble and bumble and Redken, while hair color, in particular Madison Reed, is doing well, and the “hair therapy category,” Ulta’s name for products geared toward hair thinning, scalp issues, shedding and hair loss with brands like Better Not Younger and Nioxin, is strong.
The variety of products that are helping to fuel the sector is indicative of a new generation of consumers that Marini describes as “younger and more diverse.”
“They are highly engaged beauty shoppers and they shop cross functionally,” she said. “They also very often change the look of their hair. If you’re coloring your hair and changing your look, you really need to take care of it. Masks, serums, oils — these products really treat the hair and enable people to express themselves through their hair and still have hair that’s shiny and healthy.”
For both Sephora and Ulta Beauty, textured hair care brands and companies with founders who are Black, Indigenous and people of color are also a key focus. “We took the 15 percent pledge and added head count to the team devoted to growing our assortment and hair leads this,” said Philips, noting that in hair care, Ulta is close to achieving the 15 percent figure and citing brands like Tracee Ellis Ross’ Pattern, Curl Smith, Briogeo and Sunday II Sunday as businesses that are thriving.
“We’re adding brands that are meaningful and different,” said Philips. “I want to see more innovation out there and there is such an opportunity in professional to have a modern take on a professional system. A lot of those brands are pretty old school and a lot of systems were built around relaxing hair. It is ripe for disruption.”
Both retailers are also tweaking their approach to merchandising in order to better harness the growth. Sephora’s newest off-mall stores have a higher allocation of space devoted to the category, said Venkatesh, where it sits front and center, just as shoppers walk in. Hair also has its own ‘Next Big Thing’ discovery section, which is rolling out to an increasing number of brick-and-mortar doors.
Ulta, too, is dialing up on story-telling and content creation and giving more emphasis to the category on its website and social media platforms. “In some prototypes we’re giving hair more space, but it’s about getting more productive in terms of the space we’re in,” said Philips. “We’re all about the possibilities of beauty and we want a lot of brands, but it is sharpening them and not having such a long tail.”
The boom in hair care and the rise of independent brands has not gone unnoticed by beauty’s biggest strategics and the investor community. Unilever has been playing in the arena since 2016, when it bought the Boston-based Living Proof, this past December, Procter & Gamble entered the fray when it acquired Ouai.
“This is the next big battleground,” said Venkatesh, who believes the category will benefit even more from the capital infusion. “Brands will be able to invest more in marketing and sampling to get the story out — it’s exciting,” she said.
In addition to Ouai, P&G also has a d-to-c brand it incubated in-house called Keep It Anchored, which is clinically proven to prevent hair loss for men and women. While Chris Heiert, who was named senior vice president of the newly created Specialty Beauty Division that houses both brands, declined to say whether the CPG giant has any more acquisitions planned in the near future, he made it clear the company wants to be a key player in high-growth categories.
“Consumers like to buy into brands that are real and relevant and have performance-driven products,” he said. “That plays into our strengths. As we look at hair — color protection and preservation, hair retention, clean beauty, scalp health, hair health — all of those are exciting segments where our science-backed solutions can help solve consumer needs.
“It’s an exciting time to be in beauty because consumers want to continue to upgrade their routine,” Heiert added, noting that 75 percent of consumers updated their beauty routine during the pandemic. “As we continue to be inspired by the consumer, you’ll see a lot more.”
As for stylists — they’re growing, adapting and evolving, too. “You have to keep evolving to stay ahead of the curve,” said Gregorio Ruggeri, who earned his degree in trichology during the pandemic and has added a number of bespoke scalp services to the roster of his namesake salon. “The beauty industry changes so quickly, and if you’re not there trying to stay ahead of the curve, you’re going to get left behind.”
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