During 2020 when much of the country was locked down and quarantined, personal care services, such as salons, closed their doors as well. With people working from home, many women (and some men) experimented with at-home hair color products. Bold colors like rainbow, pastel pink, cinnamon swirl, and peppermint fresh were popular choices for consumers who wanted to step outside their comfort zone if only momentarily to try something new. It also accelerated direct-to-consumer (DTC) e-commerce channels for a host of companies specializing in hair color offerings both online and in-store.
How impactful was the pandemic on hair color brands and their products? In an article for Happi, Alyssa Behrendt, senior analyst at Kline, said, “Hair color was expected to record relatively strong double-digit gains due to temporary salon closures, which forced many consumers to do their own color.
“Boxed color flew off the shelves, and some direct–to–consumer brands focusing on personalization, such as eSalon and Madison Reed, nearly doubled sales, advancing the category by low double digits. These numbers are unprecedented compared to the slight declines recorded in previous years,” noted Behrendt.
Those unprecedented sales occurred with the help of consumers new to in-home hair coloring. According to a survey conducted by OnePoll, on behalf of Garnier, which examined the hair color habits of 2,000 U.S. women aged 18 and older, it revealed that one in three women dyed their hair for the first time at home during quarantine. To learn how to color their hair, the survey says women turned to online sources for tutorials, including Instagram (30.49%), online websites (29.2%), and YouTube (23.5%).
As the world emerges from the pandemic, will the sales momentum continue? And how will hair color brands drive omnichannel fulfillment?
There appears to be no hairline fracture in sales for the foreseeable future. In fact, Research and Markets projects the global market for hair color to reach $36.1 billion by 2027, from an estimated $23.2 billion in 2020.
According to market research firm Fact.MR and its Hair Color Market global insight report, the U.S. represents the largest hair color market in North America (more than 75%), accounting for 20% of the global beauty market as of 2019.
In Europe, the firm says Germany is one of the most lucrative countries for hair color brands. The country holds one-third of the European market value primarily due to 10% of men and 60% percent of women coloring their hair annually, per a Fact.MR survey.
China also serves as an important market for hair color brands. Fact.MR expects sales of beauty products, including hair coloring, to rebound as the health of the country’s economy improves. Hair color sales for China in 2020 were limited to $2 billion. Japan, however, is poised to retain approximately 30% of the hair color market share in East Asia due to the increase in the country’s aging population — with more than 40% of the population being 65 or older.
Brands like eSalon, Punky Colour, Good Dye Young, and Madison Reed continue to innovate and build their product portfolio as market needs evolve.
One of the most recognizable brands in the at-home hair color market is Madison Reed. Founded in 2013 as a direct-to-consumer hair color company, founder and CEO Amy Errett committed to hair color formulation without using harmful chemicals such as ammonia, resorcinol, PPD (para-phenylenediamine), and others.
Madison Reed reported in February that the company raised $52 million in financing from True Ventures to “fuel its omnichannel expansion and build upon the 130% growth it saw during 2020.” In 2020, the company says its customer base nearly doubled, “During the peak of the COVID-19 surge, consumers bought the brand’s hair color kits every five seconds.”
In her article for Forbes, Tanya Klich writes, “Madison Reed has raised $199.5 million in total since launch. Its previous funding rounds have charged the expansion of all three channels: direct-to-consumer, wholesale, and its chain of ‘drama-free, no diva’ hair color bars across the country.” Errett was quoted, saying, “We grew enormously, proving that our omnichannel strategy is viable.”
As retailers rebound from the effects of the pandemic, hair color brands look to a variety of strategies to drive omnichannel growth across their channels.
• Organic ingredients. A focus on green, organic sourcing isn’t just present in the food and beverage space. Consumers are becoming ultra-focused about what they put in and on their bodies — and that extends to hair coloring as well. Harsh chemicals such as ammonia, formaldehyde, and propylene glycol can have detrimental effects on the skin and hair. Companies promoting the sourcing of organic, vegan-friendly ingredients are attracting more consumers to their products.
With formulas for its permanent hair color range featuring 75% certified organic and 95% naturally-derived ingredients, Raoul Perfitt, CEO and formulator for UK-based Tints of Nature, says in an article on Happi, “We need to live a greener, chemical-free lifestyle. For almost 30 years, Tints of Nature has offered a natural, healthier hair coloring system to replace products filled with harmful chemicals. We were one of the first hair color brands that offered salon-quality results without harmful chemicals.”
• Gen Z and the power of TikTok. Experimenting with new hair coloring doesn’t just occur among adult consumers, but the younger generation as well. Generation Z is tuned in to all things social media, whether it’s YouTube, Instagram, or TikTok. Catering to these platforms has been profitable for hair color brands especially those using influencers to show off new bold hair dyes.
An article on Glossy dives into the e-girl trend and the power of social influencers and brand ambassadors to drive Gen Z consumers to their brands and DTC channel. With TikTok as the app of choice, hair color company Good Dye Young realized 400,000 followers on its app over one year. The company says that using the app for brand marketing yielded 322% year-over-year sales growth in 2020.
• Augmented reality/artificial intelligence. While the use of technologies like artificial intelligence (AI) and augmented reality (AR) are not new in the beauty and cosmetic industry, how they’re being utilized for omnichannel optimization is innovative.
In an article on Glossy, Madison Reed Founder and CEO Amy Errett says AI and AR are now strategic online and in-store tools for customer retention. “We use AR data to figure out what other hair colors we should formulate. What I mean by that, is if we see that we have a gap in our shade range, we go, formulate the color, then tell the customer that [we have it now] and form a waitlist.
“Our technology is really predicated on first getting her the right color through AR, then helping her apply that color through videos and live consultation. AR and AI bridge the gap between [expectation and reality].”
How can automation help support omnichannel strategies of hair color companies? With the wider adoption of e-commerce, companies are turning to automated solutions to keep pace with omnichannel fulfillment in their warehouses and distribution centers. SSI SCHAEFER works closely with a variety of industries, including beauty and cosmetics, to optimize the fulfillment of e-commerce orders and their omnichannel ecosystem.
What automated solutions are hair color companies utilizing? With the ability to rapidly pick 40,000 products per hour, A-Frames are an ideal choice for the small, rectangular packaging of most hair color products. A high volume of product can be automatically picked and processed for shipment and delivery for DTC channels. Another significant benefit of A-Frames for hair color brands is that the refilling and picking processes are done separately. Thus, during low-load periods, product is refilled and ready for the next peak load — ensuring the most efficient use of personnel.
Retailers in beauty and cosmetics are also gaining e-commerce and omnichannel efficiencies using the SSI SCHAEFER Carrier System and its pouch sorter. RFID technology enables processing of individual e-commerce orders in any combination and desired sequence. Additionally, several thousand to tens of thousands of hair color products can be sorted per hour, allowing for scalability as new hair color offerings are introduced and overall business grows.
Like the bold colors that hair dye customers are experimenting with, the future of DTC e-commerce looks bright. Combining omnichannel customer strategies with warehouse automation provides hair color brands with a competitive ecosystem for revenue generation.