Can Haircare Keep Its Big Mo?

Haircare is on the up and up.

Sales in the category grew 6.6% last year to $21.7 billion, according to market research firm Circana. And Greg Starkman, co-founder of haircare brand Innersense Organic Beauty, pointed out during a panel discussion on haircare last week at Beauty Independent’s Dealmaker Summit conference in New York, it has a one up on the other categories—a high consumption rate.

“On average [consumers] will buy six to eight times in a year spending $30 versus, for a high-end skincare product, they’re only buying it maybe once or twice in a year,” he said. “And then, on the other end of the spectrum, there’s fragrance, which is like the fragrance graveyard. We all have these half-used bottles, but very rarely do people have unused shampoo or conditioner bottles.”

Starkman was joined by Chelsea Riggs, CEO of Amika; Ashleigh Barker, head of beauty and personal care for investment banking firm Lincoln International; and Zack Zavalydriga, a beauty industry consultant who counts DevaCurl, Redken, Pureology and K18 as clients, on the panel discussion. They expressed optimism about haircare’s future.

Riggs noted that intentional innovation will boost haircare’s upward momentum. “If we want people to come from mass into premium, they have to have a good experience,” she said. “And when there’s too much optionality on the shelf, and they buy that one product and it doesn’t work as well or as the same as what they’re using in mass, we’ve lost that opportunity.”

Barker underscored that the mass customer isn’t to be ignored. Circana data shows the mass segment makes up 80% of the haircare market, only nail and vitamins are more highly penetrated in mass, with prestige owning the rest. “You can’t overlook that customer and assume that they’re treating haircare just as a part of their personal hygiene,” she said. “They’re also looking for those solution-driven benefits…and so with that comes permission for innovation and for mass-oriented brands to bring that same level of efficacy and quality to a broader audience.”

In the first quarter this year, Circana highlights styling products as a top sales driver, increasing 12%. Sales of scalp care and hair thinning products rose, too. Barker emphasized that customers are seeking products that deliver functionality. She said, “We know that the shelves are very crowded in store, but consumers are looking for very useful, very purpose-driven products that they can incorporate and that can really customize to their specific needs and solutions.”

Outside of traditional mass and prestige beauty retailers, haircare has a particularly robust professional sector. Innersense and Amika started off in the pro space, targeting salons and hairstylists before branching into Ulta Beauty and Sephora, respectively. For both brands, the pro channel makes up about 30% of their business.

Zavalydriga remarked that working with stylists reinforces brands’ credibility and fuels awareness. Bullish on the pro space, he says, “It’s not often that you have a captive audience customer in your chair for 45 minutes to an hour that you can sell to. And, so, the professional channel allows you to have this captive audience and sell to them in a way that you can’t anywhere else.”

Starkman shared that professional endorsements and referrals trump Innersense’s social media campaigns and user generated content. Riggs co-signed that salons are Amika’s No. 1 brand acquisition and awareness vehicle. “It’s actually increased even though we’ve increased exponentially in premium retail with our partnership with Sephora and Sephora at Kohls,” she said. “That professional credibility is key in building that trust not only with of course our hairdresser community, but with our consumers as well.”

However, the professional salon sector is fragmented and difficult to break into. Zavalydriga mentioned that success in a single channel is critical for brands considering lucrative exits. That channel depends on the brand. He singled out Ulta as a dominant player in haircare, but added the category is among the fastest growing at Sephora. He suggested brands pick a channel and lean into it.

He said, “Build a community, build a cult following, and then, ideally, bring on an investor to then go into further channel expansion and then bring on a management team.”

Zavalydriga identified going wide on international expansion as a common mistake brands make. “It drives me crazy when founders tell me, yeah, I’m in 32 countries. That’s not a good thing,” he said. “That can be a challenge down the road for you, but it’s exciting and a compliment in the beginning.”

Historically, he continued, international expansion is margin dilutive for brands, distracting and hard on management teams. He advised founders to stay focused on their home market and only expand if they have a strong proof of concept. He said, “If you can, just prove yourself in one country and go really deep, and then leave it to the strategic for multiple other countries.”

Starkman and Riggs credit staying in their lane and doubling down on it for the success of their brands. For Innersense, styling products are its primary bestsellers. Amika’s leading product is dry shampoo, and it has the No. 1 dry shampoo in the premium haircare category. Riggs said, “We’ve been very disciplined and focused and, of course, there’s been some things along the way that we test and learn, but we really make sure that we nail the playground that we want to be playing in.”

Barker said haircare brands today need to nail branding and efficacy to woo potential financial partners. She elaborated, “The way that you do that is with a lot of strategic thinking and demonstrating that you have permission to be on the shelf, and whether that’s the wholesale shelf or the bathroom shelf, you need to give that customer a reason to want and need your brand, and that comes with delivering on something that’s not yet available to them.”

Zavalydriga said, “If you’re a founder, come up with something unique, own your formulas and then figure out how to get some version of depth, whether it’s through stylists, salons or something else.”