Pricey Hair Brands Find Success in Mass Outlets

Salon Sales Struggling, but Consumers Still Seek High-End Products

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BATAVIA, Ohio (AdAge.com) -- Recession or no, salon hair-care products are proving to be hot commodities -- just not in salons.

On one hand last month, salon mega-operator Regis Corp., hurt by a decline in salon visits, announced it had agreed to surrender its Trade Secret chain for nothing, receiving only tax writeoffs and the ability to remove the chain's results from its books.

On the other, Alberto-Culver Co. reported that its Nexxus brand, an exclusive salon brand converted to mass distribution three years ago, had grown sales at a double-digit pace last quarter.

Unilever, which long had stayed out of the salon business, last month agreed to purchase the roughly $250 million Tigi business for $411.5 million in a move some industry watchers believe is setting the stage for a Nexxus-style switch to mass for the brand.

And Walmart last month began experimenting with sales of pricey diverted salon brands such as L'Oreal's Biolage in what one industry consultant described as a 125-store test.

Limp locks
It's far from certain all those moves will happen or stick. But they come as additional blows to a salon industry that had its lowest growth rate ever recorded last year, according to Cyrus Bulsara, president of Professional Consultants & Resources, a Plano, Texas, consultancy.

Sales of hair-care products in salons grew 2.8% to $6.5 billion, according to his 2008 annual report, not counting another $2.3 billion used at salons. But service revenue growth was only 2.3% for the year, with all that coming in the first half.

Casey Keller, U.S. president of Alberto-Culver Co., in an interview said, "We see a lot of potential in the conversion [of consumers] from salon to retail. It doesn't mean salons are going away. It just means that instead of going to the salon once a month [consumers] might now do more professional styling every week and put more of that styling experience into their daily ritual and helping the [mass] retailer grow."

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