Amy Errett, founder and CEO of Madison Reed, isn’t concerned with the flurry of newcomers into the hair color business. With the hair color category growing after several stagnant years—fueled by necessity as at-home color spiked during the pandemic—there are more brands looking for their share of sales.
IGK expanded into the color business with a 25-shade range earlier this year. L’Oréal, the leader in mass hair color by almost double the sales of the closest competitor Clairol, recently launched a high-tech tool called Colorsonic, a wand-like device that distributes color throughout tresses. Errett believes she has a head start with a fine-tuned hybrid selling strategy. “Other brands entering the hair color space just reinforces the central role hair color plays in the lives of women,” said Errett. “We believe our omnichannel offering, quality of our products, exceptional focus on quality and customer care sets us apart.” Consumers can access Madison Reed products on their terms—in their homes, at one of the 53-plus Hair Color Bars nationwide, or for purchase at Ulta and Ulta Beauty at Target, and on the Madison Reed website.
There are aggressive growth plans in place calling for 80 total Hair Color Bars by year end. According to Forbes, Madison Reed racked up sales of $100 million in 2020, more than double the year before—and that was during a pandemic.
While many beauty service providers are opting for the franchising route, Madison Reed builds and operates its own doors. And the financing is there to grow. Despite the pandemic, Madison Reed raised $52 million in venture funding, doubled in size, and its hero SKU Radiant Hair Color Kit was selling every 12 seconds.
Without access to salons, sales prestige hair color sales grew 17% year over year between January 2021 and November 2021, according to NPD. The mass market chalked up sales gains of 2.6% for the 52 weeks ending January 23, 2022, to $360 million. Although that increase might not sound huge, it marked a return to black ink for a category in the red over the past few years. Errett was sitting in the right place at the right time thanks to her belief that consumers were ripe for better hair color options.
“Eight years ago, I became obsessed with revolutionizing the way women color their hair. I felt deeply that women deserved more options than spending hours and hundreds of dollars in the salon or a low-quality, cheap box from a drugstore,” she said. After passing on Dollar Shave Club, Errett, a venture capitalist, looked for an equivalent opportunity in beauty for women. That led her to hair color, an industry she said lacked innovation for decades, and the launch of Madison Reed. Even Errett couldn’t have planned on the boost and learnings from the pandemic which reinforced her omnichannel distribution strategy. Women who had never colored their hair at home started researching Madison Reed. Searches on Pinterest about haircare jumped over 400%; Google searches were also up in the triple digits. Madison Reed generated positive word-of-mouth that translated into sales. “If the past two years have taught us anything, it’s that you can’t predict the future. For us, it’s always been about staying true to our mission of empowering women and giving them the freedom to choose when and where for their hair color, without sacrificing results or quality of ingredients,” she told BeautyMatter. “That grounding philosophy allowed us to consistently serve our clients during these turbulent times—giving them the opportunity to choose how they color their hair, either in the comfort of their own home or by a licensed professional in a Madison Reed Hair Color Bar [once those were open].”
The company made the decision to temporarily pause operations at its (then) 12 Hair Color Bars until it was safe to reopen. “During this time we pivoted our colorists to the Color Crew, an online support team of licensed colorists, and maintained all positions,” she said.
The Great Resignation hasn’t been an issue for Madison Reed. Errett said she plans to add 750 additional colorists who make approximately three times more than working in traditional salons, plus full-time benefits.
While hair color might seem at first blush a difficult category to sell online, Madison Reed cracked the code. “Our technology strategy is centered around meeting a client where she is. Color matching is critical, and we have a proprietary algorithm that does that online as well as photo recognition,” she said.
The company discovered that most consumers research and shop for color online. “From there, we provide a seamless journey so she can pick the right channel for her—online, in-store, and everything in between. For example, we have clients who prefer to order online and get their color delivered to their door, and many that come into a Hair Color Bar for a consultation or a service every so often, and vice versa.” The presence of the Hair Color Bars also allows people to get their proper shades while traveling.
Are there market white spaces like hair color left in the beauty industry to be uncovered? “Every consumer market has the opportunity to be disrupted in business model, product innovation, and technology enablement—so many niches exist,” she said.
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