Hair extension snapshot industry report by diane shawe 2014

[2014] A Snap shot view of the Global value of the Hair extension Sector.

By Diane Shawe M.Ed AVPT Hair & Beauty Academy www.hairextensiontraining.academy [2014]

Summary Report Presenting

A Snap shot view of the Global value of the Hair extension Sector.

Prepared by AVPT Short courses Academy Index INTRODUCTION

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MANUFACTURERS: CHINA INDIA: DISTRIBUTORS: INDIA USA: SOUTH AFRICA

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RETAILERS:

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AMERICAN RETAIL OUTLOOK UK AND EUROPE RETAIL OUTLOOK CHINA RETAIL OUTLOOK CUSTOMER SEGMENTATION UK USA: CHINA: FUTURE OF BUSINESS: CONCLUSION:

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Introduction Human Hair Extensions have never been more popular and is estimated that the demand for hair extensions has exploded to an astonishing 40% in this year alone and that is only in the UK and Europe. Hair Extensions are the fastest growing service in the hair industry today and shows no sign of slowing down. It is estimated that the UK and European market for Hair Extensions is worth a staggering 30.7 billion per annum of which majority comes from training and merchandising courses.http://www.connect-2hair.co.uk/.

The growing Hair extension industry has paved way to one of the greatest opportunity for business expansion evidence is everywhere that marketers of this segment are dominating retail sales in inner city locations globally , increasing their marketing presence in magazines and beauty shows and targeting women of colour. It is apparent that these marketers are growing in their understanding of and merchandising to multicultural consumers with a sharply increased level of sophistication in their creative placed prominently on magazine back covers and advertising spreads. No doubt about it, their advertising in both trade and consumer publications is dominating the ethnic beauty business. http://www.bironline.com/reshare/012005/BIR0105_multicultural_report.htm

High Street Hair Salons in London are on average charging from £395-£1,000 per install for a full head of human hair extension application. All the famous celebrities on TV are having hair extensions installed, and this popular trend is exploding this year, with magazine and media articles, before and after photo’s and hair extension news and latest install techniques. You only have to look at YOUTUBE to see how many people click on to the hair extension videos uploaded by members of the public.

As this trend is growing, it is becoming more and more evident that people are seeking out training courses to become skilled at this new and growing hair enhancement and replacement opportunity, providing them not just with job satisfaction but premium income streams. Most students seek to pay between £500 for one day or up to £4,500 for five days training courses throughout the UK. Firstly driving the demand for hair extensions are time-constrained consumers who want quick, new looks and style options at a variety of price points. With even the highest-priced items selling, today’s fashion followers are clearly willing to pay more for quality hair goods. Manufacturers are obliging them with synthetic wigs and hairpieces that hold colour and styles longer and increasingly feel more like the real deal, mimicking the bounce, body, sheen and light reflection of human hair. Today’s hair goods also show off natural-looking, blended colours, even emulating grown-out roots and sun-kissed highlights. In addition, whether they’re made from synthetic fibre or human hair, fashion hairpieces are now so fast and easy to attach that wearers ©AVPT Short Courses Academy 2014

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can take them on and off like a pair of earrings. Factor in the wide array of price points and there’s a wig, extension or hairpiece to fit almost every budget.

Let us just spend a moment understanding the different components of this massive industry, this industry primarily makes up of four components they being The Manufacturer, Distributor, Reatailer and the Final consumer.

Manufacturers: China: Human Hair exports has crossed over $150,000,000 in the previous year of 2007 of which China and Hong Kong together have taken 50% of the global exports in hair exports that is very indicative that hair industry is growing by the year.

Leading exporters for Human Hair, Dressed, and Thinned, Bleached or other wise worked for 2007 (UN Comtrade Database)

Reporter Title

Trade Value

China

$52,664,431

Austria

$29,206,287

Italy

$27,801,100

China, Hong Kong SAR

$24,315,084

United Kingdom

$6,927,686

Other reporters Total Export: $156,432,434

$15,517,846

India: Human hair is mainly supplied by some of the largest charities that are un via temples.

Over the course of a year, the temple auctions 90 tons of hair, providing revenue of around £3.7m which is then ploughed back into charitable causes, including a number of specialist hospitals. "The money from hair is significant but it isn't our main source of income," says the temple's executive officer, APVN Sarma. "Our primary source is donations but the income from hair is still very important."

The temple has an annual budget of £90m, making it one of the richest religious institutions in India and also one of the country's largest charities. Part of the reason

why Tirumala is so popular with devotees and donors is the temple's long tradition of welcoming all visitors regardless of caste and religion.

It is one of the few major Hindu temples that allows non-Hindus to enter the inner sanctum that holds the deity. (www.independent.co.uk/news/world/asia/religious-offering-faith-hope--and-westernvanity-428697.html

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What started as a small export opportunity worth Raj Impex 25 to 50 lakh ($ 60,000 – $1,20,000) a year in the early 80s has now grown into a mammoth business, with nearly 40 exporters, including 10 big players, engaged in this field in India now, a leading exporter and proprietor of Raj Impex (India), Chennai, Benjamin Cherian, told PTI. The Harvard educated Cherian said the export of human hair, especially long hair, is always a big business in right from 1960s till date and the demand is so much at the prices just going up so is the volumes of the exports. Now Indian human hair is exported in various colours like black and dark brown, grey, white and brown and is also classified as straight, curly, wavy and silky.

Recent Exports Human hair, dressed, thinned, bleached or otherwise worked (UN Comtrade Database)

Period 2006 2005 2004 2003

Trade Value $ 140,325,0695 $ 103,736,077 $72,200,401 $ 69,361,784

Distributors: The worldwide market for hair products, meanwhile, is valued at anywhere up to £2.5bn a year, with significant markets in South Africa, Brazil, the United States and Europe. The US market, valued by Mintel at £1bn, has grown by 13% over the past five years, and is the most developed, with about 40% of the global hair business. But the UK is seen as the next big grow.

The hair extension category is heating up. The use of synthetic or human hair incorporated into a natural head of hair is telling its story in ad and editorial copy. There are now more than 100-plus companies targeting women of color with myriad colors, lengths and hair textures in the ever-expanding category of hair extensions.

Manufacturers of chemical treatments, relaxers, and maintenance products are quietly complaining that ethnic consumer’ purchases of human and synthetic hair may be retarding growth of these traditional products.

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Secondly wigs come with cool, new display units. Streamlined ordering also makes Costly inventory a thing of the past. Other common store-support techniques include Websites with retail locators, co-op advertising and sales-boosting promotions.

Increased competition has bolstered sophisticated marketing tactics, including the use of celebrity spokespersons and national media campaigns. As a result, fun, highfashion hair goods are gaining shelf space, delivering higher margins and even acting as a primary draw. Women between the ages of 18 and 40 are the most likely to skip the catalogues and websites and look to beauty supply stores for hair goods. By happenstance, these women are also most likely to buy hair goods during March and April, so what better time than now to check out the options a company to offer them Thirdly hair extension has also given way to create a demand for the materials required for the hair extensions that include a myriad of products made of human or synthetic hair, varying in cost, quality and technical complexity. They add length, thickness, colour and texture, from straight to wavy to curly.

They may be sold as individual sections of hair or wefts, which are like little curtains of hair stitched to a seam, and can be attached by special adhesives, metal clamps, beads, double-faced tape, thread, combs, clips or cheap glue. Bonded or fused extensions are the most expensive, as well as more refined, durable and likely to pass for the real thing. They are made of 100 percent human hair that women, usually from India -- but also from Italy, Spain, Eastern Europe and the Far East -- grow long to cut and sell.

Customers buy bonded extensions by the bundle, which consists of a set of 50 extensions that come in lengths from 10 to 28 inches. A single extension comprises about 25 strands of hair. The main distinction among the high-end brands is the way the extensions are applied. Nearly all offer pre-bonded extensions, meaning there is a hard plastic substance at one end that will act as an adhesive once the stylist presses it to several strands of the client's own hair. They do so about an inch to an inch and a half from the scalp, with a pair of tongs that is heated (known as ''hot fusion'') or that generates heat by way of ultrasound (called ''cold fusion''). The adhesive may be made with artificial keratin (keratin is a primary protein in hair) or nylon. If the extensions are done well, the join, or point of attachment, will barely be visible and feel no bigger than a grain of rice.

Leading Success stories in hair products distribution:

India: What started as a small export opportunity worth Rs 25 to 50 lakh ($ 60,000 – $1,20,000) a year in the early 80s has now grown into a mammoth business, with nearly 40 exporters, including 10 big players, engaged in this field in India now, a leading exporter and proprietor of Raj Impex (India), Chennai, Benjamin Cherian, told PTI. The Harvard educated Cherian said the export of human hair, especially

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long hair, is always a big business in right from 1960s till date and the demand is so much at the prices just going up so is the volumes of the exports.

USA: Hair extensions have been around for about a decade, and there are no published statistics to track the industry's growth. Great Lengths, one of the largest manufacturers and distributors of hair extension products, said that its sales to salons in the United States have increased 35 to 50 percent each year since 2000, and it is projecting that such sales will be as much as $30 million by the end of 2006. The company president, David Gold, estimated that 95 percent of its market is made up of women 30 to 70 years old. (New York Times published on 28th September by ELIZABETH HAYT).

South Africa: Discom continually focuses on differentiating its product offering from the Clicks brand, and has achieved this through an aggressive move into the African beauty and ethnic hair care markets. http://www.newclicks.co.za/IRDownloads/AnnualReport2003/com_sa_trading_brand s-discom.asp Sales Sales growth

2003 771 441 7.0

R’000 %

2002 720 895 12.1

Retailers: American Retail Outlook: American manufacturers are seeing sales increases from 30% to 50%, and suppliers estimate that the total U.S. market now stands between $1.5 billion and $5 billion at retail. Human-hair goods represent nearly 70% of that dollar value, but synthetics represent about 80% of unit sales. (www.beautystorebusiness.com , February 2013)

UK and Europe Retail outlook: Human Hair Extensions have never been more popular and is estimated that the demand for hair extensions has exploded to an astonishing 40% in this year alone and that is only in the UK and Europe. Hair Extensions are the fastest growing service in the hair industry today and shows no sign of slowing down. It is estimated that the UK and European market for Hair Extensions is worth a staggering 30.7 billion per annum of which majority comes from training and merchandising courses.http://www.connect-2-hair.co.uk/.

High Street Hair Salons in London are on average charging from £395-£1,000 per install for a full head of human hair extension application. All the famous celebrities on TV are having hair extensions installed, and this popular trend is exploding this year, with magazine and media articles, before and after photo’s and hair extension news and latest install techniques. You only have to look at

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YOUTUBE to see how many people click on to the hair extension videos uploaded by members of the public.

China Retail outlook: China’s vast beauty market is growing fast. In 2004, cosmetics sales amounted to Rmb85 billion while the beauty services market was worth Rmb220 billion. The beauty market is projected to grow at a faster rate than the overall economy. For 12 out of the past 14 years, the growth rate of cosmetics sales in China has exceeded that of the overall economy, with the highest annual growth rate reaching 63%.The growth rate of cosmetics sales in China has exceeded that of the overall economy, with the highest annual growth rate reaching 63%.According to forecasts made by the Economist Intelligence Unit, China will become one of the world's fastest growing cosmetics markets and will expand at an average 10% a year over the next five years. International cosmetics giants such as L'Oreal of France, Proctor & Gamble and Estee Lauder of the US, and Shiseido of Japan have long recognized this potential market and established their footholds in the mainland. Their sales growth is much higher than that of China's overall sales and their market shares are continuing to increase. http://www.hktdc.com/econforum/tdc/tdc050801.htm

Customer Segmentation: Traditionally, African-American women and medical patients were the primary consumers of hair goods, but product demand has crossed over to other market segments that are demanding today’s instant hair in all its forms. This is partially due to a push from celebrities like Paris Hilton and Lindsay.

Adding to the business, volume or colour is acceptable for every ethnicity and age group, including baby boomers. Despite their higher disposable income level and growing desire to cover up fine or thinning hair, boomers had been virtually neglected by the hair goods business in favour of the youth market. But experts agree that this untapped segment will soon be seeing an increase in quality innovations. Given the diversity of women now in the market for hair goods, stores can choose any product, quality or price point they want, based on their customers’ needs and demographics. Merchants can also get support to move the goods. Special store programs include display and merchandising materials such as shelf-talkers, catalogues and

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instructional DVDs. Hairpieces have consumer- friendly packaging with easy instructions.

UK: Black British women spend on average six times more than their white counterparts on their hair and more than half regularly visit a salon. Mintel market researchers found that while the average British woman spends £83.97 a year on beauty products, black women spend £117.44 - and that doesn't include trips to the hairdresser or spending on mainstream products not specific to Afro hair.

All this adds up to a major business opportunity for hair and beauty companies. The UK market for hair care products designed specifically for black women was worth £36.5m in 2002, and accounted for 70% of overall beauty spending by black women.

Recent estimates put the figure £10m higher.

USA: Retail market segmentation in US is a hot but complex market that is presently worth over $6 billion and is projected to grow to $7 billion by 2005. Americans are more style-conscious than ever before; greying baby boomers -- of both sexes -- are trying a range of hair care products to help them look and feel younger. Generations X and Y are even more adventurous than their parents, as they condition, mousse, bleach and perm at will. A savvy marketing company can make a splash, if it chooses the right stance for its products.http://www.packagedfacts.com/Hair-Care-Products278691/.

China: The female population aged between 15 and 64 in China currently exceeds 420 million, which is larger than the combined total of Europe, the US and Japan. As income levels continue to rise, mainland female consumers' demand for cosmetics and beauty services is bound to increase further. In view of the fast expanding mid-range market in the mainland, companies as well as individuals from Hong Kong can capitalize on the greater market access under CEPA to tap into this market. For 12 out of the past 14 years.

Future of Business: The growing Hair extension industry has paved a training niche oppotunity for business expansion were in the presence of the mother company situated in one country is felt in any of the countries by a relatively popular business model of Franchising.

Conclusion: Thus in conclusion it is evident the company having all of the above components have a very clear competitive advantage to make the most of this growing multi billion industry and that is what AVPT has its objectives set in their marketing strategy for the coming years.

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