As the beauty and personal care market reckons with the sharpest decline in 60 years, according to Kline Group, many categories are faced with a shocking lack of demand. Hair color is not one of those segments.
Despite a reported 77,000 U.S. beauty salons that have faced closures, Walmart CEO Doug McMillon said Americans have moved from panic buying toilet paper to purchasing hair dye. Its clear why essential food and drug retailers like Walmart and Target are seeing a spike in boxed hair color sales; customers are already shopping those locations for other purchases. L’Oréal CEO Jean-Paul Agon said the company, which owns the L’Oréal Paris hair color line and provides products for professional hairdressers, expects to see a swell of demand in salons once customers return to their somewhat normal routines, and digitally-native companies are seeing a spike now. Madison Reed CEO Amy Errett said, since mid-March, sales for its at-home products have increased by 10-12x.
“The demand has been incredible,” said Errett. “I know from the feedback that this is an anxious time for everyone, and when [a customer] is looking in the mirror, it can be emotional not to look and feel like themselves.”
According to prior Glossy reporting, Madison Reed reached “well over than $50 million” in sales and raised more than $51 million in funding; the company has a 78% gross margin on its products.
Madison Reed closed its corporate headquarters on March 13, followed by its 12 Color Bars. Rather than laying off or furloughing its 100 salon employees, like other service-based businesses, Errett was able to move those staffers to the Madison Reed call center.
“Since we started the company, our entire call center has always been built of certified and licensed colorists. We have been very clearly predicated on the skills and talent of those team members,” said Errett. Madison Reed recently started a Facebook Live series in early April called “Colorist on Call” to showcase the skills of these employees and also teach women how to dye their hair at home. Errett said the company has also been revamping its entire digital content series on its site and on social to keep up with surging demand.
Beyond its own team members, Madison Reed is debuting its “Colorist Cooperative” program today that is an ongoing affiliate program for professional salon employees. As part of the initiative, colorists will receive a custom link to give to their clients for online orders, and once a new Madison Reed customer purchases products, the professional will receive a $25 payment in their PayPal account. A single box of Madison Reed color is $22 or $25.
“As [coronavirus] started to unfold, it became really clear to us that salons were going to be more challenged, and we started thinking about what ways could we help,” said Errett, who explained the program does not have a cap on stylists or amount of money earned.
Prior to the coronavirus outbreak, Madison Reed was embarking on opening 100 additional, company-owned Color Bars by the end of 2024, in tandem with rolling out a franchise model. Errett said that four additional locations have already been completed and will open once shelter-in-place guidelines end in the U.S. No franchise plans have been locked in yet.
“[DTC and our franchise model] have flip-flopped because of what’s happened with demand, but it’s not changing our strategy,” said Errett. “I never want to put salons out of business, but I think there will be more dualists, or people that go to a salon and then [dye their hair] themselves in between. People who are coming to us now are now like, ‘Oh my goodness, $22 or $25 bucks, and my hair looks amazing, and I can do it some night at 11:00 when those kids are finally in bed, and I’ve poured myself a glass of wine.’ We’ve always been about giving the customer a choice.”