CosmoBiz Magazine September 2014 - Page 41

become significant enough to be noticed by the larger beauty industry as a whole. As celebrities like Jessica Simpson and, more recently, Kim Kardashian began to openly discuss their love for hair extensions, the image of using these types of “hair pieces” suddenly lost its taboo among younger Caucasian consumers. Simpson even joined forces with stylist Ken Pavés to launch her own line of extensions in 2006. Over the past seven years, BBIM reports an average market growth among Caucasian consumers of 9.5% per year, and the number may continue to grow even more quickly in the coming years. When looking at shops and salons who provide extension services, we are seeing a steady increase of 8% each year. Interestingly, growth in the Caucasian market is expected to have an effect on the African American consumer. As hair companies begin to bridge the gap to offer products to both types of consumers, it looks like the price of human hair will undergo some fluctuation. projected three year loss of about 20% of the market. To deal with the crisis, some companies made the move toward inexpensively made, unprocessed hair which imitates the popular Virgin Remi variety. As for the future, Johng says it will be very hard to predict how the market will rebound. He explains that “as the hair extension sales for Caucasian and Hispanic consumers are steadily growing while sales among African Americans…remain in recession, we may see more companies diversify their target consumers.” More companies may take an integrated approach, targeting multiple races. If this happens, Johng predicts the much higher prices of Caucasian products may come down, while the traditionally more economical pricing of African American products will continue to increase, thus slowly leveling out the extreme price discrepancy. Article continues on page 76 > But recent events will also play a big part. In 2008 the price of human hair targeted to the African American consumer increased by almost 80%. And actually, there may be a lot more going on behind the scenes to cause this drastic inflation. According to Johng, severe competition among hair companies has been playing out since the early 90’s. While the supply of human hair declined and production costs continued to rise, the price of both human and synthetic hair remained frozen at year 2000 levels for the next eight years. How did this happen? Stiff pricing competition among intensely combative companies. But, of course, that kind of stall in the market was not sustainable. After several years, these companies faced dissolution or severe price hikes, and they chose the latter. Needless to say, shocked consumers were less inclined to buy the same product they’d been using for years at an 80% increase in price—thus the 41