The “wigstensions” (wigs and extensions) market in the U.S. is rapidly changing. Sales of wigstension products for Caucasian consumers are on the rise while African-American consumers are spending less than they once did. Of course, it is important to read these two markets individually since they are unique in sales trends, types of products and distribution channels.
While there is actually no conclusive data on the wigstension markets, BBIM, a research institute which studies the hair industry, estimates that sales of wigstensions grew from $200 million in the 1960’s to about $2.7 billion by 2008 when market growth reached its peak. After half a century of steady growth, the market peaked and then took a hit. (These numbers include both Caucasian and African American market sales, though Caucasian sales are virtually insignificant when compared to those of African Americans who make up 90% of the wigstension consumer demographic.)
From 2008 to 2012 the African American wigstension industry experienced about a 30% loss in sales, says Travis Johng, a market researcher at BBIM. The decline in sales is also detailed by the three largest hair extension manufactures who also report about 30% order reduction during the same period. In 2013 the market continued to decline, seeing another 12% loss. BBIM projects the industry may suffer a further loss of about 9% by the end of this year but is hopeful that decline will come to a halt by 2016. These losses, according to Johng, are due to a dramatic price hike which began to go into effect in 2008. More on that later.
Looking, on the other hand, at the market trends for Caucasian consumers, we see that there has actually been growth of hair extension sales beginning in the late 90’s and continuing to trend upward through today. The ponytail extensions of the late 90’s sparked significant growth in the market. This trend was followed by the introduction of fusion extensions in the early 2000’s, causing the Caucasian market to see slow but steady growth over the last 16 years. However, it is just in the last four to seven years that the market’s size has 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.
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 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.