Spending on discretionary goods, including hair product items, fell during the recession
Los Angeles, CA (PRWEB) May 22, 2012
The Hair Styling Product Manufacturing industry experienced a decline in demand for its products when disposable income dropped due to high unemployment during and after the Great Recession. Industry products are discretionary, or non-essential, to many consumers. Therefore, says IBISWorld industry analyst Agata Kaczanowska, “Hair styling products were some of the first products that consumers cut out of their budgets.” Competition from other products also cut into demand for hair styling products as consumers shifted spending to more multi-purpose cleaning and conditioning hair care items to save money. In response, industry operators offered many discounts and promotions to drum up demand. Such discounts, along with increasing input prices, dented the industry's profitability. IBISWorld estimates that industry revenue will fall at a modest 1.2% annualized five-year rate to $1.1 billion in 2012. This dip includes an expected 0.9% rebound in revenue in 2012 as disposable income slowly recovers and consumers revive spending on smaller luxuries like hair styling products.
Consumer interest in natural products has led to increased industry innovation. For example, L'Oreal started a natural hair brand called Mizani in 2010 and now offers 22 hair styling products under this label. Similarly, says Kaczanowska, new industry entrants seek to fill this niche, and many also appeal to the “go local” movement as consumers showed a preference to spend money on locally produced goods. As a result, the number of enterprises is expected to increase at a 2.3% annualized pace to 841 industry firms in 2012. The growth is expected despite several acquisitions, including Unilever's purchase of major company Alberto Culver in 2011. The top four firms in the Hair Styling Product Manufacturing industry – Proctor & Gamble, L’Oreal SA, Unilever and John Paul Mitchell Systems – hold a combined share of about half of industry revenue.
During the next five years, a rebound in disposable income is forecast to support industry growth. Overall population growth, especially for minority demographics that use more hair styling products, will also lead to higher demand. Regulations have the potential to cut into profit and hamper revenue growth, especially if they require industry operators to make recalls, new labels or even reformulate products during the next five years. Furthermore, competition from hair cleaning products like shampoos and conditioners that also provide styling benefits (like smoothing agents) is expected to hamper industry growth during the next five years. For more information, visit IBISWorld’s Hair Styling Product Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
Operators in this industry manufacture hair styling products, including waxes, gels, sprays, mousses and similar items. Other hair cleaning or maintenance products like brushes, combs, curlers, shampoos, conditioners and dryers, as well as hair accessories like clips or bands, are not included in this industry. Hair color and depilatory (removal) products are also excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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