An influx of Chinese and Indonesian imports has saturated the US market for wigs and hairpieces
New York, NY (PRWEB) January 29, 2015
The Wig and Hairpiece Manufacturing industry has grown over the past five years, but experienced volatile conditions. According to IBISWorld Industry Analyst Jeremy Edwards, “As the US economy recovered from the recession, higher employment and an improving financial outlook caused consumer disposable incomes to rise and confidence to increase.” Therefore, greater discretionary spending helped boost industry revenue in 2010 and 2011, when the industry regained lost ground. Revenue began to fall again in 2013, however, as an influx of Chinese and Indonesian imports in the previous two years had saturated the US market for wigs and hairpieces. Furthermore, slow wage growth caused consumers to reduce expenditure on high-end wigs manufactured from human hair. Nonetheless, despite fierce import competition, the industry is forecast to grow strongly over the five years to 2015. The industry is expected to return to growth in 2015, as per capita disposable income rises and encourages new purchases.
The number of industry manufacturers has also increased over the five years to 2015 due to a rapid rise in demand for wigs and hairpieces, driven by higher incomes. Industry profit, measured as earnings before interest and taxes, is expected to rise slightly from 2010 margins, and has encouraged operators to reenter the industry. Furthermore, the majority of new industry entrants have focused on providing custom wigs and hairpieces.
The Wig and Hairpiece Manufacturing industry is highly fragmented. No single industry player controls a significant share of industry revenue because the majority of wigs and hairpieces are created on a custom basis in the United States. Therefore, industry players are typically only relevant on a regional basis. “Mass manufactured wigs and hairpieces are imported from countries with lower manufacturing costs and, therefore, domestic industry players have chosen to focus on the production of higher value added items,” says Edwards.
Over the past five years, industry market share concentration has increased slightly due to the exit of nonprofitable operators. Increasing import competition has forced a number of companies out of the industry, as local wage costs prevent many companies from being able to compete against Chinese manufacturers.
Over the next five years, the industry is expected to continue growing, but at a decelerated rate. Growth will be underpinned by increasing employment, which will precipitate higher disposable income and greater spending on cosmetic and aesthetic items. However, import competition will remain intense and limit overall growth. Domestic demand will continue to be satiated by the import of Chinese and Indonesian wigs and hairpieces, which are more affordable. Therefore, industry revenue is projected to increase slightly over the five years to 2020.
For more information, visit IBISWorld’s Wig and Hairpiece Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures wigs and hairpieces for aesthetic and medical purposes.
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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