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Thriving Stylist Podcast
#361 - Is the extensions bubble about to burst?
00:28:48
The hair extension industry has seen a meteoric rise in popularity, driven by social media and influencer culture. While early adopters reaped the rewards of high demand and low competition, the market has since become saturated with stylists. This...
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Do you feel like you were meant to have a kick ass career as a hairstylist? Like you got into this industry to make big things happen? Maybe you're struggling to build a solid base and want some stability. Maybe, you know, social media is important, but it feels like a waste of time because you aren't seeing any results. Maybe you've already had some amazing success but are craving more. Maybe you're ready to truly enjoy the freedom and flexibility this industry has to offer. Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you're ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists. I'm Brit Siva, social media and marketing strategist just for hairstylists and this is the Thriving Stylist Podcast. What is up? And welcome back to the Thriving Stylist Podcast. I'm your host, Brit Siva, and today we're talking about the world of hair extensions. This one might be a tiny touch controversial, but I felt like it was really important to discuss. So we're going to talk about kind of the state of the extensions market in general. Whether I think the extensions bubble is about to burst, meaning do I think that the extension industry is in trouble? And I have a lot of data to kind of back up where I'm going to end with my final thoughts. So let me explain a little bit about myself and my extensions journey just to start this. So I first got hair extensions in 2012. They were tap ins and they were done by. I was already a salon director at this point. I had stopped doing hair myself three years prior and there were stylists in my salon who were interested in learning how to do extensions. Now, if you don't know, in 2012, education was extremely hard to come by. You have to understand that even, like we're talking, what, 10 years ago, 12 years ago, the Internet wasn't what it was today. So like, now you're like, oh, I want to find a class on how to do extensions. You just Google the name of the extension company and all of the classes they offer are there. And often there's digital education. This is a world that's not like that. Okay. It was not easy to find hair extension education at all. The most ideal was to be mentored by somebody who was already doing it. But that was kind of like a catch as catch can. Like, it was kind of Rare. And so in 2012, it was like the industry was just starting to kind of come up. Some of these extension brands did have websites like, you have to understand. This was like the inception of so many of these things. You could start to order hair online. There were some training videos kind of popping up on YouTube. It was like infancy extension, infancy. So I decided to be a test model and I was like, I have extremely thin hair. I would love to have extensions. Let's do it on me. It was trial and error in all the worst ways. I ended up with permanent breakage on the sides of my head. We didn't know what we were doing. We were using subpar everything. I think that the company we were working with was even trying to figure it out. So because of the hair trauma I went through from that, I ended up shifting to clip ins. And I wore clip ins for eight years, something like that. A really long time. So I had the tape ins for a while. Then I shifted to clip ins. And most recently I now have K tips. So I've kind of done the full gamut. I've tried a lot of different things. And how did I end up with K tips? Most recently, I am at a place in my life where I don't feel like I need to have the versatility of clip ins anymore. I'm okay having a little bit more of a high maintenance extension just with where my lifestyle is. It works, it makes sense. Interestingly enough, I thought that I wanted to get some kind of like sew in weft of some kind. I know like the word like hand tied is really popular right now. Some kind of sew in weft is what I thought I wanted. Why did I think I wanted that? Candidly, Honestly, it was trendy. I had like no better explanation for it. And so I started asking around stylists that I trusted and they were like, honestly, Honestly, for you, I think the most natural result is going to be this K tip. And so I went this direction. I'm super happy with it. I'm expecting to get DMs from people telling me that I would have loved a weft. And maybe that's true. Doesn't matter. I'm super happy with what I have. I'm going to stick with it. I love it. It's working out really well for me. All that being said, I'm somebody who in 2024 entered the permanent extension market for the first time in a decade. And Meanwhile, I'm getting DMs every single week at this point from stylists who were like, something wild is happening with my extensions demand. I don't know what's going on. I'm feeling like things have changed. Am I going to be okay going backwards at the end of 2022, my predictions podcast for 2023 is, I said that I thought the extensions market was going to soften heading into 2023. That was two years ago. I do believe that's coming to fruition to some degree, however, not for the reasons that I expected. So what I thought was that the economic downturn was going to cause clients to choose not to get extensions. I was wrong. That's not what's happening. And it got me thinking, like, okay, if demand for extensions is. It sounds like softening, like, I can only go off of what people are reporting to me and not everybody's reporting the softening. And we're going to talk about that too. So for those of you who are already like, she's wrong. Hold on. Not everybody's reporting a softening. And we're going to get to that. In the podcast, I started to think about, okay, how come I'm choosing to enter the market? So clearly I'm like, here, I'm game, I'm ready. And then some people are struggling as stylists to gain a clientele who want this. Like, what could it possibly be? So I really dug in and I really did a lot of research. So let's go on a trip back in time. When you think about some of the most common. I'm not even going to name brand names on this episode because it doesn't matter. Some of the most trendy, common extension brands and application trends and all those kind of things that we're doing at scale today that many of you are getting certified in all that kind of stuff. Many of those brands were established between 2010 and 2016. Now, I will say some of those brands are really good about putting their established date on their website. Which note, if you're one of these brands, put your established date on your website. I think it lends a lot more credibility. And when I couldn't find it, I was like, interesting. It just felt a little bit like, mysterious. I don't know, it's just kind of odd. But most of the most trendy, popular ones today were established somewhere between 2010 and 2016. Not all of them, though. Great Lengths was established in the 90s. Donna Bella was in 2003. Bellamy was in 2012. So I'm not saying that everything was established in the last 10 years because they Weren't, but a lot of them were. Combine that with the fact that Instagram launched in 2010, and when we think about the hair extension market, there was something really miraculous that happened with it. Between, like 2013 and 2015, there was just this massive increase in interest. And when you think about why that happened, we now had social media. And when I say social media, I mean Instagram, I mean YouTube, I mean websites. Like, literally, it was just easier to find things, things. So it was easier to educate yourself on extensions. It was easier to find hair. Like, that was a problem too. Like, even if I want to do extensions, how do I find a distributor? How do I, how do I order the hair? How long is it going to take? Like, so many of those previous challenges got resolved. Like it back in the day, like talking 90s or early 2000s, it would take sometimes a few weeks to get the hair that you wanted. Well, now you can get like, what, 24, 48 hour shipping. Like you can get a quick turn. Not always, but sometimes, right? Easier to market extensions. And influencer culture was booming. Like when you go back to 2010, 11, 12, 13, 14, influencer culture was everything. Like, it was the Kardashianism era of the United States, right? It was everyone had hair down to the middle of their back and beyond. And extensions became popular and trendy. So extensions have been around for, gosh, what was I looking? I'm trying to do quick math in my head. 60 years, 70 years, 80 years, a really long time. When you look at the history of extensions, however, they really started to pick up in popularity when they became more mainstream. It started to be something that was a bigger part of just general culture. And it stopped being something that was less common and started to be something that was like, everybody's doing it, it's okay to talk about. And just the overall positioning really shifted and changed at scale. So because of that, and if you were in the industry at this time, you'll know this is true. From 2016 to 2019, everybody wanted to get certified in extensions. It was like the hot ticket because it was blowing up and we could feel it. There was this natural momentum, exciting social media posts and the transformation. Oh, my gosh. When you take somebody from hair at their chin length to hair even just past their shoulders and it looks blended. It's like, wow. The wow factor is hu. Now combine that with. I want you to think about what the economy was like from 2012. 13, 14, 15, 16, 17, 18, 19. It was booming. People were just like bleeding cash. So yeah, it was kind of expensive, but people had the money, and it was about being flashy and looking like you were driving a Lamborghini and having hair down to the bottom of your back. And this is just what it was all about. Okay, so then getting in that game became very exciting. Let's take a step back for a second. I want you to think about any trend where there are early adopters and early adopters to this extension boom were those who got in the game, like, before 2017. Okay, anybody? Even if they were certified in, like, 2008, great, you're still an early adopter. I'm saying anybody who kind of jumped in the game before 2017, maybe 2018, maybe. But even then, it was kind of starting to be a little bit late. Whenever you have early adopters into anything, it starts to become a little bit pyramid scheme. And don't read into that phrase too much. I'm not saying that extension companies are a pyramid scheme. That's not what I'm trying to say. This is just the way of business in general. Like, you can look at this in any industry. When somebody starts to offer something to a market that is highly craving it, the early adopters are going to see massive success with it because there's only a small handful of people that can do it well, there's only a small handful of people who know how to market it. There's this natural curiosity. It's starting to be trendy. People want to be the first to have it, first to offer it, and it's really exciting. So you watch these early adopters, and they exploded their business, right? It was. They had it all. There was so much demand to come in to see them. They were making so much money. They were finding so much success. They were becoming educators themselves. They're becoming ambassadors. They were having it all. And we looked at these people were like, I want that. I want what they have. So more people chose to get certified, more people chose to learn how to do these things. More people chose to start offering extensions, which was great. But the challenge is, you'll never be the early adopter. Like, the early adopters have already been established. So now when you're joining as an extension artist, which is still good to get into, by the way, I'm not going to end this episode with nobody should do extensions, because that's not how I feel about it. But when you're joining, you are now joining a saturated market, because when you join after that period of early adoption, which we can't put a firm timestamp on it. But you know, it was within those first few years. Well, now you'll never have the same level of longevity. You'll still never have the same credibility level of experience as that early adopter person. And you look at extension brands now and it's like, okay, well the people listed on this list are a Level 9 super certified diamond platinum artists. And you're like, okay, well I'm just, I'm just a silver artist. And so there becomes this like hierarchy of extensions. And because of that, there has become this challenge within the space overall. So because there was this challenge within the space, people started to buck the system. And that's when we saw stylists saying, I don't need the certification. I'm just going to go to YouTube University and I'm going to figure it out. Well, when that happens, quality of application decreases. Then we saw extension brands start to have hair quality issues. We started to see issues with inventory. And so people said, well, I'm going to start my own line. And then there was lots of spin off hairlines. And then there continued to be inventory issues. And it started to become very unpredictable joining this kind of niche in the industry. So because of all of that, clients started having subpar experiences. Because they started having subpar experiences, there's pushback against the service overall. So interest in spending lots and lots of money on what could end up being a subpar experience became a real fear. And because of that, marketing yourself and growing an extension clientele became harder. Now this is not unique to extensions. This happens in lots and lots of different industries. But we did watch it happen to this specific niche in real time. So because of that, I want to talk about what it would look like if you wanted to join us, an extension artist today and some kind of realities and facts. So this I thought was interesting. Like this I was laying up at night thinking. I was like, I wonder what portion of people would even want to get extensions. Like, do we even know that kind of data? So I started researching. There's 341 million Americans in the US today. Based on the most recent data, I could find 341 million. So figure 50% of that clientele is female. Now that doesn't mean that those who are male don't get extensions, but predominantly the industry is going to be female based. So I just went with that. Again, I'm going with generalizations. This is not science based, but go with me on this. Okay, so of the 170 million, 64% are between the ages of 15 and 64, which viably we could say that's kind of like the age range that people would consider getting extensions. I would argue it's a little tighter than that. Probably more like later teens to maybe into the 50s, like when you start to get up into the later 60s and like the early teens, like there's a lot of 15 year old kids getting extensions, so it starts to get thinner. But again, I like to overestimate. Right. I don't want anyone to say I'm cheating them. So now we're down to 114 million viable clients who could potentially get hair extensions. Great. So there was a hairtrade.com study that said 34% of women regularly use hair extensions. And I thought, wow, a third. That's amazing. Okay, great. So when you look at that, that brings the number of 114 million down to 38 million. Here was another fact. This one surprised me and this one came out of future marketing insights.com so futuremarketing insights.com said 45% of those who wear extensions choose clip ins. That surprised me. So when I was wearing clip in extensions, I thought I was massively the minority. I was in the minority, but not a ton. 59% choose some form of natural extension. So because at 45 plus 59 adds up to more than 100. And I totally understand that. What I would guess is that some people go back and forth, right? They sometimes have more of like a natural, a sew in a tape in a K tip or whatever. And then sometimes they use clip ins like there's a little crossover. I'm going to assume that. But 45% choose clip ins, 59% choose natural. So when you take in all of these things into account, it means that of 341 million Americans, 22 million are viable hair extension candidates, which means 7% of American women are looking for hair extensions. 7%. Okay. It's not a huge cross section versus if we were looking at how many American women are looking to have their roots touched up. It's a much larger market and a much larger pool. If we were looking at how many American women cut their hair in a year, oh my gosh, we're going to get definitely above 80% versus what we're extending. Extensions were 7%. So it is a tighter market and that still leave millions of clients who want to get them. But the viable pool is much smaller than a lot of other niches within the industry. Okay. So that being said, in 2018 the hair extension market was valued at $2.1 billion. In 2023, the value of the market was $2.7 billion billions. Okay, a lot of money. But that does just equate to 33% growth in five years. So it's growing. It's growing well, but it's not exploding. And what I think has happened is a lot more people are interested in serving this 7% and we're not seeing this huge surge in more people wanting to get extensions like we had previously. So the market is growing. More people are curious. Of that 33%, 45% are looking for more of a clip in option. So the market is growing. I'm not saying it's not. It is. There is an increased demand. But if there is a higher demand of people wanting to do it than there are clients to serve, that does become a bit of a friction point. Now, that being said, the extension market is expected to grow to 5 billion within the next 10 years. So there is looking to be an almost doubling. So the market is growing. And I think that's important to understand. However, I think we are facing some market saturation. So I looked up the definition of market saturation and it says market saturation is when a market is so full of a product or service that there is little room for new ones to succeed. And this goes back to the whole. I hate saying it because I don't think the extensions market is a pyramid scheme, but I think it's the easiest visual for people to understand when we talk about the line here in the definition of market saturation, little room for new ones to succeed. That is what happens with MLM companies is that when you get in early, you can literally become a millionaire with an MLM company. When you join 10 years into it and you are 50 rungs down the downline, you'll be lucky to break even buying into that company. And this is what does happen, is there becomes less room for new entrants into the market to succeed. Now, here's what you need to know. That doesn't mean it's not possible. It just means it's harder. And that's what I want to talk about. Okay, so going back to the definition, it's characterized by a high level of competition. Hello. Definitely a high level of competition in this market where the supply of a product or service is much higher than the demand. And I think we may be facing a tiny touch of that. Here are some of the things that can happen when a market becomes saturated. Stagnant growth, demand for a product or service decreases, making it difficult for Businesses to grow. Number two, intense competition. Businesses compete for the same customer base, making it hard to differentiate to attract customers. If that doesn't describe the extension market, I don't know what does. If you are an extension artist, I'm going to read this one more time. Does this feel like you businesses compete for the same customer base, making it hard to differentiate and attract customers? I would say yes. And that could be argued for a lot of specialties in our industry. Like if you specialize in root touch ups, like how do you differentiate? But also I do believe that the market for just doing general root touch ups is overly saturated which is why I coach stylist. Being special and having a specialty so you can break through that saturation. And we're going to talk about that in a minute too. Number three, price pressure. Businesses may have to lower prices or use aggressive pricing strategies to gain edge. Think about that and put a pin in that cause I'm going to talk about it later. Limited innovation Businesses may focus on maintaining their market share rather than investing in new ideas. How much has your method changed in the last couple of years? So what this is saying is when there is a lack of innovation, there does tend to be a stall out in growth and demand. If you're offering kind of more of the same, it could be a bit of a problem. Decreased customer loyalty when customers have more options to choose from. Decreased affection Effectiveness of marketing efforts when a business's marketing campaigns are no longer generating the same return on investment. Declining profit margins When a company's profit margins are declining. Has anybody's cost of hair gone up recently? Historical price trends When a company is unable to sustain a higher price point over time. To measure market saturation, you can use the market penetration rate or the market growth rate. The market penetration rate is the ratio of the number of customers or users of a product to service to the total potential market size. And that's the piece that but does bring up some concern for me if we know that roughly. And listen, I had to really scrap together that math. So truly it's not done by a scientific standpoint. It was done by a combination of US Census Bureau, Google, AI. What was that source that I just named a moment ago? Future marketing insights like it really is scrapped together. So let's say even 10% of the market is interested in extensions. It's small. It is a small piece of the market. Then we look at that market growth rate, the percentage change in the market size over a period of time. We looked at that and went over the Last, what did it end up being? 5 years? It was a 33% growth rate. 33% growth over 5 years is not a lot. So it's creeping up but it's not exploding versus I think there has been an explosion of people interested in serving that market. And that's why if you're entering the space as a newer artist, it is hard and even if you're an experienced artist, but you didn't do a great job of differentiating yourself or really establishing yourself credibility wise as the go to dominant extension artist, it is going to be more challenging. So going back to what I said earlier when I did that 2022 predictions podcast, which is still up, you can go back and listen to it. I said I thought there would be a softening of the extensions market. I thought it would be because economically people didn't want to pay for it. I take that back. Instead, what I think is there is a chance that if extensions stay going the way they're going, they're just going to become much less accessible and they're truly going to be a luxury only service like the elite of the elite can afford it. And I think that's really a bummer, Really a bummer. Because what I loved about where the market was a few years back is, yeah, it was definitely a push, but people could save up and do it. It's starting to be something. I was actually on a coaching call this week and there was an extension artist on there and she was like, I'm really struggling. And I was like, what about lowering your prices? And she said, I really can't. And I said, let's think about it. About how much are you expecting your clients to invest in hair extensions in a year? And she was like, whoa, I've never thought about it that way. And it was like the initial hair investment was something like 1200 bucks. I'm making rough math with that. Let's say a thousand initial hair investments, $1,000. And then she said $500 for move ups every six weeks. So when you look at it like that, it's like we're asking this client to pay what, $6,000 a year for hair extensions. That's a lot of money for people. And this person is not in la. This person is not in New York. They're not in some big market where like, yeah, Newport Beach, I bet people can pull that off. But in a lot of markets that's not possible. And what she was saying is my cost to bring the hair in has increased. Like I don't have a lot of options. While I understand it, we have to accept the reality of if it really is going to cost somebody $6,000 a year to maintain extensions, it's going to be a smaller portion of people who can pull that off. Unemployment is up, job security is starting to get tight. Wages have not increased at the same rate as inflation has. So people's willingness to just kind of spend willy nilly credit card debt is an extreme high right now nationwide. So we can't just say like people will figure it out. And this is why the industry as a whole is getting really sensitive to the word luxury. So one of the things I keep saying is I don't believe we should position our industry as a luxury. I think it's a huge mistake. I will stand on that forever and ever. What I think is happening is we're saying like while getting your hair done is a luxury, first of all, it's a massive, massive marketing mistake. Do not do that. Do not put that mindset in the eyes of your clients because you'll work yourself out of a job, which I don't think is smart to do. I think some of these services have become luxury services. I think extensions may be one of them. So one of the things that I want you to think about is diversification. If you're going to read an economics book and you read about market saturation, what it will say is the most effective way to counterbalance market saturation is diversification. So what you need to do is to tap into either adjacent markets that aren't currently being served or find a new way to create customer value or new demand or new revenue streams. One of the things I've talked about is, and especially after reading this data, if 40 something percent of clients want to have a more semi permanent option like a clip in or a halo, is that something you should consider offering at your salon? And what would that look like? There's still the, like I wore clip in extensions when they weren't cut into my hair. They didn't look great, right? There's still maintenance on something like that. Is that maybe a hybrid option you want to offer during this economic downturn? If not, is there a way where you can still charge for hair but maybe lessen your service costs? Is there a way you could do the hair with no markup on it? And listen, I understand all of the solutions I'm offering are painful. I'm talking about things that would cut into your finances. Here's the other option. The only other option is to market yourself as different. I do not believe marketing yourself as an expert of Seva brand extensions is going to make you look any different in the eyes of a client. I'm Brit Seva. I do extensions and I love Seva brand extensions. What else? I think that storyline's getting a little tired and I think that going back to everything we talked about, all of the definitions, people are looking for you as the stylist and the service provider to meet them where they're at. So does that mean offering diversification of you offer a few different extension brands and the thing that makes you different as an extension artist is that you custom choose the application method that is going to best serve that client. Tawana Dunn is somebody who I've admired for years. She's an extension artist who's always done it like that. She's never been specific, method focused and is always like, I'm certified in a lot of different methods because I want to be able to just meet my clients where they're at. Maybe that's for you. Maybe it's talking about, I don't do extensions for length, I only do extensions for density. Maybe it's a combination of thinning hair treatments and hair extensions, I don't know. But I think that you need to figure out if you're going to continue to try and penetrate this extensions market. It's either all luxury all day, and if you're going to do all luxury all day, your branding fully through and through, your guest experience fully through and through has to be luxury. Okay. If you're not going to go that luxury angle, think about how you're going to market yourself for that market differentiation. Because I do think we are seeing signs that there is kind of a maximum capacity happening, at least for the next couple of years in the extensions market. I think there's still plenty of opportunity. We know there are still millions of clients who want to get extensions, myself included. But how do you stand out to that market to make sure you are the person they pick? I hope this episode has been beneficial to you. Would love your feedback on it. As I always say, so much love happy business building and I'll see you on the next one.