Ethnic hair: wave of the future - ethnic hair products at discount store chains

Discount Store News, April 9, 1990 by Faye Brookman

Ethnic Hair: Wave of the Future

Last February, K mart ran a two-page spread advertisement in Essence Magazine saluting Black History Month.

Wal-Mart has pulled buying responsibilities for ethnic hair care in-house and designated a buyer for the category.

And Jamesway touts its ethnic selection via bag stuffers and handouts.

These are just three examples of the attention the nation's discounters are paying to the ethnic hair care business, a lucrative $500 million market. Discounters' efforts have paid off; mass merchandise sales increases, according to Nielsen Research, have substantially outpaced other outlets. For example, drug store sales rose only 6 percent and food store volume was only up about 4 percent last year. Discounters, however, registered a 20 percent-plus jump in sales. Moreover, discounters widened their share of the business from only 12 percent just five years ago to 17.1 percent last year.

According to the Chicago-based American Health and Beauty Aids Institute, an industry group, ethnic products are currently outperforming all other health and beauty aids categories especially since the category yields margins of 30 percent to 40 percent and turns of 5.0. That means the increase in business is filtering right to the discounter's bottom line.

Yet most mass merchandisers are still grappling with questions concerning the category. Some are disillusioned with recent growth which, although healthy, is not equal to the staggering sales growth of the 1980s when pricey curl kits and maintenance items paced volume. Others still debate the virtues of using a beauty supplier vs. buying direct. Other hurdles include keeping rampant out-of-stocks in check as well as finding suitable advertising vehicles, especially when the products are not always stocked chainwide. According to some sources, out-of-stocks are as high as 80 percent to 100 percent in discount outlets.

Most industry experts said sales started to flatten as the curl look was supplanted by a variety of other styles. "Today," observed Rosalind Bell, product manager for Lustrasilk, "people are wearing their hair in many different styles. There is a general category move toward dryer hair--gels instead of lotions and more geometric cuts."

Styles inspired by Tracy Chapman, those seen on the basketball court or in the new hit movie "House Party" (the lead character has a buzz cut around the side with a top that stands straight in the air), require some styling aids--but not the expensive tools needed to achieve the curl. Soft Sheen, however, has a product called High Five that is suitable for maintaining the popular high top fade look. Carla Ferrero, spokeswoman for K mart, agreed that there is no huge style success now. K mart, she added, sees a trend toward sculpting gels and stiff-styling sprays.

Many count on a new style to ignite sales. "A styling breakthrough of a celebrity could touch off a mini-boom like the Michael Jackson Jheri-curl of the '80s," said David A. Weiss, president of Packaged Facts, the New York-based research firm.

But while many point at hair styles, Kent Humphreys, president of Jack's Service Co., in Oklahoma City, said the real root of the problem is much more complicated. With its close ties to the beauty salon business, ethnic hair care relies on the beauty trade for new products--something that has faltered. "Today, as a distributor, we're seeing fewer new products and only a few [of them are] professionally driven. Therefore, we're not seeing the sizzle."

According to Humphreys, when large companies embarked on the business in the 1980s, the small companies became short-sighted. They cut back on advertising and research, two critical factors. Additionally, general market firms snapped up many black-owned companies at the same time the business started slowing. These firms have yet to realize the sales potential they thought would come easy.

The ever-changing face of the category encourages many chains such as Ames, Jamesway and K mart to rely on distributors. Among the largest in the business are Standard Distributing Inc., Ben Sheftall, Judith Lynn, Beauty Enterprises, Jack's Service and Harris. Distributors help determine the size of the set and the mix. These suppliers said most discount sets are in the 8-foot to 24-foot range.

In an effort to make the department more profitable, some chains have eliminated the middlemen. All industry eyes are on Wal-Mart to see how the chain--which was not really even in the business as recently as seven years ago--will fare buying direct. Although this theory has worked for drug chains like Walgreens (generally considered one of the best ethnic merchandisers), some believe Wal-Mart has already dropped some of the briskest movers while adding some "slow turners."

The other retailer in the limelight is Ames as it assumes the Zayre outlets. Zayre was well-known for its ability to serve ethnic markets. Several sources told DSN that Ames is having trouble understanding the unique niche and is not realizing the same sales in the ethnic hair care area.