Madison Reed Secures $33 Million To Fund Its Omnichannel Expansion

Madison Reed, the prestige beauty brand that revolutionized the hair color industry, has raised $33 million in new financing led by Sandbridge Capital, with participation from Marcy Venture Partners. The company plans to further its omnichannel expansion of hair color bars and retail locations and continue its investments in product innovations.

The company which was founded by its current CEO, Amy Errett in 2013, has grown its business portfolio from a direct-to-consumer brand to an expansive omnichannel powerhouse including continued direct-to-consumer sales, its own retail salon locations, and partnerships with retailers like Ulta Beauty ULTA . The Hair Color Bar locations have expanded to include over 60 nationwide. Madison Reed has interacted with more than 5 million customers since launching.

Access to high-quality Smart 8-Free hair color

In an interview with Errett, she discussed how Madison Reed’s goal is to provide access for everyone to be able to color their hair with high-quality results from its at-home direct-to-consumer products or in one of the national Hair Color Bars or by interaction with a retail partner. In the U.S. market, 48% of people that color their hair do so in a beauty salon while 52% color at home. Traditionally, coloring your hair at home was a scary proposition, especially because it required a bit of skill and a lot of chemicals. Madison Reed has solved both of these customer pain points by making the at-home color process easy to use with a commitment to Smart 8-Free, which means products made free of ammonia, PPD, resorcinol, parabens, phthalates, gluten, SLS, and titanium dioxide.

When asked about the recent round of funding and how this will further the brand’s mission of an omnichannel experience, Errett discussed the expansion plans of its own Hair Color Bars, growing the retail footprint and providing products through its

website (direct-to-consumer). Errett said, “Our business is the epitome of omnichannel, customers know our brand, they see the same products that we are known for in the direct-to-consumer line as we have in our own Hair Color Bars and in our partner locations.” The customer can experience Madison Reed when, where and how they want to interact with the brand. Since launching in 2013, Madison Reed has raised nearly $250M in funding. The consistency and quality of the hair products have generated a highly loyal customer base.

DIY at-home hair color is here to stay

When asked about the longevity of at-home hair color, Errett discussed how the behavior of women coloring their hair at home has not changed over time. In the U.S., at-home hair color became a well-embraced ritual in the 1950s with about 50% of women participating in the process. “There has always been this split down the middle of consumers coloring hair at home and consumers that use professional hair salons.” The DIY (do-it-yourself) hair color business experienced substantial growth during the pandemic with consumers on lock-down in the U.S.market.

The pandemic spurred business

When the brand launched, the subscription hair color business provided customers the ability to color their hair at home with high-quality products and a proven process that delivered successful results. “During 2020 the business grew over 100%, and we added many customers to our loyal following”, said Errett. The company had 12 retail stores in March of 2020 which grew to over 60 retail stores by 2022. Errett believes there are 3 reasons why at-home hair color will remain relevant in a post-pandemic world.

• The sheer convenience of being able to color hair at home with a high success rate and being able to color at a time that is most convenient for the consumer without having to make appointments or travel to a salon.
• The costs associated with at-home hair coloring are significantly less than going to a salon.
• The sense of accomplishment that people have after successfully coloring their hair. Errett beams, “There is a real sense of pride and accomplishment for people when they can look in the mirror and see the results.”

Investments in product innovation

Madison Reed is heavily involved in customer feedback and has direct contact with its customers. Errett said, “Companies need to know from their customers what they want and deliver to those expectations.” The company will be using part of the funding to further product innovation, a quality that has been recognized by the beauty industry.

In 2021, Allure recognized Reed Radiant Hair Color Kit as a top beauty product, following recognition for Allure’s 2020 best beauty product, Madison Reed Color Reviving Gloss. Errett said, “By staying close to customers, we know what customers want because we ask them.”

The products are developed for people with color-treated hair and the research and development teams, alongside chemists, work with customers and partners to continually innovate new products which are always Smart 8-Free and Leaping Bunny Certified (the international gold standard of cruelty-free beauty products). Hair color products that don’t work properly have a much greater negative impact on the customer’s life than, for instance, buying an apparel item that does not fit and has to be returned. Erret said, “A focus on quality is the lifeblood of the company, confidence is the new beautiful.”

Expansive new retail footprint

The recent funding will allow Madison Reed to expand to 80 locations and hire 850 new colorists in 2022, who will earn three times more than in a traditional salon while receiving full-time benefits. Additionally, the company anticiptates further growth of its established wholesale business in retailers including Ulta and Ulta Beauty at Target TGT , along with its strong recurring customer base online at Madison-Reed.com and Amazon.com.