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TikTok inventor and musician Hannah Chelan inspired Sally Beauty’s new marketing campaign. She shared a song about colored hair that went viral on the social media platform.

Sally Beauty Holdings

When Sally Beauty employees saw a viral video on TikTok this spring, they realized they had found the right inspiration to advance their business strategy.

In the video, Heather Chelan sang a catchy tune celebrating her dyed hair. His refrain has been adopted by many: “Having hair color doesn’t make you unprofessional.”

It has become the beauty retailer’s new anthem as it launches a marketing campaign and puts hair color – especially vibrant colors – in the foreground. During the pandemic, Sally Beauty contacted Generation Z consumers on TikTok and YouTube. It has seen a surge in sales of bright colors and textured hair products. The company is betting that people’s desire for authenticity will survive the health crisis even as they return to social events and office cubicles.

“It really comes down to self-expression,” said CEO Chris Brickman. “The office is changing. Life is changing. Work is changing. … It happened before and the pandemic kicked him in the buttocks.”

Strong colors are now also part of his look. His white hair is now dyed with jade and shamrock in the front. “It gives the boardroom a new dynamic,” he said.

Chris Brickman, Sally Beauty CEO, has a variety of vibrant colors in his hair, including purples, greens, and blues. He’s one of the people featured in the company’s new ad.

Sally Beauty Holdings

A video spot that debuted on Friday features Chelan and her jingle. That includes the multicolored curls of other people that Sally Beauty spotted on social media – including Glecy Barquirin, a pediatric nurse, and 92-year-old Helen van Winkle, whose white hair is a shade of lavender – and the company’s CEO.

Chelan said her lyrics were inspired by her own purple hair and how she was turned down by some restaurant server jobs because of it. Her experiments began with a plum-colored afro at the age of 18.

“When I did that, I thought, ‘I can never go back,'” she recalls.

At a launch event for the marketing campaign, Joey Jay, a drag queen and candidate for VH1’s “RuPaul’s Drag Race,” strutted through a New York bar like it was a catwalk. Jay wore bright yellow hair and said the pandemic – and the growth of remote working – is making old corporate dress codes seem stuffy.

“Those staff handbooks, I think we’re going to start throwing them away,” he said.

Sally Beauty started her new marketing campaign with a launch party in New York City. It featured Joey Jay, a drag queen and contestant on the TV show “RuPaul’s Drag Race”.

Melissa Repko

Retail challenges

Sally Beauty has long been known for selling hair colors, styling tools, and other beauty products. It has two sides to the business: Sally Beauty Supply, a chain of stores that attracts clients and independent stylists, and the Beauty Systems Group, which caters to salon professionals. The core business is professional hair color, along with associated accessories such as capes, clippers, and conditioners. In total, the Denton, Texas-based company has more than 5,000 stores in 12 countries.

But in recent years the company has faced challenges that many brick and mortar retailers are familiar with: falling traffic and difficulty adapting to online shopping, said Linda Bolton Weiser, senior research analyst, the health and beauty companies for DA. pursues Davidson.

Sales growth in the same store, a key metric that retailers use to compare stores that have been open for 14 months or more, has gone up and down instead of showing a steady upward momentum – and that scared some investors.

Sally Beauty stock hit an all-time high of $ 35.27 in 2015, but has trended largely down over the past five years, hitting a low of $ 8.28 in October. But since January, stocks are up nearly 64% at Thursday’s close to $ 21.37, for a market cap of $ 2.41 billion.

Weiser said she wanted the company to perform consistently. It rated it neutral but doubled its price target from $ 13 to $ 26 according to its fiscal second quarter earnings report.

The retailer showed strength in the second quarter. Revenue in the same stores rose 6.5% year over year as shoppers issued stimulus checks, salons increased capacity, and stylists replenished products for returning customers.

“Pandemic, which pandemic?”

Hair was one of the few bright spots in the beauty industry during the pandemic. When sales of lipsticks and other makeup collapsed, buyers poured money into self-care items like hair masks and accessories for coloring hair at home.

According to The NPD Group, hair product sales increased 7% year over year in 2020. That’s a big difference from the rest of the beauty industry, where sales fell 19% over that period. The research firm tracks sales at well-known beauty retailers such as department stores and specialty stores such as Sephora and Ulta Beauty. Does not include bulk retailers or specialty stores targeting professionals like Sally Beauty.

Hair care product sales have remained strong this year – a 48% increase in the first quarter year over year and 70% over the first quarter of 2019 before the pandemic. They continued to outperform sales across the prestige beauty industry, which increased 11% year over year in the first quarter but declined 5% compared to Q1 2019.

“Hair burns,” said Larissa Jensen, beauty industry consultant for the NPD. “Hair is the only category [of beauty] it was like ‘pandemic, which pandemic?’ “

However, for most beauty gamers, she said that hair is just a tiny category. It accounts for about 7% of total prestige beauty sales.

In the quarters to come, Sally Beauty will face simple comparisons as it lapsed quarters when the hair industry was largely shut down. However, the company has to prove it can fend off competitive threats, from online retailers like Amazon and newer competitors like Madison Reed to mass retailers like CVS Health, Walgreens, Target and Walmart.

Many of them expanded their range of multicultural hair products over the past year after George murdered Floyd and promised to better reflect the diversity of customers on the shelves. In the past, textured and natural hair products were abundant in specialty beauty stores like Sally.

Sally Beauty has emerged as one of the drivers of sales to vibrant color as younger consumers express themselves.

Sally Beauty Holdings

Closed salons, new opportunity

When the pandemic hit in Spring 2020, some of Sally’s top sales drivers – shops and salons – were temporarily closed.

Brickman said his company relied on growth opportunities created or intensified by the pandemic. For example, he said, e-commerce picked up as more shoppers got used to roadside pickups. When large salons struggled during the pandemic, a growing number of stylists turned to running independent business in rented lounge chairs or from their home – and turned to Sally for supplies. And self-expression has resulted in sales as people banded together or worked from home to try a hair color – from a strand of blue to a full head of pink hair.

According to Brickman, Sally Beauty’s vivid color sales have increased about 20% over the past five years. That growth accelerated during the pandemic, with vivid color sales at Sally US and Canada increasing 53% year over year in the second quarter. They made up 15% of the company’s total paint sales three years ago and now make up about 30%, the CEO said.

Sales in the textured hair category also rose as some black customers chose to wear their hair naturally rather than straightening it. Brickman attributed the trend in part to more frank conversations about races sparked by Floyd’s murder. He also sees a desire to break convention and discard old rules.

“There’s a massive cultural wave out there that is bigger than the pandemic,” he said, citing amateur investors betting on “meme stocks” and discussing strategy on Reddit as another manifestation of that trend.

The company’s e-commerce sales increased 56% in the second quarter. Brickman said he anticipates online sales will account for 15 to 20% of Sally’s business over the next few years, up from around 10% now.

Sally Beauty made other changes as well. It has chosen Marlo Cormier, a former Fossil Group manager, as its new Chief Financial Officer. It has rolled out a loyalty program for salon professionals, unveiling plans for same-day delivery to the customer’s door in just three hours.

Steph Wissink, managing director at Jefferies, said the company laid the foundation for growth, even when hit by the pandemic, by connecting with social media influencers, building relationships with stylists, and picking up on hair color trends.

“They could have just crouched down and poked their heads in the turtle shell and instead they said, ‘No. We know where we have a key advantage and we will only work hard to expand it. ‘ “

In contrast to other beauty categories, Wissink said, Sally will lose some sales because hair is not a “catch-up category”. Customers don’t have to dye their hair multiple times to make up for lost time like refreshing vanity cases. And she wonders if customers will keep their hair colors vibrant when they return to the corporate world.

“Is she going back to the law office with pink hair?” She said. “Or was that just a fun trend at home because she wasn’t seeing clients and wasn’t in court?”

Wissink has a hold rating on the stock but recently raised its price target from $ 15 to $ 25.

Sally Beauty features people with vibrant hair color in a new ad, including Brian Terada, an LGBTQ + advocate.

Sally Beauty Holdings

Sally hopes new customers will stay in, and the marketing is a plea for wider adoption of a range of hair colors.

Brian Terada, founder of Be Free, a nonprofit that supports the LGBTQ + community, is one of those new customers. Last August, the 30-year-old, who lives in Los Angeles, visited a Sally beauty store for the first time. He decided to dye his hair pink – and that resulted in even more colors.

“I went purple, pink, blue, red,” he said.

Terada posted photos on social media showing his different looks. Sally Beauty discovered his profile and decided to feature him in the new ad.

Terada resonated with the company’s message of being authentic. He said the pandemic turned everything upside down, emphasizing how life can change quickly, and freeing people from worrying so much about what others are thinking.

“So many rules and regulations and the way things always were have been broken down by Covid,” he said. “Society is so fragile. One of the rules was ‘pass’. But when the rules are gone, fitting is gone too. “

– CNBC’s Christopher Hayes contributed to this report.

A Medline Industries employee collects examination gloves to be included in personal protective equipment (PPE) kits that will be shipped to various healthcare facilities at their warehouse in Mundelein, Ill., On Monday, October 20, 2014. Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

A group of private equity firms, including the Blackstone Group, are on the verge of a deal to buy medical device manufacturer and distributor Medline Industries, the Wall Street Journal reports.

The sale could be worth more than $ 30 billion for Medline, people familiar with the matter told the newspaper.

Medline Industries of Northfield, Illinois, manufactures 550,000 types of medical supplies for specialty medical facilities such as surgical centers, acute care facilities, nursing homes, hospice centers, and hospital laundries, according to the company’s website. Founded in 1910 by AL Mills, the family business now sells in more than 125 countries.

Other firms involved in the transaction are Carlyle Group and Hellman & Friedman, the Journal reported.

WSJ originally reported Medline’s interest in an April sale.

When CNBC reached him, a Blackstone spokesman declined to comment. Carlyle, Hellman, and Medline representatives were not immediately available.

Read the full report in the Wall Street Journal here.

Pedestrians wearing protective masks walk past a Lululemon store in San Francisco, California, on Monday, March 29, 2021.

David Paul Morris | Bloomberg | Getty Images

Instead of jumping to a conclusion about the post-Covid consumer, revert back to one that psychology studies educated us on long before the pandemic. Individuals don’t change habits easily, and what they may stand to lose by changing behavior weighs more heavily on the mind than any potential gain.

“Breaking habits is hard. It is an uphill battle,” said Wharton professor of marketing and psychology Deborah Small at the recent CNBC Small Business Playbook Summit.

The idea behind that is known in the academic field as risk perception, and the pandemic did complicate it. An unprecedented event which suddenly forced consumers to go against their nature and into new behaviors, and out of many of the commerce interactions previously taken for granted: bars, cafes and restaurants, in-person fitness classes, and in-person education. Consumers have been exploring alternatives in ways they rarely do, and that occurred on top of a consumer landscape that is always changing, in recent years mostly related to digital buying and selling.

“Lots of ways in which people consumed pre-pandemic won’t return to those levels,” Small said. “We’ve been permanently changed by different experiences we had in the past year plus.”

But the Wharton professor also says it is unwise, based on all that we know about the consumer brain, to assume that the habits formed during the pandemic will become a permanent, preferred majority state. A recent Forrester survey found 75% of U.S. adults saying that the pandemic would drive long-term changes in behavior, but its research also stresses that the consumer has always been in a state of flux; it’s just maybe now more likely that change is the “new normal” for consumers.

In Small’s view, there is no single consumer to sell to — and thinking in those terms would be a fundamental mistake.

More from CNBC’s Small Business Playbook

Take exercise, as an example, and the rise of workout-from-home Peloton before its momentum was taken away by what Wall Street calls the reopening trade. Meanwhile, Lululemon continues to sell a lot of yoga pants, but it has seen a steady increase in store traffic after seeing the popularity of direct-to-consumer athleisure wear sales during the peak of Covid in the U.S. It also bought at-home fitness start-up and Peloton competitor Mirror.

Betting on more than one kind of consumer — which was already occurring before the pandemic with the rise of digital — is a smarter strategy than planning around a fixed idea of the consumer emerging from the past year.

“Imagine someone who used to go to the gym and then couldn’t, started exercising from home. Maybe they really miss the old way and are dying to get back, and couldn’t replicate it at home,” Small said. The pandemic may ultimately reconfirm that person’s original preference. On the other hand, she says, some consumers try new forms and conclude “it is convenient for me” and are changed forever.

This thinking already has a name in retail, and big presence: omnichannel. Or in other words, spread your bets rather than concentrate them. Meet the consumer where they want to be met, and understand that each consumer is not motivated by the same set of preferences. Small said it is the type of thinking which small business owners across the country — if they were able to survive the pandemic or opportunistic enough to form a new business during it — need to be acting on as the post-pandemic period begins.

She provided CNBC with a few key ideas for tackling this tricky consumer landscape.

1. Learn the difference between risk and risk perception.

Many people want to put the consumer into the pre-pandemic and post-pandemic buckets, and Small said that is actually a reasonable starting point in order to make predictions. Humans tend to categorize as a way of making sense of the world, it just becomes dangerous to categorize all consumers as being similar.

“There is enormous heterogeneity, variation across consumers, in their views, risk preferences, political ideologies … all the stuff shaping the way changes are affecting them,” she told CNBC.

That is why she says the first thing to keep in mind is the difference between risk and risk perception.

“Risk perception is not risk,” Small said. “Risk is reality, its truth. Risk perception is psychology, what we feel and think.”

Risk perception is a function of personality and the culture we live in, and the information we consume. And that can all be varied at the individual and community level.

2. Accept Covid-19 politics will continue to be a big buying and selling factor.

The politics of the pandemic are an example of how that risk perception needs to be factored into consumer marketing in the future.

The information people consume in communities can be a function of local political ideology, and Small says it is compounded by the fact that social networks are overlapping, with individuals talking to others within a cluster.

In communities and regions where there are greater concerns about Covid, consumers may remain more risk-averse even after the CDC guidance on mask wearing eased. And there is going to be the polar opposite extreme — “feelings of invulnerability and shades in between.”

“Businesses need to measure and understand where their customers are coming from,” the Wharton professor said.

There may be areas where patrons, including fully vaccinated ones, continue to only enter stores where others are masked. That may be due to personal preference, new habits being formed or politics, including wanting to be an ally of essential workers who could still be at risk of contracting the virus. And there may be examples that go far in the opposite direction, and reinforce how political polarization is part of the future that Main Street businesses must navigate. Think of the hat store in Nashville, Tennessee, which made national headlines for yellow star lapels promoting non-vaccinated status.

3. Don’t draw a pandemic line, but maybe segment by preferences.

Vaccination efforts in the U.S. have made great progress and case counts and mortality from the virus have sharply declined, but there is a significant portion of the public which will need more time to be at ease with Covid.

Small says that means it is smart to maintain a stance that leans into hygiene, but also recognize that among your customer base there may be those who believe society went too far in reacting to the risk of the virus, and there is a risk of backlash towards businesses that overemphasize sanitation.

“This is a tricky balancing act,” Small said, one that is maybe most difficult to navigate for businesses in “purple states.”

She strongly recommends considering if there are ways to doing segmentation of consumers to meet the needs of those who continue to stress Covid hygiene and those who may feel differently. The idea of segmentation circles back to the heterogeneity that underlies human risk perception. As one example, it could be embraced by having business hours designated for different customer segments. Some businesses maintained shopping hours reserved only for older customers during the Covid peak.

Small also said business owners should not lose focus on one forced change that has worked very well: conducting business outdoors. Some of the best innovations she has seen among small businesses where she lives related to figuring out more way to do things outdoors. “It’s better for safety and lower risk … so when possible that’s great. Why didn’t we think of it before?”

4. Ask your customers what they want.

The best way to learn what customers want? Ask them.

For big companies, that can mean market research, a science that includes in-depth tools to measure concerns and preferences. And can be expensive.

Small said it is not necessary for a small business to give up on the effort because it can’t afford proper market research. There are plenty of good alternatives, from do-it-yourself Google Trends analysis to creating surveys using free online tools or Instagram for quick polling.

“Asking customers questions is the key thing” she said.

And it is important, because another side of human nature that often trips us up is overconfidence.

“We think we know customers well. Oftentimes our intuitions aren’t correct,” she said. “So it is really useful to ask them. … not just assume. Ask them those questions.”

And she says people tend to tell the truth.

“As a general rule … if they are your customers and you have some relationship … they want you to do well, so it is in their interest to be honest,” Small said.

Right now, they also probably have a lot of information to share that is valuable.

“We’ve all had a lot of time to reflect in the last year and they have opinions. … listen to customers,” the Wharton professor said. “Don’t go with intuition. Talk to customers, seek feedback from them, and try to understand what they care about.”

While assumptions are bad, and intuition can be wrong, Small also stressed that business owners should not be overwhelmed by the challenges, and should start by reflecting on what they’ve learned from so much having changed, the innovations they’ve come up with, and the extent to which they’ve been adaptive. “Trust yourself. If you have adapted before you can adapt again, and can you learn from the way you adapted before and apply it going forward.”

Kevin Richardson grew up in West Baltimore and credits horse racing for keeping him out of trouble. He started cleaning stables and worked his way up to assistant coach. His love of sport led him to become an owner and today he boasts of owning shares in 25 horses.

“Starting at the bottom and eventually becoming the owner or partner of a great racehorse is everyone’s dream,” said Richardson as he stood in front of the horse stalls at the Pimlico Race Course in Baltimore.

Companies like SportBLX and Myracehorse.com offer shares in racehorses to investors. For less than $ 100 a share, people can own a fraction of the race winnings, stud fees, and other income. It also opens doors for attending events.

The offers are regulated by the Securities and Exchange Commission, which requires investors to hold shares for at least one year. There is currently not enough market for investors to sell these stocks. Instead, the holding company will be liquidated when the horse is done and investors are paid the remaining returns.

Richardson has invested through both SportBLX and MyRaceHorse.com.

“I want to make money like everyone else. But for that reason you can’t come in, ”he said.

SportBLX co-founder Joe De Perio admitted that making money investing in racehorses is difficult.

“You shouldn’t think you’re going to make a lot of money because the numbers … don’t confirm it,” said De Perio.

When a horse is racing, there can be great volatility. A win can add value to the prizes, along with stud fees and leasing opportunities, but injury can wipe out the value. This makes the pricing of racehorses risky and increases the challenge of what is known as a Regulation A offer. Under this security, every horse offer must be approved and the schedule for this can take several months.

“What happened is we just had to stay away from racing-age horses. And we kind of got into buying babies, yearlings, two-year-olds, and they don’t have that kind of volatility,” said Michael Behrens, CEO of MyRaceHorse .com.

Rep. Andy Barr, a Republican whose Lexington, Kentucky borough is in the so-called “Horse Capital of the World,” urges the SEC to make it easier for private investors to get involved in a racehorse.

“Innovative companies are democratizing the exciting business of owning horses by selling stocks of these horses and allowing retail investors to own some of the racehorses they see in the Kentucky Derby, Belmont Stakes and other races nationwide. Unfortunately, government bureaucracy is holding back the growth of this innovation, “Barr said.

The greatest excitement experiences the owners of horses who actively race. The platforms meet investors’ desire for the benefits of ownership. In addition to shares, ownership offers the opportunity to meet with coaches, visit stables and even have a photo taken in the winners’ circle.

“Many of our investors have been very keen to take part in horse racing,” said Behrens, adding that it was a “fun part of the game.”

MyRaceHorse.com sold shares in Authentic before winning the 2020 Kentucky Derby. Investors had to be part of the excitement of owning a winner, but the prize money for this race wasn’t a huge payoff for investors. Performance awards to the original owners and expenses made up the bulk of this prepayment, even as the horse increased in value in stud fees.

Investor Elliot Levine said he could offset the four stocks of Authentic he bought from MyRaceHorse.com.

“Boy, it was the biggest thrill being part of a horse in the derby,” said Levine.

The disclosures required by the SEC make it clear that the risk to these investments is high.

“These risks include holding your investment for months or years with limited or no ability to resell and losing all of your investment; You must be able to suffer a total loss of your investment without changing your lifestyle, ”the MyRaceHorse. com prospectus reads.

“People really do it for the idea of ​​joining a community to get access to a world, to go to physical events that allow you to get closer to that horse and the asset you have invested in. “Said Behrens.

Risks could turn into rewards if investing in racehorses inspires enthusiasm for the sport, which has fallen dramatically in popularity over the past 20 years.

Barr, who sponsored the Horse Racing Integrity and Safety Act signed last year, said he hoped the investment interest combined with a drug safety and competitive standards program “can strengthen the future of the sport for generations to come.”

This is a bet horse racing fans will pay off on.