Hair & Beauty Industries Face Renewed Fight for Survival
The National Hair & Beauty Federation (NHBF) publishes its latest State of the Industry quarterly survey showing evidence that the sector is battling the slowly recovering but is urging further targeted government support to ensure business survival and future growth.
Several survey indicators remain in line with the low seen in September with rising prices, reliance on government support, uncertainty around survival and stagnated growth aspirations. These all signal that the negative outlook remains.
Recent business support in the form of the 75% discount on business rates for retail in 2023/24 and continued energy support through the Energy Bill Discount Scheme is welcome. However, further support will be needed in order to ensure that well-established businesses can continue to provide valuable employment through the cost of doing business crisis.
Richard Lambert, NHBF chief cxecutive said: “After businesses have battled through the last two years, the hair and beauty industry is now faced with a renewed fight for survival. The latest survey results show that businesses already in debt are still grappling with rising energy costs, supplier and staff costs. With continued and targeted support from the UK Government, we are confident that the personal care sector will be in position to play a central role in the UK’s economic growth, thriving high streets and community wellbeing into the future.”
The latest State of the Industry survey found that:
In the climate of rising energy and business costs and declining consumer confidence, the sense of uncertainty that returned in September has now bedded in:
- Slightly more businesses (25%, up from 19% in September) are making either a small or substantial loss. Slightly fewer are making a small or good profit (30%, down from 35%) and 44% are breaking even.
- The general trend towards increasing prices continues. Similar to September, 51% of businesses raised their prices over the previous three months; a further 66% will do so over the next three months.
- Businesses are most worried about energy costs, supplier costs and rises to National Minimum Wage/National Living Wage (NMW/NLW) as having the biggest impact on the business. In response, they are removing non-essential expenditure, increasing prices and holding off taking on staff/apprentices.
- In response to energy bill support being more than halved through the Energy Bill Discount Scheme, businesses intend to increase prices, remove non-essential expenditure and hold off taking on staff/apprentices.
- Reliance on external support is still high and in line with levels seen in the autumn, with nearly three quarters (71%) of businesses either partially or completely reliant on Government support. This reliance peaked at 81% in January 2022.
Staffing, recruitment and apprentices
- Recruitment intentions are still low and in line with the autumn. In the next three months, only 15% of respondents are definitely or likely to take on new staff (12% in September).
- Over the last three months, 21% have cut back on apprentices (25% in September). Similar to the autumn, only 9% were definitely or likely to take on apprentices in the next three months.
- Worryingly, half of businesses (50%) say they either were not sure or would not be supporting apprentices to the end of their course.
Looking to the future
- Business survival expectations are still muted and in line with our autumn findings. Only half (49%) are confident of their survival. The numbers of businesses who are not sure whether they will survive over the next six months until June 2023 is still high at 44%.
- Growth intentions are at a similar low to September, with 30% saying that they intend to grow their business either rapidly or moderately. Similar numbers of businesses intend to remain the same size (44%) and there is a slight rise in those that are planning to downsize or handover the business (25%, up from 22% in September).
The latest survey findings show that, after a challenging two years, the sector is facing a renewed fight for survival. Further Government support to the sector, has been very welcome, but we are in no doubt that more will be needed to keep well established salons and barbershops, in business through the recession.
The NHBF is therefore calling for the following:
- Further targeted support on energy: support for those businesses that signed up for higher than usual contracts or whose contract renewals are coming up over the next 3-6 months, Government and Ofgem taking a more active role in ensuring energy companies pass on the support and grants and incentives to encourage energy efficiency.
- Wider business support: suspension of debt repayments for businesses under pressure, banks encouraged to offer more flexibility around the repayment of loans and restraint on further rises to the National Minimum Wage (NMW) and National Living Wage (NLW).
- Securing future sector talent: apprenticeship incentives up to £3,000 per employee.
- Urgent review of taxation which is disincentivising growth: an urgent review of the way in which VAT is applied, because the current system whereby a salon immediately becomes liable for a £17,000 VAT bill as soon as they cross the threshold is a powerful incentive to remain below this line.
- A crackdown on tax evading businesses.
The survey received around 500 (488) responses between 9-18 January 2023. It gathered views from a good representation of businesses in the personal care sector across all areas including city centres, town centres and villages in England, Northern Ireland, Scotland and Wales.
Respondents included salon or barbershop owners, chair or room renters, home-based business owners, mobile or freelance practitioners, employers and the self-employed. The vast majority (95%) of respondents were salon or barbershop owners. 7% were self-employed individuals and 2% involved.
in the wider space renting, mobile and freelance part of the sector; this is either the sole focus of their business or in addition to being a salon or barbershop owner.
In 2020-21 the Office of National Statistics reported that UK’s 46,000 salon businesses (hair, beauty and barbershops) delivered a combined turnover of around £4.6 billion.
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