What lies ahead for the hair and beauty industry post COVID-19?
6 mins
COVID-19 hit hard for all sorts of businesses, and among the most affected was - without doubt - the hairdressing and beauty services industry simply because of the personal nature of the services they provide. What opportunities and challenges lie ahead for the industry in the wake of the pandemic?
Lockdowns and public health measures forced salons to temporarily close and staff shortages due to illness took their toll. Even when the strict lock-downs ended, restrictions on client numbers seriously impacted turnover and cash flow, making it difficult for some to keep the doors open at all.
The way people socialised also changed. Fewer live events and number restrictions on celebrations like weddings and milestone birthdays meant less demand for services. Do-it-yourself hair and beauty treatments became more popular, which also cut demand for in-salon treatments.
This led to the industry’s annual growth going backwards by -2.5% between 2018 and 2023, reaching an all time low of -9.0% in 2021.
The industry has slowly gained ground since, with growth predicted to increase to 1.6% over the next five years. While things are starting to pick up, the road back to pre 2019 levels will be challenging, but there are opportunities too.
Know your customer
Hairdressing and beauty services represent a substantial proportion of household expenditure, which has contributed to steady industry growth over the years. Current rising interest rates and cost of living pressures may force people to change their spending habits - going to the hairdresser less often or opting for less costly treatments.
As the economy improves, discretionary incomes and population growth will increase demand for hairdressing and beauty services from different community segments. Savvy salon owners will keep an eye on their changing customer base and offer services customised to new demographics.
Take a holistic approach
After the pandemic, people have become more health conscious than ever and ‘wellness-first’ beauty services will be in demand. Providing services that not only improve a person’s looks but contribute to their overall health and wellbeing will encourage spending on high-margin products and services. Think organic products, supplements, natural therapies and longer term treatments for body, hair, nails and skin. Choosing less harmful chemicals in the salon will also have a positive overall health benefit for you and your team.
Don’t forget the blokes
Men’s skincare and grooming services are predicted to grow to almost $19 billion globally by 2027*. Salons that expand their male grooming options - or even specialise in men’s services - should enjoy higher than average industry growth. In addition to the latest style cuts - from the buzz to the mullet - men are looking for products that contribute to their overall health and wellbeing. Sunless tanning, unwanted hair removal, and beard and skin care treatments and products will be seen as essentials to help men relax and feel good about themselves.
Emphasise value
Cost of living pressures continue for many households. The good news is that consumers still view hair and beauty services as an affordable luxury but providing value will be the key. People want to feel they’re getting value for money on any non-discretionary purchases. Consider offering loyalty discounts, vouchers, special offers etc. to help your clients manage the costs and keep coming back for more. Look for other ways to enhance the value perception for your clients, such as serving free coffee or alcoholic drinks, playing music and providing more comfortable seats and lounges to improve ambience.
It’s wise to specialise
There will also be a market for premium services as consumers indulge in expensive treatments instead of making larger expenditures like holidays and retail purchases. Consider specialising in one or two high-end services, such as laser hair removal, facial fillers and injectables, chemical peels and more expensive hair salon treatments. to boost profit margins.
The hair and beauty industry is fast-paced and highly competitive. As consumers return to using hairdressing and beauty services more regularly it’s important for your business to stand out from the crowd. Being aware of customers' preferences towards specialised over generic services will provide a new avenue for innovation.
Over the next five years steady growth will increase profitability to around $8.6 billion**, despite ongoing price-based competition and cost-of-living increases.
How Ezidebit can help
Ezidiebit can make sure your payment systems and processes run smoothly and efficiently, so you can focus on growing your business. With a range of payment solutions at your fingertips and streamlined, simple payment reconciliation into your business software or Ezidebit’s platform, you can enjoy additional revenue streams by offering gift vouchers or hair and beauty products online, plus you can take deposits or prepayments for client appointments. Cut down on rental costs and take your business on the road with our mobile payments solutions. With over 20 years in the payments industry, we have built a reputation that hair and beauty businesses trust.
To find out more about how we can help you grow your hairdressing or beauty services business, get in touch today.
** IBISWorld