NHBF Industry Survey: the struggles and what salons need in 2023

It’s hard times ahead for the hairdressing industry with less than confident growth and talent recruitment predictions, can the government do more?

The hairdressing industry has come out fighting after Covid, and we can all be proud about that. But now they’re facing another tough economic climate with the rising cost of doing business. While growth remains slow, more government support could secure future prosperity, says the National Hair & Beauty Federation, (NHBF).

In their latest State of the Industry quarterly survey, which involved mostly salon and barbershop owners, the NHBF has found that the negative outlook that rose in September 2022 with escalating prices, sub-par growth, and general uncertainty looks set to continue and worsen this year.
 

Rising losses and diminishing profits

The survey shows the number of businesses reporting either a small or substantial loss has risen by 6 per cent, (25 per cent up from 19 per cent in September). Salons that are making small or good profits have dropped to 30 per cent, which is down from 35 per cent last autumn. Fewer than half of salons are now breaking even at just 44 per cent.

With the rising cost of doing business, it isn’t surprising that the late 2022 trend of putting up prices continues in 2023 with over half (51 per cent) of salons having raised their prices over the last three months and 66 per cent planning to do so over the next three months.

The reasons for the price rises are many and include energy and supplier costs and rises to National Minimum Wage/National Living Wage (NMW/NLW).

Other ways salons are trying to tackle the pressure of rising business costs is by removing non-essential expenditure and pressing pause on staff and apprentice recruitment.

According to the survey, only 15 per cent of respondents are ‘definitely’ or ‘likely’ to onboard new staff, however this statistic has improved slightly from September when it was just 12 per cent.
 
Apprentices may be getting the roughest deal as 21 per cent of respondents have cut back on hiring them over the past three months, and only nine per cent say they are ‘definitely’ or ‘likely’ to take them on in the next three. Worse still, only half of salons say they’re either ‘not sure’ or ‘would not be’ supporting apprentices through to the end of their course.

Government support remains high, growth plans are low

In this hostile climate, reliance on government support remains almost as high as last year. Nearly three quarters (71 per cent) of business respondents are either ‘partially’ or ‘completely’ reliant on government support, although the good news is this reliance peaked at 81 per cent in January last year.

While government reliance is high, growth predictions are similarly low to September 2022, with only 30 per cent of respondents saying they intend to grow their business either ‘rapidly’ or ‘moderately.’

A significant number want to remain the same size at 44 per cent, signifying a climate of caution. There is also a rise in those planning to downsize or handover the business at 25 per cent, up from 22 per cent in September 2022.

A brighter horizon with more government help?

Modest or no growth plans aside, the most concerning finding from the survey is low survival confidence, with only 44 per cent of salons and barbershops confident about making it through the next six months.

Due to this, the NHBF calls on the government to make things easier for businesses, including more energy support for those on higher contracts and/or with renewals coming up. They also want the government and Ofgem to ensure energy companies pass on the support, grants, and incentives to promote energy efficiency.

Suspension of debt repayments for businesses under pressure and more bank flexibility around repayment of loans are other ideas, as well as a restraint of further hikes to the national minimum and living wages.

They also think apprenticeship incentives of up to £3,000 per employee will help businesses take more on. They’re also calling for a urgent review on the way VAT is applied to salons and a crackdown on tax-evaders.

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