New Report From NHBF Shows Salons Expect to Survive 1-2 Months if Lockdown Continues with No Further Government Support

 
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The National Hair & Beauty Federation (NHBF) has published this week a damning report on the future for hair and beauty without government intervention.

The report titled “Hair, beauty and the pandemic: An industry at the sharp end. The impact of coronavirus on business vulnerability and the potential for mitigating measures”, commissioned from independent analysts Pragmatix Advisory by the NHBF, details the current situation for the industry, the strength of the sector prior to the pandemic and the urgent measures required to ensure that the majority of the industry survives, which long term will cost the Government very little.

The main findings from the report highlight that with over 140 days of lockdown in 2020, hair and beauty has been one of the worst affected sectors.

On average, turnover fell by 45% compared to 2019.

  • Social distancing restrictions mean salon capacity is down to 70% of what it was, losing on average two hours of appointment time per stylist per day. There are also reports of reduced customer demand.

  • Full-time employment in the sector is down 21% on 2019.

  • The average cash loss to a business in 2020 was £17,000, with those over the VAT threshold taking an even bigger hit.

  • 1 in 10 businesses did not return any income or dividend to their owners or managers in 2020

  • 60% of businesses entered 2021 with no cash reserves (up from 27% in 2019).

  • There are now many businesses in the sector which are acutely vulnerable to failure in the next 12 months.

  • 2021 is expected to be just as tough as 2020.

  • Without further support, most expect to survive 2-3 months (from January) if lockdown continues.

  • The crisis has disproportionate impact on women and those in deprived communities. Hair & beauty business owners are 82% female with an 88% female workforce. There is a higher proportion of Personal Care businesses than any other sector in the most deprived areas of the UK. The closure of these businesses poses greatest risk to those in the local community who are most likely to be employed in these salons and barbershops.

The report also identifies that industry help from the government in the form of a 5% VAT reduction which is being petitioned by the #choptheVAT campaign would be significant in helping the beauty industry. Reducing VAT to 5% would add £16,000 to the average VAT registered business, closing the cash gap by one-third. This would reduce to 6% the proportion of businesses not returning anything to their owners or managers and if 18% of the businesses which would have otherwise failed survive as a result of reducing VAT to 5%, then the policy pays for itself through the taxes they will pay.

You can download and read the full report from NHBF here.

 
Business and EducationNatalia Kulak