New survey suggests enduring uncertainty within the wider beauty industry

As the aesthetics industry, like many sectors, continues to recover after the height of the coronavirus pandemic, a new survey has found that there is continued uncertainty about the future within the wider beauty industry. 

In the National Hair & Beauty Federation’s (NHBF) latest State of the Industry quarterly survey, data suggests that the trade body’s sector is slowly recovering but further governmental support is required to ensure business survival and future growth. 

In particular, the survey demonstrates that there’s an enduring sense of anxiety within the broader beauty industry. This has been exacerbated by a climate of rising energy and business costs, which is familiar to aesthetic business owners.

Compared to the last NHBF State of the Industry survey in September 2022, slightly more businesses (25%, up from 19% in September) reported 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.

As such, reliance on external support is still high within the NHBF’s sector, in line with levels seen in the autumn. Nearly three-quarters (71%) of businesses revealed that they were either partially or completely reliant on Government support. This reliance peaked at 81% in January 2022. 

The general trend towards increasing prices has also continued, with the biggest impact caused by energy and supplier costs as well as rises to the National Minimum Wage/National Living Wage. This has led to further reliance on governmental support and stagnated growth aspirations in many cases. 

With these same factors directly influencing aesthetic practices, the report thus makes informative, if not completely confidence-boosting, reading for those in the aesthetics industry. 

The survey also identified how NHBF businesses are attempting to negate these rising costs. In particular, many businesses have expressed the intention to increase prices, remove non-essential expenditures and hold off hiring staff and apprentices. 

At a rate similar to in September, 51% of the businesses surveyed reported having raised their prices over the previous three months and a further 66% said they plan to do so over the next three months. As for recruitment in the NHBF sector, it remains low and in line with the Autumn survey. In the next three months, only 15% of respondents are definitely or likely to take on new staff, compared to 12% in September. 

Furthermore, according to the report, only half (49%) of NHBF businesses surveyed are confident of their survival, which is in line with the findings in September. The number of businesses that are not sure whether they will survive until June 2023 is still high at 44%. 

It’s not surprising then that growth intentions in the sector are at a similar low to September 2022, with 30% of those surveyed saying that they intend to grow their business either rapidly or moderately. A similar number of businesses intend to remain the same size (44%) and there is a slight rise in those that are planning to downsize or hand over their business (25%, up from 22% in September). 

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 was welcomed in the report. However, indications are that further support will be needed. As such, it is worth considering how the framework for further governmental intervention, called for by the NHBF, could be beneficial to the aesthetics industry. 

In particular, the trade body is asking for:

• 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.  

It remains to be seen what the governmental response to the NHBF’s demands will be, although the aesthetic industry could find any comment informative reading.  

Established in 1942, the National Hair & Beauty Federation (NHBF) is the UK’s largest trade body for the hair, beauty and barbering industries. The State of the Industry survey received 488 responses between 9-18 January 2023, from a 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. The vast majority (95%) of respondents were salon or barbershop owners.