Released in February 2024, the latest quarterly State of the Industry Survey from the National Hair & Beauty Federation (NHBF) shows that the recovery of the sector has been slow and steady through 2023 and into January 2024. Resilient sector businesses are still under pressure from sticky inflation, high winter energy costs, rising wage costs in April 2024 and the lack of availability of experienced staff to grow their businesses.
While the hair sector continues to make a slow and steady recovery, there has been a slight rise in businesses making a loss, which is up 6% from September 2023, with 20% of businesses now reporting losses. Meanwhile, 40% of businesses are making a small or good profit – down 5% from September last year.
The trend towards increasing prices continued to slow, with 39% of businesses doing so over the previous three months, down from 55% in September 2023. A further 64% of businesses will raise their prices over the next three months.
Reliance on external support remains high but is stable, with over half of businesses (58%, up slightly from 56%) partially or completely reliant on Government support.
High energy costs are continuing to affect the hair sector, with two thirds of the sector paying more for energy than they were six months ago. When the Energy Bill Discount Scheme ends on 1 April 2024, half of the businesses (49%) will see their costs increase by a further 20%, and for two thirds of the sector they will be set to rise by up to 40%.
Business debt levels remain high with debt reported as a problem for over half (56%) of sector businesses, similar to the levels we saw in July 2023. For one third of businesses, (32%), levels of debt have increased over the last six months. In addition, 45% of businesses with debt estimate that it will take between two and five years to clear.
Rising costs are having an effect on staffing and recruitment intentions, with the workforce remaining the same over the last three months for nearly two thirds (63%) of the sector. However, recruitment intentions have taken a dip, with only 17% (down from 27%) of businesses likely to take on new staff and fewer than 9% of businesses open to taking on new apprentices over the next three months.
Caroline Larissey, NHBF Chief Executive says: “The sector recovery is slow, but of most concern is the dip in businesses intending to take on staff and apprentices, as we rely on a pipeline of young talent entering our sector. Ahead of the Spring Budget on 6 March, we are calling on the government for further targeted sector support in the form of VAT reform (either reducing the rate, raising the threshold or tiered rates) and further support to employers through apprenticeship incentives. With this support we are positive that our sector will continue to demonstrate resilience and the ability to weather the storm.
Want to find out more about the call on Government to cut the VAT rate? Just click here.
