NHBF announces quarterly State of the Industry survey results

The latest National Hair & Beauty Federation quarterly survey results show that the sector recovery has been slow and steady over the last 18 months. Sector businesses are still battling through the challenging economic climate including responding to significant wage rate rises between 10-20% in April 2024.

Slightly fewer businesses are making a profit, and reduced numbers are expecting turnover to increase. Debt and reliance on external support remain high but survival prospects are more positive and growth intentions remain stable.

Recruitment intentions for both staff and apprentices remain low-key which is a concern for the future of the sector. 75% of businesses said it is even more difficult to recruit compared to 12 months ago[1]. Due to the sector shift to self-employment, many businesses find it challenging to run a profitable and successful salon that employs staff.

The sector skills crisis outlined in the NHBF Careers at the Cutting-Edge report[2], continues with a lack of experienced staff and reduced apprenticeship starts.

Key Findings:

• Making a profit/loss: with 45% making a profit and 45% breaking even, there has been a slight rise in businesses making a loss (16% up from 12% in April).
• Prices: after price rises in April to cover rising wage rates, there was a slight reduction in prices going up over previous 3 months; 58% (down from 66% in April) of businesses raised their prices. A further 46% (similar to April) will do so over the next three months.
• Reliance on external support: Over half of businesses (55%, similar to April) are either partially or completely reliant on Government support.

Business costs and debt

• Businesses are most concerned about increases to the National Minimum Wage/National Living Wage at 70%. Energy costs come in second at 61% then trade supplies (59%).
• In response to these costs, businesses are putting up prices (48%), holding off taking on new staff/apprentices (47%) and reducing staff hours (24%).
• Debt levels in the sector remain high; 53% of businesses are in debt (down slightly from 56% in January 2024). 50% (previously 45%) say that it will take them between 2 and 5 years to clear their business debts.

Staffing, recruitment and apprentices

• The workforce has stayed the same for similar numbers of businesses, 61% over the last three months, similar to in April.
• Recruitment intentions remain muted; in the next three months, 20% (up slightly from 16% in April) were definitely or likely to take on new staff and only 15% (similar to April) would take on apprentices.

 Looking to the future

• Turnover: Turnover expectations are holding steady with 55% (up slightly from 49% in April) expecting it to stay the same over the next three months. 28% (down from 34%) expect it to increase.
• Business survival expectations remain more positive with 76% of businesses confident of their survival over the next six months but with 21% not sure.
• Growth intentions are still balanced with similar numbers of businesses 43% saying that they intend to grow the business either rapidly or moderately and 41% stay the same size (45% in April). 16% (up slightly from 14% from April) are planning to downsize or hand over the business.
• Barriers to growth: The current economic conditions are still the biggest challenge for sector businesses (66%) along with recruiting experienced staff (41%) and finding apprentices (19%).
• Expectations of the new government: reducing the rate of VAT (61%) would be most beneficial for their business, then a slower rise to the National Minimum Wage/National Living Wage (45%) or raise the VAT threshold further (37%).

Caroline Larissey, chief executive of the NHBF says,

“The sector makes a significant contribution to the high street and community wellbeing with a continuing rise in the number of barbers, beauty salons and nail bars yet a decline in the number of hairdressers and hair and beauty salons on the high street^[3].

Many businesses have benefited from business rates discounts and support on energy costs but further targeted support to small and micro employers will be needed including through the proposed Growth & Skills levy to unlock the sector’s full potential. This would allow sector businesses to grow and provide valuable employment.

The rise to the VAT threshold announced in the Spring Budget benefitted many sector businesses but further reform is needed to support the sector into the future.”