22 October 2024
The National Hair & Beauty Federation (NHBF) has released key findings from its most recent quarterly State of the Industry survey that took place in September. The survey highlights the ongoing challenges that the sector faces in the current economic climate including responding to significant wage rate rises between 10-20% in April 2024.
The recovery for the sector is still slow but steady. In particular sector recruitment intentions for both staff and apprentices still remains low with 75% of businesses saying that it is harder to recruit now than 12 months ago.
Key findings include:
- Making a profit/loss: with 46% making a profit and 41% breaking even, slightly fewer businesses are making a loss (14% down from 16% in July).
- Prices: after price rises in April to cover rising wage rates, there was a slight reduction in prices going up over the previous 3 months; 40% (down from 58% in July) of businesses raised their prices. A further 56% will do so over the next three months.
Business costs and wage rises:
- Businesses are most concerned about increases to the National Minimum Wage/National Living Wage (76%), energy costs (55%) and trade supplies (52%).
- In response to these costs, businesses are putting up prices (50%), holding off taking on new staff/apprentices (47%) and reducing staff hours (26%).
- In response to the National Living Wage likely to be raised by 5.8% in April 2025, businesses intend to put up prices (66%), reduce staff hours (31%) or reduce the number of staff they employ (31%).
- In response to measures in the Employment Rights Bill, 61% said that it would make it less likely that they would take on new staff, 42% would take on fewer apprentices due to increased staff costs and 24% would actively reduce the number of staff they employ.
Staffing, recruitment and apprentices:
- The workforce has stayed the same for 53% businesses over the last three months (down from 61% in July). 18% reported a decrease (down from 24% in July) and 18% say that it had increased (up from 10% in July).
- In terms of skills shortages, businesses have had most challenges with recruiting Senior Stylists (31%), Stylists (30%), apprentices (22%) and beauty therapists (11%).
- Recruitment intentions remain muted; in the next three months, only 15% (down from 20% in July) were definitely or likely to take on new staff and only 8% (down from 15% in July) would take on apprentices.
Looking to the future
- Turnover expectations are slightly lower with more businesses (20%, increased from 12% in July) expecting it to decrease slightly. 27% of businesses (similar to July) expect it to increase slightly or significantly and 50% stay the same.
- Growth intentions are still balanced with 43% saying that they intend to remain the same size and 38% saying that they intend to grow the business either rapidly or moderately (similar to 41% in July). 20% (up from 16% in July) were planning to downsize or hand over the business.
- On business rates reform options, businesses were most favourable around raising small business rates relief from £12,000 to at least £25,000 (55%), continue the Retail discount in England and Wales (47%) and continue to freeze the small business multiplier (29%).
The recommendations in the summary correspond with our recommendations to Government ahead of the Autumn Budget.
NHBF chief executive Caroline Larissey said:
"These latest quarterly survey results show that sector recovery remains slow but steady. However, low recruitment intentions are a real concern for the industry across both staff and apprentices.
In our letter to the Chancellor, ahead of the Autumn Budget we made it clear how important targeted support to employers is to counterbalance rising wages, either through the Employment Allowance, targeted support for training apprentices and maintaining the business rates retail discount.
We urge the Government to take swift action to support these businesses, which are central to local economies and community wellbeing across the UK."
The full report is available on the NHBF website