Support is needed for salons facing new financial challenges

I’ve always been a cheerleader for good practice in the sector; lecturing and educating on salon management and sharing the knowledge I’ve acquired since being appointed a salon manager at 20 years old. My career has seen me running salons of all sizes in all geographic locations before opening my own business at 25. Here I am, 30 years later, and the industry I love is much changed, with the likelihood it will change beyond recognition in the years to come.

In the pandemic, the Government gave many concessions to the hospitality industry – with Eat Out to Help Out, and a VAT reduction to 5% only for a period of 14 months, then a reduced rate of 12.5% until March of this year. Other sectors which were equally affected never managed to obtain a similar VAT reduction, with ours being one of them.

That’s why myself and some other salon owners set up SOS (Save Our Salons) to campaign for a levelling up in the VAT rate for our labour-intensive industry and the adoption of the Irish VAT model where the threshold is reduced, and services enjoy a lower rate than any VAT due on retail sales. We were not successful in this despite massive support for our cause. We still firmly believe that this is the right way to manage VAT in our sector (and I will never stop campaigning for it).

Although our sector is unregulated and we have no one official industry body, there are many associations, and during the pandemic they aligned to represent us to BEIS (the Government department that looks after our newly named Personal Care sector). Joining these meetings, we felt none of the industry bodies adequately represented us: the VAT paying, PAYE employing salons who are training and educating apprentices and holding the salon keys in our hands – in short, the salon owners who are at the coalface.

Clear representation

So, I, along with some other salon owners including Toby Dicker of The Chapel and Stephen Nurse of Daniel Galvin, set up the Salon Employers Association (SEA). Years ago, I belonged to a similar organisation called BAPHE (which helped launch and administer Government initiatives such as the Youth Training Scheme - YTS) and similarly our SEA remit became more general as we evolved and realised that aside from VAT there are other issues and that we need to represent our particular niche of the industry that encompass all of the challenges we may face.

Within weeks of launching, we signed up more than 1,000 salons, representing more than 11,000 people working in the sector, with an estimated turnover of 225m. Membership is free, and our work is voluntary. We are a not-for-profit organisation and although we have minimal funding, we have no large sponsors. We’re in regular contact with BEIS and have secured meetings for the 10 largest employers in the sector directly with them to share data confidentially and substantiate our arguments.

Fresh focus

So, what challenges do we face now? Our surveys tell us that turnover is still almost 20% lower than pre-Covid-19 levels – the reasons for which are myriad. Clients coming less often was evident, working from home meant occasion services were vastly reduced, and moving away from cities and the conventional commute was another factor.

The pandemic meant tourist business was non-existent for those salons who enjoyed seasonal turnover trends. DIY treatments and the trend for at-home visits has had a marked impact on the traditional salon business, too. But these customer behavioural trends are only half the story. They need to be coupled with the business and economic challenges salon owners face to get the true picture.

Many were unable to achieve any rent concessions in the pandemic, still paying for their bricks-and-mortar premises from zero income. Business rates are now back up to pre-pandemic levels in most local authorities. Staff are leaving to go self-employed. Government grants were rarely available in the second wave, with many councils stating they are reserved for hospitality only.

Organisations in the sector need to be careful that they don’t massage the numbers and paint a picture of us as an industry in growth as the consequences of such spin is not only misleading but potentially damaging (for instance, to landlords who do not understand our sectorial challenges).

But now, with turnover still down, we face two more, and potentially greater, challenges – the rise in energy costs is already something our members are feeling – with some seeing their bills set to rise by more than 200%. And with employer’s NI rising by 1.25% in a sector that traditionally sees more than 50% of their turnover spent on payroll, the financial impact will be huge.

These are challenging times for all of us, but we know we’re unique as an industry in facing them all. No other sector is as labour intensive but still requires bricks-and-mortar premises. No other sector has no alternative online revenue; employs, nurtures and educates as many apprentices; or is as heavily taxed.

So, if we don’t protect our particular business model, then what will happen? In-salon apprenticeships could disappear. Salon owners will be forced into becoming glorified landlords, housing work hubs full of self-employed room rentals, and the tax-take we generate will be lost forever. We need to get these messages to Government and we can only substantiate them with the data and numbers BEIS are asking us for. Please, help us by completing our surveys (anonymously if you prefer) at salonemployersassociation.co.uk to demonstrate how levelling up our industry can help save not only the high street, but the industry we know and love.

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Hellen Ward is managing director of Richard Ward Hair & Metrospa in London and a beauty ambassador for the National Hair & Beauty Federation (NHBF).