Creative HEAD: Making the Cut

by | Feb 10, 2021

Creative HEAD have released Making the Cut, a new in-depth study of hairdressing businesses and what they need to grow and thrive.

Executive Summary (source: Creative HEAD)

 

“Up until the beginning of 2020, hairdressing was a robust and growing industry, with survival rates bucking the general decline of the British high street. The Office for National Statistics states that in 2020 there were almost 45,000 hair and beauty salon businesses 1 in the UK (a rise of more than 1,000 since 2019), with barbershops among the top three retail categories that saw the biggest growth in the UK – above supermarkets, coffee shops, takeaways and pizzerias. According to the British Beauty Council 2, £6.3bn was spent in UK salons and barbershops in 2018.

 

It’s important to note that the 259,200 3 jobs that hairdressing creates are not at risk of being replaced by machines as they are with many other industries – once mastered, hairdressing is a skill for life. Instead, this is an industry with a vibrant, diverse workforce that is characterised by a high percentage of female entrepreneurs – 88% of hairdressers are women, and they own and run 82% of the nation’s salons 4 – and that supports many thousands of young people into a career, with almost half the workforce aged 16 to 24 5. As the country begins to rebuild after the pandemic, it will be critical to ensure women and young people have more opportunities to work – hairdressing will be an important part of the puzzle in the recovery of the UK economy post-Covid.

 

But this is not an industry without problems. Growing competition and a saturated market mean salons and barbershops are not only competing against each other for clients, they are also competing for experienced and qualified staff, with salons up and down the country reporting recruitment difficulties. Since 2015, when the Government raised the school leaving age to 18, salon bosses have also struggled to find available 16-year-olds, traditionally a fertile source of new salon recruits. And while the cost of a haircut has not risen particularly in the last 10 years, hikes in employment costs, rents and business rates have dramatically impacted on margins. Owning and running a salon is not as profitable a business as it used to be.

 

Fuelled by social media, which has enabled individual stylists easily and cost-effectively to build and promote ‘brand me’, hairdressing has seen a massive swing to self-employment in recent years – 60% of the workforce is now self-employed 6, and salon owners are increasingly using freelance workers in their business. Those who continue directly to employ their own staff cite unfair competition, highlighting the associated costs and VAT payments, which they often have to pass on to their clients. In contrast, salons with only self-employed people working in them avoid employment costs, employer National Insurance Contributions at 13.8% and VAT, and can therefore charge lower prices.

 

Meanwhile, demand for apprenticeships – once the hairdressing industry’s preferred first step on the career ladder – has dropped by a massive 30% since 2019 7; salon owners say they can’t afford to pay for apprentices, and self-employed hairdressers simply don’t take on and train new staff.

 

On the other hand, with the Covid-19 pandemic having highlighted inequities in terms of those who are employed versus the self-employed, and left so many hairdressers unable to continue working in their salons, it will be important for the future growth of the hairdressing industry as a whole to seek to empower independent people, rather than necessarily trying to employ them.

 

For this report, we surveyed 200 hairdressing businesses (100 salon owners and 100 selfemployed hairdressers) to ask what ‘growth’ means to them, their ambitions for growing more, and what holds them back from realising their ambitions. What follows overleaf is a summary of our findings.”

 

Extract from Making the Cut

You can download Make the Cut here.

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