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Salon business suffers a blow due to second wave, lockdowns

Two out of three employees in the beauty and wellness industry are women or migrant workers who have been the worst hit due to the extended lockdown.Premium
Two out of three employees in the beauty and wellness industry are women or migrant workers who have been the worst hit due to the extended lockdown.

  • India's Beauty and personal care market is expected to touch $10 billion by 2021 growing at an annual rate of 5-6%, according to a report by Indian Beauty & Hygiene Association. However, most beauty and wellness businesses including salons, spas and barber shops, fall in the SME category

The second wave of covid-19 pandemic and subsequent lockdown has led to a massive dent in business for Avani Yashwin, founder of Bandra-based Happy in the Head hair studio. The decade-old studio, which started taking clients in a phased manner last year to maintain social distancing, has been shut since April.

“I cannot colour or cut someone’s hair over a Zoom call, can I?" she asked. “There is no income, but I continue to pay overheads, including rent and other costs. I’ve also consciously decided to support my staff of 13 people because I know they won’t get work elsewhere. It is a mentally and financially draining period," she said.

Yashwin is among millions of independent salon owners who are faced with the challenge posed by the second wave. Lockdowns imposed by states from the beginning of April have bruised the beauty care business, with even upmarket chains reeling from the loss in business. In the handful of small cities where the business still goes on, there is a palpable fear of contracting the virus while stepping out. This adds to the woes of salon owners because of the cut in discretionary spending.

Enrich, a 22-year-old salon chain, has shut five salons since 2020, bringing its total count down to 83. “The financial impact of the second wave is much more than last year. With so much uncertainty, the patience of those to whom we pay rent, product partners, and service providers has withered away," said Vikram Bhatt, founder, Enrich Salons.

Bhatt said they are generating 15% of revenue by selling products that are being home delivered in cities. “Even though we are making losses, we have not proactively laid off people. There have been salary cuts. We have also got equity infusion, which is helping us sail through this difficult time," he said.

On the other hand, beauty brand Lakme, which is owned by Hindustan Unilever (HUL) and operates 490 salons across India, claimed that it has witnessed up to 50% hit on footfall across the country. “We are leveraging digital technology during the lockdown to train our teams and offer expertise and consultation to our clients," said an HUL spokesperson.

The second wave has forced many small and mid-sized salon and spa businesses to shut shop because of tremendous losses faced and the lack of clarity about the way forward, said Samir Srivastav, chief executive officer, Jean-Claude Biguine Salons India, the local arm of the French salon chain.

“Being an international chain, we have so far managed to stay afloat while continuing to encounter a lot of pressure and uncertainties. In March, we started witnessing a significant reduction in footfall, eventually leading to the government recommended lockdown. Our salons in Mumbai, Pune, and Bengaluru are closed," he said.

The salon chain has launched an online beauty store, Shopatjcb.com, where clients can access premium haircare, skincare, organic products, and accessories, and also avail from teleconsultation services.

The magnitude of business impact of the second wave has been strong with zero footfall and revenue streams drying up, said the professional products division at L’Oreal India, which works closely with 45,000 salons.

“As much as 4-5% of the partner salons had to shut down. There are a few big salons that have consolidated their position in the last one year, while some, which were in loss, have considered shutting shop. Unfortunately, multiple small players could not make it through the first lockdown. We will know the exact impact of the second wave when business is expected to resume by June-July," said D.P. Sharma, director, professional products division, L’Oreal India.

The beauty and personal care market is expected to touch $10 billion by 2021, growing at an annual rate of 5-6%, according to a report by the Indian Beauty & Hygiene Association. However, the majority of beauty and wellness businesses, including salons, spas, and barber shops, fall either in the small and medium enterprise or the unorganised category.

This sector employs approximately seven million skill-based professionals, mostly from the weaker sections of the society, according to industry estimates. Two out of three employees in the industry are women or migrant workers who have been the worst-hit by the extended lockdowns.

Delhi-based 36-year-old beautician Kiran Gupta, for instance, has not been able to fully operate her five-year-old salon in Kamla Nagar in the national capital since 2020. “I haven’t been able to smoothly run the parlour for months either because of lack of demand, staff shortage, or lockdown. Most of my staff has gone back to their native places, and there’s no point in hiring new people when there’s so much uncertainty surrounding the pandemic," she said.

There are both labour and financial problems in this sector depending on the size of the business, Madan Sabnavis, chief economist at Care Ratings, pointed out.

“The owner -driven salons with limited staff members do not have income protection, have rental cost pressure, and face labour issues because of their staff migrating to native places if the business is not operational. The branded salons have high overheads in terms of expensive rentals, salaries, and variable cost. At home beauty service providers who work with online at home service platforms will also suffer because of the lack of demand at this point," he said.

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