3 ways to protect your hair salon through the cost of living crisis
The cost of living crisis is taking its toll on us all. According to the latest insights, over nine in ten people (94%) reported that their living expenses — including groceries, energy and petrol — had risen compared with a year ago. This has prompted a notable shift in consumer purchasing behaviour for a multitude of ‘non-essential’ items, from cutting down on meat to splurges on fashion.
The beauty industry has been often able to weather economic downturns, due to a phenomenon known as the “lipstick effect,” in which consumers continue to splash out on beauty treatments despite financial woes. The reasoning implies that, even though larger luxuries may be out of the question when money is tight, people still need to treat themselves to something small to keep them going.
This is good news for hair and beauty salons, but as a prudent salon owner, you’ll know there’s no guarantee that “lipstick effect” spending will continue to last. However, if you make the right decisions for your business now, you’ll be able to come out stronger than ever after the cost of living crisis eventually ends. Here’s three ways to protect your salon through the economic downturn.
- Cut operational costs
Streamlining your expenditures is essential during a cost of living crisis. However, while it’s tempting to trim expenses wherever you see them, you should complete a thorough audit of your spending first to ensure you do so in the right places.
There are various ways to minimise salon costs without skimping on the quality of your services, from reducing overstaffing to altering your energy usage. Around 7,000 kilowatt-hours of power are used annually by the average small hair salon, but there are real ways to reduce that number and save money. These include switching to LED light bulbs instead of halogen ones and lowering the thermostat on your air conditioner or boiler.
Nonetheless, there are some expenses, such as insurance, that should not be cut back on. Salon Gold’s industry professionals note that “salon insurance is essential for any hairdressing salon. Without specialist insurance, you would be left to foot the bill in the event of any loss or damage to your property or any compensation claim made against you.”
- Raise your prices
It’s all too easy to put off reviewing your prices until things “settle down.” However, with the cost of living crisis to last until the end of 2024, this is not going to happen anytime soon. According to the Financial Times, more than half of salons have already raised their prices. So, if you’ve done the maths and think that doing so yourself will help you survive in the current economic climate, don’t be afraid to make this change.
When introducing any price increases, transparency is crucial. Notify customers via email, your website, and social media, as this will prevent them from being taken aback and feeling duped by a sudden increase in charges.
Afterwards. as Phorest advises, you should “be prepared to answer any questions coming from your clients. Taking the time to chat with them will smoothen the entire process.” You can even go a step further and add value to your treatments with complementary perks, such as take-home conditioning treatments, branded candles or goody bags.
- Broaden your salon services
We might be in tough economic times, but it’s still possible to make higher profits with a few tactical changes. For example, if you’re desperate to fill empty chairs and widen your consumer base, you could consider introducing one or two new or in-demand services to your salon, like hair botox or a new styling trend
When your clients are through the door, upselling can prove to be a powerful tactic to increase your takings. However, as Timely notes, it’s important not to be pushy. “If there’s one thing that will guarantee your client never comes back, it’s giving them the feeling that they’re being sold to the whole time they’re with you. They’ve come to you for self-care and relaxation, so that’s your first priority.”
Ultimately, the more customers that return to you, the more profit you are likely to make. Be sure to ask each and every booking if they want to arrange their next appointment before they leave, and don’t underestimate the value of establishing client loyalty and refer-a-friend programmes.