LONDON, England – Vagaro, the leading salon, spa, hair, and beauty software, recently analysed data from IBISWorld, a leading global industry-market research database, which projects revenue in the hair and beauty sector* will reach £4.6 billion over the next five years.
This growth is expected despite the rising cost of living, and after industry revenue saw a period of decline during the pandemic.
A recent survey of UK hair and beauty professionals, conducted by Vagaro in an ongoing effort to understand the industry’s pain points, shows that inflation has impacted their businesses.
85% of the survey’s respondents said they raised their prices due to inflation.
49% of respondents said their wholesale costs increased by more than 10%, while 45% said wholesale costs increased by 5-10%. Only 4% said their wholesale costs increased by less than 5%.
To ensure growth and to protect the highest level of experience they provide to their customers regardless of the economic climate, 39% of hair and beauty pros accessed their savings, while 16% accessed new lines of credit or business loans in the past year.
“While it's encouraging to see the resilience of the industry despite fluctuations in the economy, it's important for companies like Vagaro to offer service and product flexibility for business owners. Ensuring our customers’ success is the key foundation for capabilities like requiring deposits at the time of booking, which protects them from last-minute cancellations and no-shows. Additionally, we recently launched a flexible funding feature called Vagaro Capital,” says Vagaro CEO, Fred Helou.
Vagaro Capital is a form of revenue-based funding, allowing businesses to secure the money they need to make improvements or grow immediately, with flexible repayment options based on future sales.
Haircuts, colour and highlights remained the most popular services for consumers over the past year, accounting for a healthy 55% of annual industry revenue, while nail-care services come in next at 16.4%, followed by product sales at 14.9%.
This is reflected in Vagaro’s proprietary platform data, which shows bookings for women’s haircuts in 2023 increased by 23% and men’s haircuts by 20%.
The majority of survey respondents said they did not see a decrease in services booked.
Vagaro Brand Partner & globally-renowned beauty expert, Val Garland, says, “Consumers are more likely to spend money on a beauty experience, in the current economic climate because they want to be made to feel special, they want the real-life experience of luxury and pampering that one can only really get in an actual physical beauty environment.”
Despite the current climate, many respondents agreed to the theory of the “lipstick effect,” which is the phenomena that consumers will still spend on beauty and self-care, even during cost-of-living crises.
This is also reflected in Vagaro salon and spa software’s proprietary database which shows beauty and hair appointments on the platform increased by 159% overall, year-over-year, with the most significant growth seen in London (+71.8%), South Croydon (+67.1%), Ilford (+22%), and Reading (+6.9%).
Vagaro Brand Partner and award-winning skincare expert, Lisa Franklin, says, “People often seek comfort and relaxation. Beauty services offer a way for individuals to pamper themselves and engage in self-care, providing a sense of well-being and stress relief, contributing to a person's self-esteem and self-image, which may be particularly important during challenging times. Looking good and feeling confident can have a positive impact on mental health.”
While some respondents strategically reduced their expenses, for example, 28% cut back on products and inventory, and 13% cut back their hours of operation, they have also implemented promotional communication methods via social media, text and email marketing, and by offering special deals and discounts to keep their customers engaged and active.
Professionals should look to resources such as Vagaro’s comprehensive salon and spa software which provides users with complimentary marketing tools to promote their services and sustain their business in a cost-effective manner.
Learn more about the salon and spa software that can streamline flexibility for businesses during fluctuating market conditions.
*Definition of the referenced industry as defined by IBISWorld: This industry provides hairdressing and beauty services through hair and beauty salons and self-employed hair professionals and beauticians. Hairdressing services include hair washing, trimming and cutting, setting, dyeing, tinting, blow drying, straightening and similar activities. Beauty services include make-up, skin care, waxing, facial massages, eyebrow and eyelash tinting, manicures and pedicures.
About Vagaro
Vagaro is the leading salon, spa, and fitness software, serving hundreds of thousands of professionals worldwide. Vagaro simplifies business management, credit card and payment processing, and makes it easy for businesses to grow their clientele on a modern consumer marketplace. Vagaro’s a-la-carte options and affordable pricing provide a unique level of scalability, making it suitable for businesses of all sizes, from the solopreneur to enterprise franchises. Simple, innovative, and reliable, Vagaro empowers beauty and wellness professionals to excel in a digital age. Visit Vagaro to learn more.