Rahul Mishra along with his 10-year-old son, Aryan, stepped out of home for a much needed hair cut after 95 days on Sunday, when the salons opened up in Mumbai. The up-market salon not just ensured a staggered inflow of customers to maintain social distancing, Mishra and his son were given a safety kit containing a cape, a mask and a shoe cover which they were asked to put on before they entered the salon. The stylist who attended to them also changed his safety gear in front of them to convince them that he was sanitised. However, the father-son duo ended up paying almost double of what they'd pay before coronavirus outbreak.
Salon chains across the country are leaving no stone unturned to convince their consumers that they are safe, but a haircut in the COVID era comes at a huge premium. Salon industry stakeholders claim that a 10-15 per cent increase in pricing was already on the cards even before the lockdown. But coronavirus safety kits, which they are forced to offer to their consumers, have made the price even steeper.
"The increase is only to accommodate a hygiene cost for all the safety measures set in place to reassure a safe and seamless experience for the client. I am certain that having implemented constant and consistent manpower to sanitise the space, PPE equipment, safety gear to stylists, staff and clients alike, it's only fair that all salon chains have either implemented a menu price hike or even include the hygiene cost separately as line item on their invoices," points out Spoorthy Shetty, CEO, BBlunt.
While salons in Mumbai have been operational only since Sunday, it's almost a month since they opened up in markets such as Delhi, Bangalore and Hyderabad. After initial weeks of pent up demand, the footfalls in the salons are barely 25-30 per cent of original footfalls. "The initial response was awesome, there were appointments after appointments, but it quickly died out," says C.K. Kumaravel, Founder, Naturals Salon.
"Covid cases are rising in the cities post-lockdown and citizens are being warned by the government that they could re-impose the lockdown if relaxations turn out to be risky. We are seeing a 40-50 per cent footfall decline and that seems to be a trend across all brands as per industry colleagues," adds Bblunt's Shetty. In fact, 90 per cent of customers who availed salon services in the first few weeks have been men. "Customers, especially, women, are being cautious. Most of them have kids and senior citizens at home and therefore, they don't want to take the risk," says Bhupesh Dinger, Director, Enrich Salons.
Also, salons today are only allowed to offer basic haircuts, which gives them low single digit margins (but gives them volumes). Most of the profits come from high end services such as skincare and hair-treatments. Salon chains such as Enrich have invested in video consultations, which according to Dinger has led to a growth in home salon services. He says that there is an increasing demand for home salon services as people are scared to step out of their homes. "Home service contributed in single digits to our overall revenue pre-COVID, and I now expect it to contribute a healthy double digits," he says.
Kumaravel agrees that home salon service will be a huge revenue stream going forwards. "We recently offered a car service to a celebrity since his flat association didn't allow our staff to enter his premises. However, there seems to be a distinct need for home service," he says.
However, BBlunt is sceptical about home services. "We will be wary about getting into that at this point as they are two different channels with varying degrees of risk and 80% of the COVID cases are asymptomatic. For salon chain brands that have an omni channel presence, home services contributes to a very small share of the pie. Home services is a low margin business, so the ROI is not exciting at the moment especially when the cost of doing business has increased. Salon brands will need to hike home service prices if they have to sustain the 'at home' vertical," points out Shetty.
So, will home salon services be a short-term tactical move for salon chains to earn revenue during the lockdown. Dinger of Enrich says that in the long-term people will surely opt for salons to home, as there a host of services which need equipment and can only be offered in the salon. "We have to be adaptable and play quarter by quarter." "We are now having to find solutions for the business to survive in the medium term. We are making a quarter to quarter plan on sustainability as despite lower revenues, the salons will have to make relevant investments in the elevated hygiene and safety standards. To ensure business continuity, we are rationalising costs and taking hard calls on shutting doors where rental discussions with landlords have been unfavourable," adds BBlunt's Shetty.