SALON 2.0: WHO WILL SURVIVE?

Business models have been restructured in the current situation. Most businesses have incorporated changes that they may have never considered before. The aim has been to survive the race of being the fittest.

What is going to be the biggest change in the salon industry in the coming years?

“None of us have a perfect answer to this question, unfortunately,” says Spoorthy Shetty, CEO, B’Blunt. “All of us have been taking each day as it comes and adapting to it in the best way possible. The pandemic has led all of us to reset our business model and reinvent it.” She further mentions three aspects in the salon vertical that has kept her afloat: rent negotiations, salary restructuring, and judicious inventory management.

Shetty adds, “In the past, we have given a lot of thrust to our top-line. But we have realised that a lot of thrust should also be given to our expenses. Once expenses are in line with the revenue, you have then moved from a fixed to a variable revenue. We have revisited all our plans and reworked them. We have liquidated SKU’s that were not ongoing. Such changes have enabled us to minimise business risks. At BBlunt, we have diversified our portfolios, we have several avenues in place that have helped us stay afloat. We still have not recovered fully but we are on our way."

How have you rebalanced?

The months, specially when the entire country was on a complete lockdown, were extremely tough for the salon industry. And, balancing back and staying afloat has certainly been a challenge for salon owners.

Shetty says, “When the country was on a complete lockdown, all our avenues were shut just like most businesses. But three months into the lockdown, businesses started opening, and since, we have been trying to cash in on the avenues that are generating income. Salons have witnessed a lesser footfall, which has naturally impacted revenue generation. But to balance this, we have deployed our staff to other verticals. Previously, there were instances when we had to say no to work, but now we have the manpower that we can redirect to other verticals.”

Aalim Hakim, Director, Haakim’s Aalim Hair ‘n’ Beauty Lounge, elaborates, “We are still to witness major changes. All these years, I have worked with an old school philosophy and saved up money for a ‘rainy day’. And, this enabled me to pay over 120 employees 100 per cent of their salary all through the lockdown.” He recommends to those in the salon business to start keeping their employees in mind and cater to them as well. “We have major overheads to pay, but there is going to be a major correction in the industry. We will bounce back, and the much-needed correction will be done.”

For newcomers, this is the best time to set up a business. The market is down and if you have the cash and investment for your business, you should go ahead.

Post reopening, have salary structures changed in salons, and how?

Booking profits for any business, especially the salon business is going to be quite challenging. Hakim has adopted a system of lower salaries and higher commissions. He believes, “This helps the stylists stay motivated and work harder, because the more work they do, the more commission they earn. This also helps the salon grow and earn exponentially. If a stylist is getting a 30 per cent commission, salons are earning less than 20 per cent. The salons are bearing the overheads of electricity, cleaning, sanitation, and food. The lower profit margin per ticket for the salon makes it important for them to receive constant foot traffic in every salon.”

Shetty adds, “Salon owners have started realising that having big named stylists on board, tying up with multiple big products chains and having big salons does not guarantee them their RoI. The lockdown has led everyone to spending some time in introspection and finding out what truly needs to be in place to be a profitable business. Salon revenues are so unpredictable that several facets of our revenue model have to be recalibrated. We cannot predict how much we can make every month, due to which, restructuring the salary system is highly needed. We have been paying our employees through the lockdown, so the next few quarters are going to be focused on remaking the money and breaking even.”

Starting something new

While the existing salons are strategising their business and salary models, how would or can new salons go about with their launch and business plans?

According to Hakim, “For newcomers, this is the best time to set up a business. The market is down and if you have the cash and investment for your business, you should go ahead. It may take time to get your RoI, but the market will pick up. Being old school in my business approach, I believe in the quality of my work and have never offered any schemes, discounts, or memberships. Hence, my business model will pretty much still be the same, but I would surely like to incorporate my learnings from this period going forward."

Shetty shares, “BBlunt will continue doing what we have been doing for the past 20 years. Even before the pandemic, we have always prioritised three things: Hygiene and safety; service delivery; and technical expertise. Regaining the clients’ trust on these undamental factors will help with more return customers. Exceeding the expectations of your clients while providing them with services will help them be loyal to your salon.”

These practical tips and survival tactics will help salons consider alterations in their business models and emerge stronger than before.