As 2021 comes to a close, let’s take a moment to reflect on the impact COVID-19 has had on the hair and beauty industry in Australia and New Zealand, and the learnings we can take going forward.
We’ve put together this data about the hair and beauty industry from Kitomba Benchmark, a feature of Kitomba Salon and Spa Software that compiles and compares anonymous data from across the industry. It is a great way to know where your business stands in relation to others in the industry.
Let’s take a look at the effects of lockdowns on the average quarterly revenue in both New Zealand and Australia along with positive trends in retail sales and online booking.
How did COVID-19 affect average quarterly revenue?
In June 2021, Australia was hit with the third wave of COVID-19 cases caused by the delta variant. It resulted in local and regional snap lockdowns followed by extended state-wide lockdowns across New South Wales, Victoria, Queensland, and South Australia. In August 2021, New Zealand too went into a nationwide lockdown for three weeks, with the Auckland region continuing to deal with ongoing restrictions. This new wave of lockdowns resulted in closures or restricted operations of the hair and beauty businesses and significantly affected revenues in Q3 2021.
COVID-19 impact on the hair and beauty industry in Australia
Overall, Australia saw a significant drop in revenue across both hair and beauty businesses in Q3 2021 due to the widespread COVID-19 lockdowns. The average quarterly revenue among hair salons in Australia in Q3 2021 has decreased by up to 36% compared to Q2 2021. If we compare to Q3 last year when average revenue returned to almost 2019 levels post lockdown, the quarterly revenue is down by 17%. In the beauty industry, we observed similar trends with the average quarterly revenue per spa or clinic dropping sharply by 44% compared to Q2 2021 and by 37% when compared to Q3 2020.
Average revenue for the hair salons in Australia
Average revenue for the beauty salons in Australia
COVID-19 impact on the hair and beauty industry in New Zealand
In New Zealand, average quarterly revenue in Q3 2021 was affected by a three-week country-wide lockdown in August and an ongoing lockdown in Auckland. In Q3 2021 it decreased by 19% compared to Q2 2021 and by 16% compared to Q3 2020. The beauty industry mirrors these numbers with the average revenue down by 21% in Q3 2021 compared to Q3 2020. The sharp dip in Q2 2020 represents the start of the pandemic last year.
Average revenue for the hair salons in New Zealand
Average revenue for the beauty salons in New Zealand
Retail revenue at hair and beauty salons in Australia and New Zealand
Although this year’s extended lockdowns forced hair and beauty salons to temporarily close their doors or operate at limited capacity, the revenue that comes from selling retail products is positively trending upwards. This change was facilitated by businesses being able to pivot and adopt new ways of reaching their clients by setting up online stores, arranging curbside pick-ups and deliveries. In return, clients showed support to their favourite local salons, spas and clinics by purchasing gift cards and online vouchers to use when salons reopen along with buying their favourite high-quality hair and skincare products to use for self-care while working from home.
When it comes to retail, we’re looking at three main metrics:
- Retail percentage of salons visits which is the number of visits that include a retail purchase
- Retail percentage of clients which shows how many individual clients buy retail
- Retail dollars is the percentage of salon revenue that comes from selling retail products
Retail revenue at hair salons in Australia
On average, around 20% of all visits to hair salons in Australia include the sale of a retail product. In Q3 2021, retail percentage of salon visits that included the sale of a retail product increased by 3%. The retail percentage of clients who buy retail products is typically between 22-27% of the customer base that will buy retail in any given quarter. In Q3 2021, 25% of clients bought retail products.
Retail percentage of clients is slightly higher than the number of visits that include the sale of a retail product, which tells us these customers only buy retail on some of their visits. Since only 25% of clients bought retail, it means that 75% of clients were not successfully sold any retail products.
Retail revenue at beauty salons in Australia
In Australia, on average around 15-20% of all visits to beauty salons and spas include the sale of a retail product. In Q3 2021, it peaked at 25%. Retail percentage of clients shows that 28% of individual clients bought retail products in Q3 2021 which is higher than the average of 23% throughout the year. Overall, there is an increase in the percentage of salon revenue that comes from selling retail products as it’s consistently around 15-18%, but it increased to 26% in Q3 2021.
This upward trend can be attributed to clients wanting to support their beauty salons during the lockdown by buying products from online stores and wanting to use good quality products for their skincare routine at home. However, the data shows that 72% of customers are still not choosing to purchase retail products, which presents an opportunity for beauty businesses.
Retail revenue at hair salons in New Zealand
In New Zealand, we observed that over the past four years the retail percentage of visits to beauty salons and spas stayed the same (on average is around 22%). Meanwhile, the retail percentage of clients (or how many individual customers buy retail) fluctuated between 22-27%. In Q2 2020 the lines crossed, showing some clients were buying retail more often, potentially buying every visit instead of every second. Although it is noted that some customers have stopped buying retail at all. In general, buyer behaviour has returned to pre-lockdown levels with Q2 2020 and Q2 2021 looking very similar and with Q3 2021 trending positively upwards.
Retail revenue at beauty salons in New Zealand
In New Zealand, the retail percentage of visits to beauty salons and spas that include a retail purchase stayed on average around 15-20% which is similar to salons in Australia. The retail percentage of clients stayed relatively the same over the years with 25% in Q3 2021. As shown on the chart, this number peaks every year during Christmas. Overall, the percentage of salon revenue that comes from selling retail peaked at 21% in Q3 2021 which is higher than the usual 15-18%.
Average online booking revenue at hair and beauty salons in New Zealand and Australia
Over the past few years, online booking gained momentum in the hair and beauty industry with more salons, spas and clinics adopting online software to accept and manage appointments, take deposits, and sell vouchers, but COVID-19 has caused a significant growth in the rates of online bookings among hair and beauty clients.
The data below represents the revenue received through online booking. It’s worth noting that online booking revenue levels exceeded the pre-pandemic levels for the hair and beauty businesses across both Australia and New Zealand.
Online booking revenue at hair salons in Australia
In Australia, online booking revenue at hair salons represents 12% of the total revenue in Q3 2021 compared to 9% in Q3 2020. As shown in the figure below, online booking revenue experienced high growth over the last 18 months peaking in Q4 2020 and Q2 2021. It grew by 13% compared to Q3 2020 despite the current lockdowns and business closures across the country.
Online booking revenue at beauty salons in Australia
Average online booking revenue at beauty salons and spas in Australia represents 13% of the total revenue in Q3 2021 compared to 12% in Q3 2020. It peaked in Q4 2020 and maintained higher levels throughout 2021, but in Q3 2021 it decreased by 34% compared to Q3 2020 due to a new wave of lockdowns and stricter requirements for beauty salons.
Online booking revenue at hair salons in New Zealand
In New Zealand, the revenue from online booking at hair salons has been steadily growing since 2018 with a sharp increase at the beginning of the year. Online booking revenue currently represents 13% of the total revenue in Q3 2021 compared to 12% in Q3 2020.
Online booking revenue at beauty salons in New Zealand
In Q3 2021, online revenue represents 16% of the total revenue of the beauty salons across New Zealand compared to 13% in Q3 2020. In Q2 2020, revenue through online booking was negatively affected by the salon shutdowns at the very start of the pandemic but since then it recovered and exceeded the pre-pandemic levels.
What’s the verdict?
The hair and beauty industry was hard-hit during the COVID-19 pandemic as businesses had to navigate through lockdowns, business closures and restricted operations. In this review, we highlighted some of the trends and changes that salons, spas and clinics undertook to not only stay in business but also better serve their clients.
Here are our recommendations for hair and beauty businesses to further continue mitigating effects of the lockdowns.
Take advantage of online booking
If you haven’t set up your online booking, now is the time to do it! There are many advantages to having online booking:
- Accept deposits for online bookings to secure your future appointments and reduce cancellations
- Make it easier for your clients to book with you any time of the day on any device
- Make it more convenient for your clients to purchase vouchers from your salon, spa or clinic
- Add Book Now buttons to your Facebook page and Instagram profile, and turn your followers into paying clients
Setup online store
You can also create your own online store to sell retail products and service packages as well as offer memberships and flexible payment options such as Afterpay. Online stores are a growing trend in the hair and beauty industry and it can provide you with an additional revenue stream.
Sell more retail
Retail sales can make a huge contribution to your profits and are an important part of caring for your clients between visits. Add value to product purchases with a follow-up email containing information on how a client can get the most out of the product. You can also set up another follow-up message to be sent three months later reminding your client that they’re due to re-purchase. If you have an online store, include a link so that they can buy the product online or ask them to come into the salon to purchase it.
Key metrics used
- Revenue: number of client visits x spend per visit
- Average quarterly revenue: the average revenue for the quarter for all salons in the dataset
- Retail % of salons visits which is the number of visits that include a retail purchase
- Retail % of clients which shows how many individual customers buy retail
- Retail $ is the percentage of salon revenue that comes from selling retail products
- Average online booking revenue: the average revenue for the quarter received through online booking
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