Professional Beauty Market Outlook: COVID-19 vs. 2008/09 Recession 

COVID-19’s shortterm impact is, without question, greater than the 2008/09 recession.  Will the industry’s post-pandemic performance mimic that of the previous “New Normal”? 

Salons, along with all other non-essential businesses, will be closed throughout much of the United States for weeks, if not months, to come.  While some stopgap and entrepreneurial measures are in place to help stave off business closures (e.g. DIY salon services/kits; virtual and mobile stylists), the economic impact is already significant and, like the pandemic itself, has yet to reach its peak. If the vast salon closures are in place even for only one month, the loss in industry service revenues will be an estimated $5.5 billion. With a recession beginning, consumer behavior and spending in 2020 will shift even more dramatically than it did in 2009. 

Salon Industry Performance Metrics 2008/2009 Recession COVID-19 2020 Outlook
Salon Service Revenues; # of Salons Service Revenues: ↓ 8.3% in 2009 # of salons: ↓ 2.9% Service Revenues: Projected to ↓ 33%* # of salons: Projected to ↓20%*
Frequency of Salon Services Average 8- to 10-week service interval increased to 10 to 16 weeks Similar pattern as the 2008/09 recession once salons reopen
DIY Hair Care (e.g. at-home coloring) Retail sales of traditional colorants ↓ 2.4% in 2009; sales of colorants to salons ↓1.6% in 2009 Salon sales of DIY colorants of personalized formulas will offset some of the salon decline; traditional retail projected to ↑ 3% in 2020
Professional Hair Care Product Sales (through salons and retail channels – online and offline) Sales ↓6% in 2009; also shift to masstige, mass product Sales ↓ of 23%* forecast for 2020; lower consumer discretionary spend; shift to masstige, mass product
Consumer Point of Purchase Mass retailers, specialty retailers (e.g. Ulta) benefited from decline in in-salon sell thru and shift to mass/masstige products Online sales projected to increase from 5% to 10%* SOM due to both salon and retail store closures

Source: Kline Salon Hair Care USA report; Kline analysis; Professional Beauty Association industry statistics. *Kline analysis; likely case scenario forecast.

By 2012 salon product sales recovered to pre-recession levels. Such a recovery post COVID-19 appears unlikely. 

Sales of salon hair care products were flat in 2008 and subsequently declined by over 6in 2009the year most impacted by the recession. Sales growth resumed, albeit at a slow and somewhat inconsistent rate, with more moderate and steady growth resuming in 2012 and thereafter. By 2019, sales reached $3.7 billion, an increase of 3.6% over 2018 and a CAGR of almost 4.0% from 2012. 

Historical Sales Growth of Salon Hair Care Products in the United States, 2008 to 2019

Historical Sales Growth of Salon Hair Care Products in the United States, 2008 to 2019

In 2020, Kline estimates that salon hair care products will most likely realize $2.8 billion in annual sales in the United States, a drastic decline from 2019 performance. Key factors influencing the level of decline include the number of salons and the state of consumer buying power, among other factors. Our outlook for 2020 is particularly bleak in Kline’s worstcase scenario.   

  • Best case: reopening of salons during Q2 of 2020monthly unemployment rates ranging from 5% to 10%  
  • Most likely casereopening of salons during Q3 of 2020, monthly unemployment rates ranging from 5% to 15% 
  • Worst case: reopening of salons in Q4 of 2020monthly unemployment rates  over 15%  

A Graph of Salon Hair Product Sales in the United States

Looking forward, Kline’s bestcase scenario projects salon product sales of $3.4 billion in 2025a CAGR of 1.4% from 2019. 

 

What awaits the United States is not The Next New Normal but The New Reality of a world that is fundamentally changed without a return to business as usual. 

The road back from the economic fallout from COVID-19 will be unlike anything most of us have experienced.  Many businesses that existed as we entered Q1 of 2020 will be out of business and will not return or be replaced. This will be particularly true in the hospitality industrywhich has already witnessed business closures which are devastating the restaurant and travel industry.  The professional beauty business will experience much of the same—a substantial reduction in the number of salons, business closures among marketers and distributors, and more. But such disruption will also create significant opportunities with digital delivery of services and more personalized solutions. And nearterm, there are pragmatic solutions and opportunities to pursue for both the benefit of businesses and for the greater good of the industry and key stakeholders at all levels. 

 

Opportunities Ahead for Salon Hair Care Marketers 

Salons Need Help to Survive  Salons Need Help to Survive 

 

  • Financial support (loans, discounts, etc.) 
  • Business support (payment terms, etc.) 
DIY Products & Kits for Clients  DIY Products & Kits for Clients 

 

  • Root Touch Up Kits 
  • Other Kits, Treatment Regimens
E-Commerce and Local Retailing 

 

  • Fulfilling customer needs online 
  • Home delivery from local retailers and salons 
AI and Social Media 

 

  • Advanced knowledge management tools to understand how your brand (and competitors) are connecting with consumers, what information consumers are seeking, searching during ‘shelter in place’ mode 
Digital  

 

  • Full 360 digital world for product marketers, distributors, salons, and consumers

For a more in-depth analysis on the markets, please refer to our Salon Hair Care Global Series and Professional Skin Care Global Series that cover key market changes and challenges, opportunities, channel drivers, key product categories and new launches regionally and globally despite the harmful coronavirus impact, analysis of which is included in the reports. 

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