Wondering what impact COVID-19 has had on the hair and beauty industry in New Zealand and Australia? We dove deep into the data to find out.
We sourced 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 so you know where your business stands. Historical data from 2016 to 2019 was also used, and we compared Q3 2020 with Q3 2019.
The result? An insight into the effects of lockdowns in both New Zealand and Australia, and predictions and opportunities for the future.
The impact of COVID-19 on total daily revenue
We looked at the impact of COVID-19 lockdowns on total revenue for the New Zealand and Australian hair and beauty industries on a day-to-day basis, which is made up of both services and retail spend.
COVID-19 impact on Australian hair salons
Australia saw a significant drop in revenue at the beginning of April 2020 due to COVID-19 restrictions. Although some salons were allowed to remain open due to different rules in different states, many closed their doors.
Restrictions were lifted in June which saw revenue return to almost normal levels when compared to Q3 2019.
The exception was Victoria, which entered a second lockdown in August. To get a better picture of Australia’s recovery post lockdown, we removed Victoria from this graph. The first two peaks and dips are the Christmas and January periods for 2018 and 2019. This is followed by lockdown in Australia, and its recovery.
Victoria’s first lockdown was short and had rolling, easing restrictions, but the second lockdown was a complete lockdown. The end of Victoria’s second lockdown saw pent up demand with peaks that almost rivaled Christmas in 2019, even with social distancing and cleaning restrictions in place.
Victoria had an impact on the rest of Australia, pulling down the overall averages. However, after Victoria’s lockdown the recovery can be seen across the country.
COVID-19 impact on the Australian beauty industry
The Australian beauty industry saw much stricter restrictions than the hair industry, which resulted in a more prominent dip in daily total revenue during lockdowns.
The Australian beauty industry (all salons)
Victoria’s beauty industry
What about New Zealand?
New Zealand’s lockdown caused a dramatic drop in client spend from 25 March 2020 due to all of New Zealand going into lockdown, resulting in all hair and beauty businesses closing their doors. However, there was a post lockdown boom in June, which then settled to almost normal spend compared to Q3 in 2019.
Auckland entered a second lockdown in August, which led to another drop in total daily revenue. However, this returned to normal levels again after restrictions were lifted.
COVID-19 impact on New Zealand hair industry
COVID-19 impact on New Zealand beauty industry
What happened to quarterly average revenue?
There was a decline in average quarterly revenue for both countries and industries during lockdown, which was mainly driven by visit numbers dropping. However, there was a rebound in revenue post lockdown for both Australia and New Zealand.
Average revenue for Australian hair salons in Q3 2020 (excluding Victoria) returned to within 5% of Q3 2019 levels post lockdown.
As for the Australian beauty industry, revenue dropped sharply in Q2 due to lockdown, but in Q3 2020 average revenue bounced back to within 7% of Q3 2019 levels. This bounce back is in spite of a protracted lockdown in Victoria and indicates the other Australian states are performing well ahead of Q3 2019 levels.
Average revenue for Australian hair salons (excluding Victoria)
Average revenue for Australian beauty salons
Average revenue for New Zealand hair salons
As for New Zealand, average quarterly revenue returned to normal Q3 2019 levels after lockdown for both hair and beauty businesses.
Average revenue for the New Zealand beauty industry
A spike in client average spend
Client average spend spiked after lockdown in both New Zealand and Australia, and has remained elevated compared to previous years, which is fantastic news for our industry.
This is the average spend per visit and may be made up of retail and services, or just retail or services. It’s the total revenue of a salon divided by the number of visits.
Post lockdown saw increased demand for retail in both Australia and New Zealand, with clients buying more items per visit, more notably in the beauty industry.
Client spend for Australian hair salons (excluding Victoria)
Victoria went into a second lockdown, which reduced client spend after the first post lockdown peak. However, the rest of Australia (excluding Victoria) then saw increasing average client spend.
Client spend for the Australian beauty industry
Average spend per beauty client has grown steadily (at around 5-7% YoY) between Q3 2017 and Q3 2019, but has kicked up sharply since lockdown.
One theory is that limited supply and pent up demand following lockdown resulted in more clients having multiple treatments within each visit, which drove up average spend per visit.
A positive trend is that the average spend has stayed elevated into Q3 – beyond the initial post lockdown boom.
Client spend for New Zealand hair salons
Client spend for the New Zealand hair industry reduced slightly after the post lockdown peak, but was still up from Q3 2019.
Client spend for the New Zealand beauty industry
Average spend per customer has grown slowly (at around 3% YoY) between Q3 2017 and Q3 2019, but has kicked up sharply since lockdown.
Similar to the Australian beauty industry, this could be due to limited supply and pent up demand following lockdown, resulting in more clients having multiple treatments within each visit, driving up average spend per visit. The average spend has stayed elevated into Q3 – beyond the initial post lockdown boom.
What’s the verdict?
So what does this information mean for the hair and beauty industry in Australia and New Zealand?
Based on this data and the trends we are seeing, this indicates the hair and beauty industry should see a healthy recovery after COVID-19 lockdowns. However, here are our recommendations for salons, spas and clinics to aid their recovery post lockdown.
1. Attract new clients
Based on historical themes the market was getting crowded. 2017-2019 saw an anecdotal increase in new salons, which led to a downward trend in the number of clients per salon.
During COVID-19 we saw an increase in the number of salons closing. Now there is less competition, so the client base of salons may grow and visit numbers may increase.
There will be clients out there now without salons, so make your salon, spa or clinic their new local.
Demand for hair and beauty services and retail has increased as a result of COVID-19 and supply has been constrained, which means there may also be an opportunity to increase prices.
2. Look after your loyal clients
Make sure you’re looking after your loyal client base. The data tells us that, on average, regulars make up 15-17% of a hair salon’s client base, and 40% of visits come from 15% of clients.
Rebooking is still as important as ever, and always aim to reduce your client revisit period.
Spend spiked after lockdown and has remained elevated compared to previous levels, so make sure you’re driving upsells like colour, treatments and retail, as there is still room to grow.
Clients are buying more retail items per visit, so track what clients buy and make sure you can continue the trend each visit.
Also don’t forget to regularly revisit your pricing, because the data shows prices are slowly increasing across the industry.
4. Offer online booking
Be aware of client behaviour changes. COVID-19 has developed more appetite for online options across a wider base. Our Online Booking data shows a marked increase in the percentage of bookings made online.
Over 50% of online bookings are received outside normal salon hours, and both Australia and New Zealand have very similar ratios. If you don’t offer online booking, now is a good time to start so you don’t miss out on potential clients.
How this data was collected
The data outlined in this article was sourced from Kitomba Benchmark, which is a feature of Kitomba Salon and Spa Software that compiles and compares anonymous data from the hair and beauty industry. Historical data from 2016 to 2019 was used, and we compared Q3 2020 with Q3 2019.
Key metrics used
Revenue: number of client visits x spend per visit
Client average spend: This is the average spend per visit and may be made up of retail and services, or just retail or services. It’s the total revenue of a salon divided by the number of visits.
Average retail spend per client: This is the average amount a retail client spends on retail. If a client does not buy retail they are not included. It includes both walk in retail clients and appointment retail. It is the total retail revenue divided by the number of visits in which a retail item was purchased.
Total daily revenue: Total revenue from every salon across the dataset for that day.
Average quarterly revenue: The average revenue for the quarter for all salons in the dataset.
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