Challenges and obstacles in the sector of the hair salon in Spain: analysis, evolution and context

TThe hairdressing sector in Spain has experienced several challenges in recent years, and the COVID-19 pandemic has been just one of them. A little over a month ago, the general media announced that hairdressers were forced to cut 30% of their staff, but at what point did the situation start to become precarious? To understand the current situation in the sector and the obstacles it faces, it is necessary to analyse the context and the factors that have contributed to its evolution.José Luis Azañón, spokesman for the association 'Alianza por la bajada del IVA al 10% a las peluquerías y estética' has spoken to 'Next in Beauty' to explain how the hairdressing sector is currently doing. This same association has been producing a barometer for some years now, which aims to reflect how the aesthetics, hairdressing and personal image sector is doing financially. The barometer of the hairdressing and beauty sector in Spain has become a crucial tool for understanding the economic and employment situation in this field. Since the beginning of the pandemic in 2020, it has been conducted on a regular basis every six months through anonymous surveys answered by owners of hairdressing and beauty salon establishments. These surveys provide valuable data on the sector, mainly in economic and employment terms.VAT reduction and the struggle of the hairdressing sectorAzañón, has made a brief review of what has marked the hairdressing sector in recent years and has hindered its evolution and development. José Luis Azañón, goes back to 2012: "The first major challenge faced by the hairdressing sector in Spain dates back to 2012, when Mariano Rajoy's government decided to increase VAT rates in an attempt to overcome the economic crisis. This across-the-board increase affected various sectors, including hairdressing, which went from 8% to 10% in the reduced rate and from 18% to 21% in the general rate." The spokesperson for Alianza Por la Bajada del IVA al 10% has explained that, "This tax measure generated the first crisis in the sector, with the closure of approximately 8,000 hairdressing establishments between September 2012 and September 2013. These closures were largely due to the direct impact on clientele, which began to decline due to price increases. Although the sector managed a slight recovery between 2013 and 2019, with 5,000 to 6,000 new salons opening, operating margins declined significantly." The association is immersed in the fight for the lowering of VAT and although it has tried on several occasions to get help from the relevant government body, in this case, the Ministry of Labour, after several missives, they have not obtained any kind of response. "Our sector has been the eternally forgotten one. We are a sector of artisans, self-employed and basically self-employed people who risk the little savings they have to try to set up an establishment", said Azañón. The spokesperson also pointed out that, unlike other sectors, price increases are not a solution in the case of hairdressing salons: "There are many people who raise prices as they see that the cash register is empty and that they have no money, but sometimes they do it too late. Our sector has the perfect storm, sales go down, costs go up, what can you do to survive? You can only raise prices. The price increase is something that has undoubtedly also affected the manufacturers of hair products, as is the case of the company with more than 40 years of history, Periche Profesional, who stress that it is essential to achieve the VAT reduction: "There are many factors that affect the manufacturers of hair products and that is why we will do everything in our power to help improve the present of our professional sector. We will continue to support our professionals and to brand Spain outside our country. But as we have said before, lowering VAT is very important, especially with the inflation we have experienced, which has substantially increased the state's coffers, but has reduced the purchasing power of consumers. On the other hand, in the case of salon and hairdressing equipment distributors, such as Dismay, he states that this has not had the same influence as it has had on other companies that are aimed more at the end consumer.Demonstration for the lowering of VAT. Source: RTVEThe spokesperson of the 'Alliance for the reduction of VAT to 10% for hairdressing and beauty salons' also took advantage of his intervention in 'Next in Beauty' to highlight the role of certain professional channel companies dedicated to hairdressing aesthetics. They try to help the hairdresser by giving away different products or promotions. Revlon, for example, has praised the figure of the hairdresser by recognising his or her efforts: "Hairdressers have a great capacity to survive the most difficult times. We are in a very changing economic context and our sector is not exempt, but the good news is that it is growing, especially thanks to salons that are transforming their service proposal, bringing value to customers. At Revlon, we position ourselves as the great ally of the hairdresser and our mission is to help you grow your business and build your personal brand. We want to revalue the figure of the hairdresser and their very important mission of making people happy". Jordi Trilles Regional General Manager Southern Europe REVLON added that he is optimistic about the future. Average number of visits to hairdressing establishments halves in 3 yearsThe arrival of the COVID-19 pandemic and the social containment and distancing measures imposed had a significant impact on the sector. Not only because of the measures imposed to avoid contagion, but also because it has changed people's consumption habits: "People have seen that maybe it wasn't so, so, so necessary that for a long time social events have been greatly reduced, as teleworking has been practised...". Something the association's spokesperson shared with 'Next in Beauty' is that before the coronavirus, the average number of visits to hairdressing establishments was 8.3 visits per year per inhabitant. Today, it has halved to 4.1 per year. "The sector is still at figures 20% below where it was in 2019. What is the problem right now? We understand that people have changed their consumption patterns in a way that we understand may be permanent, and if it's not permanent, it's going to take a long time to recover. Therefore, the operating structures of the sector are changing enormously and the only solution is to increase prices. The only solution. Because if not, the numbers for the sector are not coming out anywhere". This is something that is also corroborated by 'Periche Profesional': "It is true that currently the sector is not going through its best moment and it is difficult to recover. Spaniards have halved their visits to hairdressing salons in the last three years and consequently the drop in demand has meant that the sector's turnover is 20% less than before the pandemic".But this change in consumer habits is not only happening at the salon, but also outside the salon. Consumers, thanks to social networks, believe that they are able to treat their hair themselves. "Indeed, we get cases where they have tried to do the tutorials they see on YouTube, TikTok, Instagram... This happens 10 times more than before the pandemic". Moreover, she especially stresses that the main cause is often bleaching: "they think they can just bleach their hair like that, one after the other, without taking into account if it is the right moment". The black economy in the hairdressing sectorJosé Luis Azañón pointed out that the hairdressing and personal image sector is one of the sectors where the percentage of the underground economy is the highest. Entrepreneurs, on many occasions, are unable to cope with the incessant costs, which are constantly increasing, as are taxes. This forces them to lower the shutters of their premises, but not to cease their activity: "This is especially true in empty Spain, although it also happens in the big cities, but to a lesser extent. In the villages, the person had his hairdressing salon open and provided a service to the inhabitants, and perhaps to a neighbouring village in the surrounding area, but he did not have enough volume to maintain his hairdressing business. This man has decided to close his hairdressing salon, but he has not closed it. In his house, as soon as he enters the first room, he has set up a 'mini-salon' and the whole village knows where the hairdresser lives. What has happened is that this gentleman is tired of losing money having an establishment open to the public because of the great tax pressure he has. So, what did he say? I open an establishment in my house, the whole town will keep coming to my house to get their hair cut, I don't pay taxes and I have a clandestine hairdressing salon. This is happening all over the place in empty Spain". According to the association's figures, the underground economy in this sector is already 20%.

Challenges and obstacles in the sector of the hair salon in Spain: analysis, evolution and context

José Luis Azañón, spokesman of 'Alliance by the descent of the VAT to 10% to the hair salons and aesthetic' explains the precarización of the sector