Beauty and wellness industry- hit hard by COVID. What can they do to bounce back soon?
SERVICE INDUSTRY- Beauty and Wellness
Introduction:
Salons, Spas, fitness centers have been among the worst hit during the COVID pandemic. The salon industry in India is estimated to be around 30% of the overall wellness and beauty market, valued at around $3.8 billion (2018). 85% of the contribution to the total industry revenue is made by women, who are also the largest workforce in the Industry. There has been an increase in customer demands for services like facials, manicures, pedicures etc. other than basic services like haircuts, shaving etc. This is attributed to the rising income levels, changing lifestyle of Indians and the increasing importance on appearances and self-care. There has been an increasing demand for grooming and beauty services with a CAGR of (27–37%) in the industry (2018).
The fitness and slimming industry also forms an integral part of beauty and wellness industry. However a large segment of the industry is unorganized with the organized sector accounting for only 28% of the total industry. The same is the case of the beauty industry which is highly unorganized with small, regional and local layers which account for 75% of the industry. The Beauty and wellness sector skill council, which is an NGO formed for the welfare of this sector estimates around 70 lakh people are employed in the sector. During the onset of the pandemic the government had ordered the salons to be shut down which resulting in most people losing their sole income source. Although in many places the restrictions have been eased, owners say that there has been a 50–60% decline in the number of visitors in salons in urban areas, which would be lower for tier-2 cities and rural parts. Although some places like Australia and Japan had deemed haircut as an essential service during the lockdown, India hadn’t done so. And going ahead with the reopening of the industry, there must be a significant change or shift in functioning and customer perceptions in order to bring back it to pre-covid standards.
Post-COVID:
There have been measures taken by the B&WSSC where they had launched an online certification program for precautionary measures, safety, health and hygiene guidelines for the practicing professionals in the beauty industry, however only around 2% of the workforce have registered for it, this would be because of the large unorganized sector.
Even after the pandemic, the beauty and wellness industry will continue to exist and be in demands because people associate looking good with feeling good about themselves. It helps increase confidence, self-esteem and self-regard. Although the work from home scene might prevent people from focusing on dressing up, boredom form continuity and stagnancy would set in and people would understand that looking good and giving attention to grooming is linked to their overall performance and confidence. Self-help and self-care products cannot replace professionals after an extent.
Health related pressures-People will be more concerned about hygiene and precautionary measures taken in the salons and spas like sanitization, social distancing, and the employees heal status and so on. There would also be social pressures on the businesses to focus on these as they are considered as critical to ensure safety of the customers and masks and gloves would be quintessential. There will also be regulatory pressures from authorities and governing institutions to adhere to operating guidelines for the businesses. On top of these there would also be economic pressures for businesses to stay open and cover up the operational and labor costs and still cash some profits.
New expectations:
There will be an increasing demand for visible standards which would include frequent cleaning and sanitizing of the chairs after every use, social distancing from other customers, masks and gloves for all employees, sanitizers, using customer bought scissors or other personal grooming equipment etc. The rising need for standards would mean customers would start moving towards business chains and established businesses with a good brand name, as they would expect a uniform quality of service and conformance to all the precautionary measures and hygiene standards. Large chains are also better suited to afford the costs and deliver increased standards. Individual professionals might have to move to the branded businesses in search of employment.
Technology
Technology being injected to all industries have helped propel growth in them. For beauty and wellness industry as well it would do the same. Cloud based technology, social media, mobile applications and software, data driven management can all contribute significantly to the changing business environment in the industry. Enabling online smart booking of appointments and a dedicated time slot would mean that customers can avoid waiting for the others to finish.
This would also help to reduce interactions with others and help in social distancing. Online payments would also have a similar impact. They can also replace entertainment, earlier magazines, with online entertainment content. There can also be technology deployed in the shop like screens displaying checklists and updates on when the chair was last sanitized etc.
Referrals, reviews and ratings would also undergo a significant change in importance. There will be a shift from the focus on ratings and reviews of the stylist as more and more people would be careful about businesses listed online with an increasing importance for the review of hygiene conditions. Although the fundamental service would require touch, there will be a significant increase in efficiency with the deployment of technology. This would be better enabled with the consolidation of the industry from the unorganized to an organized structure. It would improve business ability and greater buying power for technology.
On demand at home services:
Increasing smart phone and internet penetration and demand for convenience had even before COVID helped to propel an at home service model for the beauty and wellness industry. With more and more people preferring to enjoy the experience from the comfort of their homes. The model helped deploy excess capacity of workforce and also satisfy customers. Customers get the liberty to choose service hours which could include early morning hours even before the shops have opened. The at home service market was estimated to value around $2.7 billion. Aggregators of such services like house joy and urban clap has seen a contribution ranging from 20–30% from beauty services.
The post COVID and present market conditions would increase customer satisfaction for at home services whom they can trust. Businesses can deploy workforce and employees after health checkups like temperature check and other background verification of the employee. Customers would pay for services from trusted businesses. Deploying a mobile self-contained workforce and operating unit in a vehicle or so to certain neighborhoods in preferred days would mean customers could come and have the services done or could request the stylist to visit them in their homes and deliver the service. Serving segments in neighborhood basis would also help monitor the employee and customer health and manage costs efficiently.
Personalization: increasing personalized services can help regain acquaintance with customers lost during COVID. This would include sending customized service plan options to choose from and customized communications, allowing people to book according to their convenience -an in shop appointment or an in house one.
Focusing on altering the subscription models to suit a work from home culture, by reducing the frequency of the visits and including more services in a single appointment would also benefit the businesses. This combined with innovative pricing can drive businesses in the post COVID market.
The HBR article: Want to perfect your company’s service? Use behavioural science by Richard B chase and Sriram Dasu states about how people do not recall every moment of the service or experience, rather only the most significant moments in them. The overall assessment is said to be based on factors: the trend in sequence of pain/pleasure, and the high/low points and the ending. For beauty service industry, which is a primarily experience industry, finishing strong does have significant implication this would mean the services received towards the end of the appointment like collecting feedback, the flexibility payment options available , the ease of booking the next appointment and the courtesy of the professionals.
The duration effect is also considerably important with the article stating that the pleasurable content and its arrangement is what dominates people’s assessment of duration. For salons this would mean, as mentioned earlier, reduce the waiting time for appointments, especially this would make people perceive health risks if they are waiting in a salon for long times waiting for service,. Streamlining the booking and allotment of service slots would hence make a significant difference. Also giving people rituals and repetitive familiar activities can help in service industry.
In the article the experience economy, Joseph pine and James Gilmore talk about the option of mass customization as a good way to transition to the experience economy. Mass customization means creating and combining standardized modules in different ways for each buyer. This can be very well applied in the beauty and wellness industry. Building commitment through choice: Giving people the luxury of options and choices is also important as it tends to make them more comfortable and happier. Option of customizing the service options and picking the time of appointments can go a long way.
Affective route:
The workforce in the beauty and wellness industry are considered as highly committed people. They have a personal bond with their regular customers and enjoy in the satisfaction of the customers, this would be more applicable to the unorganized sector of the industry where the customers and employees are acquaintances. The employees empathize with the clients and cherish the process in helping them look and feel good about themselves.
Recently Gillette launched an advertising voicing its support for the local barbers in a very heart touching video. They focus on the attachment of the customer to the professionals and local barbers and voiced to financially support them during the time of the lockdown. Similarly support from other brands can create an emotional appeal in the minds of the customers. Even for the unorganized sectors, focusing on a positive affect through the interactions with the initial customers and connecting with them would help spread a positive word of mouth.
Diversification:
For bundling services and for mass customization it is necessary to have a diverse set of services offered. For existing businesses which had only limited options it would mean to consolidate with other players from the unorganized sector and to combine workforce under a single umbrella offering an array of different services that the customers can choose from. This would increase awareness among customers about the business.
Fishbein model- Subjective norm
The theory of reasoned action states that the customer attitudes influence behavior by the influence on intentions which are decisions to act in a particular way. In this model subjective norm is the perceived social pressure to act or perform an action. This subjective norm would become more prominent and critical in the present scenario in case of COVID. The first step would be to enhance customer attitude towards visiting salons by ensuring a safe and hygienic environment. The next step would be to allow discounts and increase customer traction when people believe that their neighbors consider it a safe service, their minds will also conform to believe it. Hence increasing confidence in a neighborhood and motivating positive word of mouth is very critical. The current perceptions in the mind of customers as to salon visits being risky and not safe needs to be replaced with a sense of trust and belief in the business and the employees.
Customer Perception:
The most significant change that needs to occur is not only to the business or the industry but also to the customers’ perception. Perception is reality in the service/ experience industry. Replacing the fear in the minds of the customer with trust requires a lot of effort. Deploying technology to conform to the news norms of technology, social distancing, employing a decent healthy workforce, understanding and valuing customer convenience and using operant conditioning to improve the customer learning by positive reinforcements like rewarding them with offers special discounts and impeccable service. Customer attitude drives behavior and hence changing the attitude towards a post COVID service industry one which is personal like beauty and wellness is difficult but the transition is not impossible. It requires great service and dedication.
References:
2. https://www.zenoti.com/blogs/beauty-wellness-in-the-post-covid-19-world/
4. http://ficci.in/spdocument/23105/Wellness-and-Beauty2019_Online.pdf
5. The experience economy- B.Joseph Pine, James H Gilmore
6. HBR- Want to perfect your company’s service? Use behavioural science by Richard B chase and Sriram Dasu
