2016 is one of those years that will stand out in history. We elected a president who many said was unelectable after an election that seems to have divided the country. We also said goodbye to some of the greatest heroes of our time. RIP Leonard Cohen, Prince and David Bowie, just three names among a long list of greats who bowed out in 2016. But we shouldn’t be too quick to embrace 2017. Beside the enormous task of building bridges politically, 2017 comes with challenges that are only now beginning to affect the industry. It’s a sorry list and we need to start discussing how we are going to deal with these challenges.
Gainful employment has huge repercussions for the beauty industry. We discussed it frequently during 2016 and now we are seeing the effect. In October alone last year, one company closed around 75 schools. There will be more. It means there will be fewer certified cosmetologists coming on to the job market, making it harder and harder for us to recruit in what is already an inhospitable environment. I predict it will deteriorate further before it gets better.
Rising labor costs will follow as the labor pool shrinks; that’s obvious.But we are also facing rising Statutory Minimum Wage levels that will have a direct impact on our wage bill. Salons must find ways to raise productivity to offset the costs or profitability will dip.
Team retention will become more difficult, putting salons at risk of losing not just team members but their clientele. We will have to invest more on keeping our teams satisfied, and I don’t just mean wages. We will have to spend more on education and other incentives to keep our teams together.
Salon suites look to be the only segment of the industry that is buoyant, but that isn’t good news for the rest of the industry, struggling to hire or keep good people while facing increasing costs brought by regulatory changes. I’m confident, though, that this segment will begin to approach saturation in the next few years as those tempted to go independent discover the level of commitment and time it takes to run their own business.
Technological innovation will bring opportunity as well as challenge. Software is definitely making it easier for us to manage our businesses more widely and to grow quickly. But keeping on top of innovation will be grueling. Yet if we don’t, we risk being overtaken by competitors more able to embrace new systems or new channels of communication. We could also miss out with the next generation of clients, who seem to dart from one technology to the next. But there are other challenges we have hardly begun to address, such as communication with our team and policing how they present their professional front to our existing and potential guests. I believe this is one challenge we’ll hear a lot more about in 2017.