The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Welcome to BoF's Beauty Newsletter, featuring members-only analysis and the week's top news from the front lines of the global beauty business. Subscribe here.
NEW YORK, United States — Salon owner and hair stylist Paul Labrecque has shipped out over 150 custom hair colour touch-up kits in the last week. Typically, he charges clients in New York City, Philadelphia and Palm Beach, Florida $285 for single process hair colour. But in the midst of the coronavirus crisis, the package — which includes colour formula, brushes, and step-by-step instructions for application — costs just $75. He'll even do a FaceTime tutorial.
“People are very desperate to get their colour,” he said.
In the last week, non-essential businesses like hair salons have had to shut down to protect both workers and customers from potential coronavirus infection and to contain its spread. As a result, Labrecque and countless other beauty businesses have had to let their employees go. As of this week, 3.3 million workers in the US have filed unemployment claims. But in the beauty industry, not all hands-on service workers are entitled to payment, and when they are, it's often significantly less than what they were making.
Stylists in Labrecque's salons earn a 35 percent to 50 percent commission on services, as well as tips and commission on product sales. He is putting aside commission for those stylists whose clients are asking for the mail touch-up service in order to provide them with a little extra cash when they come back to work. (He can't give it to them now for fear that it will make them ineligible for unemployment benefits.) He's also concerned that he will stop getting colour shipments from L'Oréal and Wella as supply chains and delivery mechanisms become more snarled. But this small service is not enough to keep the business afloat regardless.
Other beauty pros are doing similar things. Lisa Barbaro is a self-employed hair stylist in suburban Chicago who rents a small business suite in which she sees clients. She’s making root touch-up packages for $25 that clients can pick up from her front porch.
“It’s the tiniest amount of income and keeps everyone from buying something at Walmart and ruining their hair and making much more work for me later,” she said. She said that some stylists in her area have resorted to seeing clients in their homes, flouting social distancing rules in order to keep an income. Barbaro, whose business is profitable, thinks she is better off than many in her profession, estimating that she can survive for another three months on her reserves. She is assuming she’ll have to continue paying rent on her space, though she hasn’t had this conversation with her landlord yet.
According to Behind the Chair, a resource organisation for those in the hair care professions, a recent survey of thousands of their members revealed that 65 percent only have enough reserve to sustain themselves for a month or less.
This is certainly the case for Michael Angelo, who just closed his NYC-based Wonderland Beauty Parlor. He's also sending out hair colour extenders and has put his remaining retail product stock on a Shopify site to sell. "I have a line of credit and I could draw down more debt. But it's out of the question for me," he said. "And ironically, it was our first year of profitability in probably a decade of navigating rocky waters."
This crisis has exposed systemic injustices in our economy and society.
Nail salon workers, particularly in urban areas like New York City that employ a large number of undocumented immigrants, are going to be hard hit. Undocumented immigrants cannot draw unemployment benefits. Additionally, they are already living paycheck to paycheck after years of wage theft by some unethical salon owners. Many of these workers are paid day rates off the books as little as $70, and often make sub-minimum wage even with tips, as a New York Times exposé from 2015 illustrated.
The NY Nail Salon Workers Association just announced the formation of a Covid-19 Relief and Resilience Platform, in which it will solicit donations for nail techs. Thus far it has raised just over $6,000. The organisation is also advocating for government to step in and provide more protection. "This crisis has exposed systemic injustices in our economy and society, and nail salon workers will continue to organise and fight for health, dignity and justice at work and beyond," the association's political coordinator Clara Wheatley-Schaller said in a release.
Some employees at larger companies are faring better, but it's not certain how long that will last. Benefit, which is owned by LVMH, operates over 1,300 Brow Bars and has staff at department stores around the country. It is continuing to pay its employees their base pay and benefits for "the duration of store closures."
Drybar, which has over 150 outposts throughout the country, also laid off its workers. It said in an Instagram post that it would be "providing a Covid-19 assistance programme" but did not give details. Drybar declined to comment.
Employees of European Wax Center, which has over 750 stores (only five of which are corporate-owned), report delayed communication by owners and uncertainty about benefits. One employee who works in the northeastern US and asked for anonymity in order to avoid retribution said franchisees were still expected to pay their royalty fees. “European Wax Center is doing everything we can to support our franchisees at this time and help our franchisees get through this,” Chief Executive David Berg said in an email.
The maximum unemployment payment in that employee’s state, at least until or unless the US makes more funds available to furloughed workers, is $500 twice a month, well short of her normal monthly income. She said at least one wax specialist at her salon was making $85,000 a year, thanks to commissions, bonuses and tips.
Sarah Lester, a European Wax Center employee based in Tennessee, said that full-time employees at her store were being paid their banked sick time pay prior to being laid off, but that she fell a few hours short of qualifying for it. She doesn’t feel she received enough communication from management before the stores closed. “I really enjoy working at European Wax Center, but I think they didn’t handle it right for employees,” she said.
Consumers and industry watchdogs like Estée Laundry have called out some of these businesses for not paying employees through the shutdowns. But many of these smaller businesses simply aren’t liquid enough to do so.
Heyday, which operates 10 facial bars in the US and had about 300 employees prior to the crisis, was criticised by Instagram commenters for laying off employees but starting a fund for clients to send tips and support to those affected. (Many restaurants have taken this approach.) The company will be paying its employees healthcare benefits through the end of April. It’s currently raised about $16,000 via the fund.
In 2018, Heyday raised $8 million in Series A funding, which was used at the time to open more stores and hire. Heyday co-founder Michael Pollak said this time is different from the economic slowdown of 2008, when business softened but there was time to adjust.
“In the case of the current extreme crisis, having to close physical touchpoints means there is a complete cut-off of revenue. Our industry, the beauty and service business, will be one of the later to recover as well,” he said. “It’s just not feasible for a business to hold payroll indefinitely, and the unemployment insurance benefits are a more stable option for our teams.”
In the case of the current extreme crisis, having to close physical touchpoints means there is a complete cut-off of revenue.
He, and the other business owners that spoke to BoF, are hoping to reopen and are actively planning for it during the shutdown. Heyday is running online educational content for employees who want it, as well as strengthening digital initiatives that can benefit customers in the future.
“There is a silver lining in a pause in that you can prepare for some things that help get you to growth that you can’t get to while operating day to day,” Pollak said. “Some of those things we’re going to work on so the team comes back to better and stronger operations.”
Business owners who also sell products may be in a better position than their service-only counterparts to weather this. Sarah Gibson Tuttle, the founder of Olive & June, which operates three nail salons in LA, had to lay off about 50 employees. She also hopes to hire them back.
Olive & June sells nail polish and nail art stickers at Target, as well as a $50 “Studio Box” with tools for at-home manicures. Tuttle said that purchases of the box have increased eight times those of a normal week. She sold more in the past week than during last year’s Cyber Week promotion. Engagement on the brand’s social media and interest in home manicure tutorials is spiking as consumers are looking for comfort and rituals.
Still, the stability of e-commerce also remains uncertain. “We spent the last few weeks looking at every aspect of our business including our supply chain to make sure we’re best positioned here because we want people to be able to order it and receive it,” she said. “There are inherent delays right now.”
Heyday’s Pollak remains positive. “We’re going to need all this again. At the end of the day, people want services, they want human touch, whether that’s from a stylist or makeup artist or aesthetician and that’s going to come back.”
THIS WEEK IN BEAUTY
Wellness brands are talking a lot about immunity. It's a slippery slope, but brands like Goop are trying to provide content and products to consumers to soothe and calm them.
Estée Lauder is making hand sanitiser. The beauty conglomerate publicised the initiative this week, after also announcing it was donating $2 million to Doctors Without Borders.
Unilever is donating a lot. The CPG giant is donating medical supplies, products, and at least $540 million worldwide to people hard hit by the crisis.
Huda Kattan pledges $100,000. The mega-beauty influencer is donating the money to struggling makeup artists.
Beauty companies pitch in against coronavirus. Companies large and small have launched initiatives from donating masks to hospitals to donating soap to homeless shelters.
Douglas is opening up its online marketplace. The European beauty retailer is allowing other retailers and small brands to sell via its e-commerce platform.