At the end of May 2020, when the Indian government began rolling back its two-month-long lockdown, Naturals’ founder CK Kumaravel was relieved. Naturals is India’s largest salon chain, with nearly 700 salons across 92 cities. Anticipating pent up demand, it used the lockdown to enforce Covid-safety measures. With staff trained on new hygiene protocols, it was ready for business.
Kumaravel’s relief soon turned to worry. Instead of “queues” of eager customers, walk-ins were only 40% of pre-Covid levels. Adding to Naturals’ woes, the customers who came opted for ‘door-buster’ services such as haircuts or threading—services that salons usually incur a loss on. High-margin services like hair colouring, spa treatments or bridal makeup found few takers. While hair colouring offers margins of about 25%, bridal makeup goes as high as 400-500%. The business, as things stood, was unviable.
Though touted as recession-proof—the professional beauty and wellness industry grew at a compound annual growth rate (CAGR) of 12% over the last decade—running a salon is expensive. It involves high rentals and fixed overhead costs, and now additional expenses for safety. Kumaravel’s goal is now to survive this year. “Customer behaviour has changed fundamentally,” says Kumaravel, who is also Naturals’ chief executive officer.
This situation is likely to continue until the next financial year, says a senior executive with a Mumbai-based salon chain. They did not want to be named as they weren’t authorised to speak to the media.
While chains such as Naturals may be large enough to weather the storm, many many The Indian Express Salons to stores to cafes: small services stare at end of road Read more smaller salons have already shut.
In contrast, six-year-old home services marketplace Urban Company Urban Company The Ken UrbanClap wants to be India’s first home services unicorn Read more (formerly UrbanClap) sits in a sweet spot. Its business model of aggregating service professionals in a highly fragmented market is tailor-made for a post-Covid world. The Beauty and Wellness segment is already the company’s most lucrative, contributing 55% of the company’s Rs 216 crore ($29.48 million) revenue for the year ended March 2020.
During the lockdown, the company— valued valued Entracker UrbanClap valued at $933 Mn post Series E round Read more at $933 million with investors including Tiger Global and Accel Partners—received beauty service requests from around 120,000 users, according to founder and CEO Abhiraj Bhal Abhiraj Bhal Livemint Urban Company FY20 revenue jumps 103% led by demand in beauty and wellness Read more .