Over 40% of Salon Managers Report Bankruptcy Risks in Japan

A recent survey conducted by LiIBe, a company specializing in AI utilization training for salon and beauty operators located in Chuo City, Tokyo, has uncovered alarming trends among salon managers in Japan. The survey targeted salon leadership aged between the 20s to 60s, shedding light on their consciousness about bankruptcy risks associated with their businesses.

Background

The harsh economic climate, exacerbated by ongoing inflation and rising labor costs, has posed significant challenges for small and medium-sized enterprises (SMEs) in various sectors, including the beauty industry. Data indicates that the number of bankruptcy filings in the beauty sector could reach a 20-year high by 2025. Rising material costs, coupled with high customer acquisition expenses, are straining profits. In an arena flooded with competitors, passing on increased costs for services to customers is proving to be a formidable challenge. This dual pressure on the revenue model of salons necessitates an urgent examination of the financial landscape and risks involved for salon managers. To investigate these issues, LiIBe embarked on a comprehensive study focused on the cited problems faced by salon managers.

Survey Summary

- Over 40% of salon managers expressed concerns regarding potential bankruptcy risks for their businesses.
- The primary factors affecting their profitability are identified as declining customer visits and repeat rates, along with soaring material costs.
- More than 65% of salon managers reported that they had not raised service prices within the last year.
- The main reason for avoiding price increases was the fear of losing customers, as highlighted by over 42% of respondents.
- Among those who had raised prices, around 30% noted a decrease in customer numbers following the adjustment.
- Salon managers identified improving customer retention as the most crucial area for enhancing profit margins moving forward.