Beyond Retail, How Will COVID-19 Affect Storefront Businesses?

Keith Jelinek

Barbershops, salons, gyms and entire downtowns face questions as a result of the coronavirus.

As states start reopening across the country, high-touch operations like barbershops, gyms and salons must grapple with particularly acute health and business risks. The right safety measures—and communicating them to clients—will be key, says Keith Jelinek. He discussed the COVID-19 effect on the broader retail sector in an earlier post.

There’s a lot of analysis out there about COVID-19’s effect on retail. But what about other storefront businesses—barbershops, salons, gyms, etc.? Are they faring any better?

While traditional retailers face a lot of challenges when it comes to reopening—including state and local restrictions, such as occupancy constraints—businesses such as barbershops, salons and gyms are challenged in entirely different ways. They provide services that require some form of contact—even very close contact—with consumers. Each of these organizations must deal with cleaning and sanitization, additional physical space for customers obtaining services (such as providing appropriately six feet between salon chairs and sinks), as well as for customers awaiting appointments.

For example, at gyms, restrictions will need to be placed on the workout spaces themselves—especially for scheduled classes—and the number of customers allowed at a given time. Equipment will need to be sanitized after each use and cleaned thoroughly after each class. 

The other important factor is availability and cost of personal protective equipment for employees and consumers. While most of retail is positioned around self-serve, the barbershop, salon and gyms segment is high service/high personal touch and brings additional operational costs on top of space and occupancy constraints. This will put significant pressure on profitability.

Without the ability to sell online, are many of those businesses even more worse off than traditional retailers?

In a sense, yes, but we are seeing significant innovation. For instance, there is already a tremendous shift to online gym classes for reduced fees, or even at no charge, to maintain customer engagement. We have also seen a significant increase in the sales of gym equipment directly to consumers’ homes and in subscription services, like those offering spin classes. That’s an increased type of competition for the gym on the corner, and it probably won’t go away after the pandemic abates. So finding ways to offer similar services at least until members return to physical gyms is important.

Some consumers will shift to new fitness habits, while others will eventually migrate back to reopened gyms, provided they are confident about their safety. We have also seen an increase in sales of consumer-direct beauty products, as well as at-home hair-coloring kits and electric hair clippers. These are probably temporary shifts, and consumers will switch back to their salons and barbershops as they reopen. 

Many of these businesses have remained important to downtowns and neighborhoods. Should we expect a lot of shuttered storefronts in the coming months?

We will likely see a change in downtowns as many small businesses will not be able to continue to operate, unfortunately. Government-sponsored programs for forgivable loans stretch only so far, and these businesses are also burdened by consumer fears about returning to an environment with high-touch services. Overall, these businesses will likely take more time to recover, and time requires capital to keep the doors open and rent and employees paid.

Is there anything these businesses should be doing to prepare for some semblance of normalcy—perhaps in ways that differ from what retailers are doing?

The most important thing is to stay in constant contact with customers. This might be through email, text, Facebook or Twitter. Letting customers know how they are preparing for reopening, what safety measures they’re taking and other modifications—such as repositioning exercise equipment, space between chairs in salons—is extremely important.

Consumers understand that small businesses are under restrictions and are struggling—and they want to help. They understand that small business is the lifeblood of our economy and extremely important to local and downtown environments. As such, smaller businesses should realize that they can bring a personal touch to their communications—in ways which many large retailers cannot.