Sri Lanka salons in survival battle amid Coronavirus and import controls
ECONOMYNEXT – Sri Lanka’s salons are struggling to make a comeback after a two month Coronavirus closure which devastated their businesses on top of a fall in discretionary spending in 2019, as import controls also placed more obstacles in their path.
“We opened on May 15 after going two whole months without opening the salon,” Priya Rathnayake who runs the Sunpriya Salon in Maharagama, a suburb on Sri Lanka’s capital Colombo said.
“Currently I have less than three employees per salon and it was a struggle since we couldn’t pay salaries. Our clientele was mainly for grey-hair coverage, haircuts and eyebrow threading.”
Under strict rules imposed by health authorities, threading, facials and make-up are not allowed to be carried out.
Rathnayake said the pandemic situation has halted a huge client segment who would regularly visit for hair dyes and grey hair coverage, due to health concerns of that specific age group.
“We were already struggling after the Easter attacks last year, where we had to lay off our junior/assistant staff due to economic difficulties,” she said.
“Just as we started to slowly recover, this pandemic dragged us to rock bottom again. Now we are lucky to get more than four or five customers a day.
“It was a struggle last year too because people were not spending a lot.
Sri Lanka cut rates and injected excess liquidity into money markets in triggering a currency collapse in 2018 just as the economy recovered from a previous crisis, which led to a fall in discretionary spending after the rupee fell from 153 to 182 to the US dollar.
When currencies collapse and people lose the real value of their salaries, credit slows and consumers focus on essentials like food, not discretionary spending.
On top of monetary instability, Islamist suicide bombers attacked several churches and hotels in April 2019, further hurting sentiment and tourist income.
Ratnayake said she asked her landlord for help.
“Because I could not pay the rent I asked the landlord for help, to not charge rent for the two months we couldn’t work.
Her landlord Indrani Embuldeniya is a senior citizen without a pension, who depends on the rent for living expenses and healthcare.
“She asked me and I said ok. I know the problems,” she said. “However, I hope she can pay the rent for this month and maybe catch up on the missed rentals at a later date when the crisis is averted.”
Nayana Karunaratne, President of Sri Lanka Association of Hairdressers and Beauticians (SLAHAB) says there are an estimated 60,000 salons in the country of which about 35,000 are ‘barber saloons’ catering to men.
Over 250,000 person are estimated to be are employed in the sector, she said.
“Salons are okay but the business is very low because we can only do about 50 percent of our services and only 50 percent customers are still coming,” Karunaratne said.
“But we are managing and we are following the government rules.”
She said Public Health Inspectors are coming to check as required and to make sure that rules are enforced.
“They come on and off and check on us they are very strict,” she said.
As the rupee came under pressure amid money printing, Sri Lanka slapped import controls, in a self-imposed economic embargo – the worst seen since the 1970s.
For many small businesses, including import controls are an added problem on top of Coronavirus.
There have been calls to reform on Sri Lanka’s monetary framework so that the country can leave behind import controls which had dogged the economy for over 70 years.
Salons would have also been hit by import controls, but except for some make-up items, industry officials say they can manage.
“Because some of the products, we are heavily depending on imports,” Karunaratne said. “But I think 75 percent of the cosmetics needed can be managed by using local products.
Some local products are of very high quality, she said.
“But specifically, there will be a problem in makeup products such as lipsticks and other makeup because we don’t have a good production in Sri Lanka yet for those products,” Karunatne said.
Salons have also been buying personal protective equipment.
“In the PPE side, we are well prepared, because everything is locally available,” Karunaratne said. “We have at hand very good quality helmets, face masks and towels.”
Priya Rathnayake’s family has been in the business for nearly five decades. Her father started the business in 1972 and she took over in 1989.
At the time Sri Lanka was in the grip of a Marxist uprising, known as JVP troubles, where businesses were closed suddenly amid curfews imposed by the government and also the militants.
“In the JVP troubles also we managed to survive,” she recalled. “But this was worse because we had to lock ourselves at home for two whole months without our only source of income.”
However, industry expert Karunaratne seemed to have a much hopeful picture on the recovery front.
“We have survived much worse times than this so I am very positive we can manage this with this pandemic outbreak as well,” Karunaratne said. (Colombo/June04/2020)