Harry Mottram looks ahead for ICSM Credit to see what happens to business after the lock down ends
It is not official but little by little many businesses are beginning to reopen in a limited way. Traffic has picked up on the motorways and some firms who thought they were non-essential enterprises have found a way round the dictates from central Government. B&Q have reopened 64 stores including their garden centres while Halfords have reopend the majority of their 460 stores.
Pharmacies, petrol stations, newsagents, bicycle shops, home and hardware stores, launderettes and dry cleaners, garages, pet shops, post offices and banks have remained for the large part open although not all businesses in these sectors have kept their doors open. Supermarkets and corner stores have remained open and parts of the building trade have maintained operations despite criticism.
Various dates have been mooted in the media as to when the lock down will be lifted with the received wisdom being it will be a gradual reopening with schools and garden centres first and pubs and restaurants last. The question is what state will business be in when it happens? Here are a few scenarios:
Early lift-off in May
With the outbreak under control and the depressing death and infection statistics falling to near zero the economy is restarted with a general back to work. Huge demands from consumers for almost all types of products sparks a massive sigh of relief from all and as a result the smallest number of firms going into administration. High Street stores such as Debenhams and Zara reopen and find cash flow streaming back to Christmas levels. Struggling printing companies, sign makers suddenly have an order book of work that guarantees business for the rest of 2020. Despite banks being difficult during the lock down and insisting on commercial loans with high interest rates finance directors realise their revised cash flow forecasts mean they will be back in the black by the autumn and can give their lenders two fingers. All highly unlikely but we live in hope that we might escape the worst.
Trickle back in June
June 1st has been suggested by some in the teaching profession as the earliest date the schools can start to return to normal. Staggered numbers of pupils are allowed back with priority to primary and infant schools – which of course allows the parents of the children to return to work and nurseries and childminders to reopen. At the same time clothing stores, leisure centres for outdoor sports, furnishing and furniture stores, barbers and hairdressers open with some social distancing measures in place. By June with insurers pulling cover on invoicing for firms due to there being a pandemic scores of printing firms, hauliers, manufacturers and engineering companies will find they are insolvent. Large numbers of firms call in the administrators and personal bankruptcies rocket. Don’t expect a U-shape recession.
Too late in July
If there remains a total lock down until July some firms will break ranks and vote with their feet and return to work despite the law. But up to 50% of retailers, 40% of service industry firms and 30% of manufacturers will have gone bust. Commentators have looked to the past to see how damaging a recession that would result with a late return to normal working. The Credit Crunch was bad as were the recessions of the 1980s but such a delay could be more like a depression. Later than July and we’re talking wipe-out for the pub and restaurant trades. Cinemas, night clubs, arts centres, holiday parks and tourist sites will see mass casualties especially if the lock down is reintroduced as a second wave of coronavirus sweeps the country in the autumn. Let’s hope there’s a jab available by then.
These are the personal thoughts of the journalist Harry Mottram so don’t take them to heart but at present it’s hard to see light at the end of the tunnel. What is certain is there will be a major restructuring of business with some sectors unlikely to recover to pre lock down levels. Those who relied on the insurance companies to bail them out as their clients went bust or refused to pay will be disappointed. And those factoring their invoices likewise will have seen this model of payment founder on the coronavirus rocks.
Newspapers have taken a further knock to their circulations with publishers increasingly putting up paywalls on their news websites to up the income. Newsquest has announced all its titles will be monetised this way as a result of coronavirus as the print product continues its decline while 20 weekly papers have suspended publication for the duration of the crisis – whether they reopen is open to question. However with time on their hands the publice have taken to reading books with an increase in sales with fantasy and educational literature doing particularly well.
With pubs and restaurants likely to be the last to reopen sadly the British public have got used to entertaining at home meaning many establishments will have died. The dark kitchen industry is one success story with meals delivered to householders a cheaper alternative to dining out, and deliveries in particular from Amazon but increasingly retail stores who have switched to online like Cath Kidston are increasingly the future.
Home working has become the norm for many firms so expect some companies to cut their losses and give notice to expensive rented suites in fashionable locations with a smaller hub and the staff working from home. Together with retailers deserting the high street there could be a book in converting more redundant offices and shops to flats and apartments. More work for builders, fitters and associated trades along with sign-makers and estate agents.
Firms specialising in working out why people buy certain things online and from particulare websites are on the increase along with one slightly unexpected business growth: in second hand cars. Not the traditional site by the main road with rows of ex-company cars for sale but an online service where you key in the specifications you want and the car is brought to your door for you to take delivery. Cazoo raised £100m last week to expand its operation. Arthur Daley eat your heart out.
They say every economic downturn has an upside. New business models emerge as older industries die off. But the good news is if your business comes out of this pandemic intact and profitable then you have a bright future as competition will be less and prices will be higher.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk