While the UK is beginning to ease the coronavirus pandemic lockdown, every industry is now assessing the impact of the crisis. Data from the Office for National Statistics (based on a sample of 17,500 businesses across sectors taken between 6 and 19 April) found 75.2% were continuing to trade, 24.3% had paused trading, and 0.5% had permanently ceased trading.
In the retail and wholesale sector, 64% of businesses reported falling sales, including 33% that had seen sales fall by more than 50%. This reflects both the closure of non-essential goods retailers and the widespread switch to online purchasing. Some 73% of businesses in the sector said they were interested in the Coronavirus Job Retention Scheme; 60% were considering deferring VAT payments; and 45% were looking at business rates holidays. On the latter, retailers welcomed the announcement that next year’s planned revaluation of business rates will not take place, which should reduce at least one source of imminent uncertainty.
Business confidence amongst retailers and wholesalers has proved relatively resilient, with 72% of those continuing to trade expressing confidence they have the resources able to remain in business throughout the pandemic. Fewer businesses in the sector said they required a loan than in other industries and demand for rates holidays was also lower. It’s clear that the pandemic has underlined the importance of so many retail and wholesale businesses to the UK economy – they have continued to trade to serve their local communities.
Separate data from GfK also provides some grounds for optimism. Its headline consumer confidence measure rose by a single point last week, albeit only to minus 33. Interestingly, the index is six points higher than the low point recorded during the global financial crisis in July 2008. It’s also significant that GfK reports a slight uptick in its major purchases index (up three points to minus 49), which may indicate there is pent-up demand with non-essential shops having been closed since 23 March.
Strategies for the new normal
The world is likely to look very different following the pandemic and many businesses are now beginning to think about how they will adapt to the changing operating environment.
In physical retail, certain retail parks have fared better than high streets and shopping centres in recent years, with consumers taking advantage of free parking and larger stores. The pandemic could accelerate this trend, given that many retail parks and larger supermarkets have remained open.
Online, meanwhile, we continue to see innovation. For example, we saw a large online UK retailer announcing a new partnership with an Asia Pacific airline, which is an initiative trialling dedicated cargo plans that link its global production and distribution centres, with other airfreight services so disrupted.
The question for many retail and wholesale businesses will be whether the changes they are seeing in key markets are transitory, and likely to be reversed following the crisis, or more long-lasting. Many are taking the latter view, which is why groups such as The Hut are taking radical action.
How Santander can help
We’ll discuss these ideas in more detail during next week’s Santander Industry Webinar, which will focus on the Retail sector. Our panel will discuss exit strategies and what we can learn from global best practice, including examples from Asia-Pacific markets. Details of the webinar will be shared next week.
At Santander, we believe it’s important to recognise that brands will be remembered for how they act now. For our part, we’re continuing to look at how to serve clients better – initiatives to support retail and wholesale clients (in addition to our Trade Club and wholesale & retail International connectivity proposition) include:
- Santander Retailer Offers – we’re offering brands to sell their excess stock online through our Retailer Offers programme, which enables around 2.7 million Santander personal customers to earn cashback when shopping at selected merchants. Visit our website for more information.
- Liquidity management – for businesses selling essential goods and experiencing increased demand, we’re offering targeted support for short and medium term liquidity management to make sure they can optimise returns on surplus funds.
- Elavon’s e-commerce proposition – this initiative, provided via our partner Elavon, can get clients that have not previously traded online up and running with an ecommerce website in just 24 hours (subject to credit checks). The first three months’ platform expenses are waived. Our business support programme – Survive and Revive give further details.