The global coronavirus pandemic continues to throw the world into turmoil as we enter a second lockdown. Alongside the tragic human cost, both direct and indirect, COVID-19 has hit UK businesses hard. Those that weren’t flexible or imaginative enough to swiftly pivot have either closed or are struggling. Meanwhile, those who are facing soaring demand for their products have had to rapidly realign operations to satisfy changed customer needs.
Airlines, travel firms and retail giants whose business models made it impossible to adapt are among those that have gone to the wall. Altogether, 21,000 UK businesses collapsed in March 2020, a 70% year-on-year increase. Many well-known, long-established brand names have already disappeared in this pandemic. Some, like Flybe, Thomas Cook and BrightHouse, were as a direct result of COVID-19. Others, such as Debenhams, Carluccio’s and Carphone Warehouse were already in trouble and the pandemic has merely hastened the end.
Bonanza for some
But alongside the casualties, there have also been winners. As you might expect, the virus has created a bonanza for manufacturers of PPE, facemasks and sanitising products.
Additionally, with face-to-face contact restricted, suppliers of remote medical services, e-learning apps and e-commerce are all having a bumper year. The increased dependence on online platforms and remote systems access caused by the switch to mass home-working, has had a knock-on effect on demand for ancillary services like cybersecurity and video-conferencing platforms. (Unsurprisingly, Zoom’s share price has soared 41% during the pandemic).
Our increased focus on health and wellness during the first lockdown led to a boom in online exercise classes, so much so that both Nike and Adidas are reportedly fighting for exercise guru Joe Wicks’ celebrity endorsement in a £5m bidding war. Similarly, deliveries of healthy meal kits and on-trend sports apparel from brands like influencers’ favourite Gymshark have also taken off.
Forced to spend more time at home, more than 12 million of us signed up to streaming services such as Netflix, Disney+ and Amazon Prime, with viewing figures for video streaming up 71% on 2019. Likewise, the video gaming industry increased by a net of 4% during lockdown with Nintendo’s profits surging by more than 400% in the quarter to 30 June 2020.
Amid reluctance to travel on public transport, eco-friendly options such as e-scooters and cycling also increased in popularity. This was spurred on by local authority efforts to support social distancing by prioritising pedestrians and cyclists.
Supermarkets are another beneficiary of our curtailed social lives. With online grocery sales increasing by 129% week-on-week in the UK and Europe, they’re expected to add £5bn to UK e-commerce sales this year, bringing the total to over £78bn.
It will come as no surprise that ‘go-to supplier of everything’ Amazon predicts double-digit year-on-year growth with third quarter sales expected to be up between 24% and 33%. Cardboard manufacturers are among the more unexpected sectors to benefit from the e-commerce boom. Some have been forced to switch to round-the-clock operations to handle the phenomenal growth in orders from their e-commerce customers. And with non-essential shops closed for a second phase of lockdown, e-commerce will be a lifeline for retail businesses.
What lessons can businesses learn?
Although the winners and losers span a variety of sectors, they all share certain attributes.
Firstly, they understand the importance of getting the fundamentals right, laying firm foundations on which to build. We’re talking here about accounting basics, automation and robust management information that enables them to make informed risk management decisions and capitalise on opportunities that present themselves. Our Build and Scale programmes do just that for clients.
Secondly, they are flexible, agile and in touch with their markets, allowing them to pivot.
Thirdly, they follow golden rules used by the world’s consistently top-performing companies when faced with making difficult decisions, namely:
- Better before cheaper (creating the best value for the customer)
- Revenue before cost (focus on increasing revenue even if this means incurring higher costs)
Pitfalls to avoid
Square Mile Accounting has identified seven common reasons for business failure, three of which are particularly relevant in this pandemic:
- Being resistant to change – Having highlighted the importance of flexibility and agility, it may not surprise you that one of the leading causes of business failure is being resistant to change. Square Mile founder David Gormer explains, “If you can adapt and embrace change, you’ll stay ahead of the curve. The most successful businesses are the ones that assess what their customers actually want. This needs to be a continual, iterative process, especially when markets and customer behaviour are changing – as is the case now.”
- Building your product or service in a cave – In other words, being out of touch with what customers actually want. Leaders can be too close to the business to objectively analyse whether there is a market for its products or services. What may be perfect in their eyes may be completely off the mark in the potential customer’s eyes.
- Not focussing on your people – Businesses often underestimate the importance of creating an environment in which employees feel valued, listened to and involved in the company. Yet a positive working culture helps build the business’ brand identity, which is essentially its reputation and how people outside the organisation view you.
Help at hand
If you’d like to discuss any ideas arising from this article, email firstname.lastname@example.org or pick up the phone for a friendly chat with the team. We’re here to help your business get through this pandemic.
This is the first article in a series analysing the factors behind business success stories and highlighting interesting trends emerging from this pandemic. Watch this space!
Click here to download our free guide Mistakes start-ups are making and how to avoid them
 Ofcom annual study 5.8.20 https://www.bbc.co.uk/news/entertainment-arts-53637305
 Durham Box 31.8.20 https://www.durhambox.co.uk/insights/blog/details.aspx?positionId=105