Millions of businesses thought things would be better by now
As well as affecting millions of individuals and businesses across the UK, the pandemic has also had a funny effect on time itself.
The lockdown, masks, baking tiger bread, watching Tiger King, social distancing and home working all happened in 2020 and 2021 but sometimes it feels like yesterday.
With the ongoing public inquiry reminding us of the events of three years ago – which feels odd just reading it – we’re looking back to see what industries struggled the most during the most unusual and unprecedented two years of our collective lifetimes and which areas of the UK fared better and worse than others.
Positive impacts on business
Health, fitness and wellness
Companies producing health and wellness products including vitamins, supplements and home fitness equipment such as Peloton all saw increased sales during the pandemic.
Peloton became synonymous with the home exercise market with sales of their bikes, treadmills and online fitness class subscriptions after its sales trebled in 2020 with Britons seeking home based exercise equipment.
Since the end of 2021, the company has pivoted to opening its own branded fitness studios in London and New York as well as operating several stand alone retail outlets and concessions within eight John Lewis stores.
E-commerce and delivery
Online retail, e-commerce and delivery platforms such as Amazon and Shopify saw substantial growth as physical store closures and social distancing measures meant more people became reliant on at-home shopping.
Food delivery suppliers jumped on this once-in-a-lifetime opportunity as Uber Eats and Deliveroo were able to kickstart their ventures in the best possible circumstances for them.
The necessity of working from home led to an explosion in the use of video conferencing and collaboration tools.
Platforms such as Zoom, Teams and Slack became essential for remote work, learning and virtual meetings leading to significant increases in users and revenues which has been maintained to this day as more hybrid working patterns continue to be adopted.
Telecom companies benefited from the increased demand as did streaming services such as Netflix and Disney+ as they literally had a captive audience for the best part of two years.
Staring at the same four walls for an extended period of time will highlight any imperfections. It will also hasten the need for change if the colour and style isn’t up to date so home improvement and DIY retailers were also big winners once people were able to return to the stores.
Negative impacts on business
For every sector that benefited from the pandemic, several more faced the negative effects head on and might not have recovered to this day.
Travel and Tourism
When international and domestic travel restrictions were imposed, the global travel industry ground to a halt overnight. Airlines, hotels, cruise lines and tour operators faced precipitous declines in demand even with government support such as staff furloughs and bounce back loans.
Restaurants, bars, pubs and cafes might have had the most difficult pandemic of all sectors. Even when they were allowed to reopen, they had to deal with social distancing measures, reduced consumer confidence and spending, reduced capacity and even temporary schemes such as “eat out to help out” didn’t entirely plug the holes that Covid-19 created in balance sheets and menus.
Theatres, cinemas, concert venues and sports stadiums and venues were all hamstrung due to the restrictions on gatherings and cancellation or postponement of events. We covered how much football teams across the UK were losing through the pandemic but all sports and venues saw substantial revenue losses due to the absence of events.
So why more liquidations?
So why are we looking back into what happened during this era now, three years on from the first lockdowns?
Because new analysis shows that for several businesses, economic conditions are harder now than they were during the pandemic.
Company closures increased by more than five times in some areas of the UK compared to the year before the pandemic with independent firms proportionally seeing the largest rise in liquidations in 2022 compared to 2019.
22,000 companies underwent an insolvency procedure last year in England and Wales alone which was the most since 2009.
|Yorkshire & Humber
Every area saw rises in 2022 over 2019 with 80% of local authority areas seeing rises in their area. Havering in East London saw 40 in 2019 which rose to 205 in 2022. Southend-on-Sea in Essex saw 51 CVLs in 2019 up to 240 in 2022.
Both these areas saw a collapse in smaller construction firms with a third of the losses being in this category.
Derby saw CVLs in their area more than treble from 33 to 108 while Bolton saw their number rise from 224 to 501 with more than half being high street retailers.
Chris Horner, insolvency director with BusinessRescueExpert, said: “The figures show that companies recovering from the pandemic years have been hit by rising inflation, interest rates and energy costs while they are trying to rebuild their businesses and pay off any bounce back loans they took out.
“It’s interesting to note that more independent businesses are choosing to close through liquidation and this is reflected in the regional figures. Cities tend to host bigger businesses so the outskirts and suburbs of big cities and towns where there are more independents face the full effect of these closures.
“Additionally, town centre footfall still hasn’t returned to pre-pandemic levels so independent businesses on high streets all over the country have been affected.
“Administrations and Company Voluntary Arrangements (CVAs) still haven’t got back to their 2019 levels yet which indicates that more directors are choosing to take care of their unsecured debts, including bounce back loans, by closing through a CVL rather than restructuring or recovering.
“But each company is different and while a CVL is absolutely the right call for some, many otherwise viable firms could still have a bright future if they make some short term changes to set themselves up for longer term gain.”
In January 2020 nobody could have envisaged what the rest of the year would look like nor that three years later things might be even tougher for many businesses.
One fact that hasn’t changed is that no matter what situation your company is facing, you can still get some free, impartial, expert advice whenever you need it.
Any director or business owner can get in touch with us and arrange a convenient session with one of our team of advisors to discuss their options.
They will then be able to make reasoned and strategic decisions based on the evidence they supply that will be able to benefit their business in the short and medium term no matter what their ultimate goals are.