From Amazon and Zoom to your local corner shop: The businesses thriving after six months of lockdown
Reasons to be cheerful have been few and far between for British businesses these past six months.
In the 26 weeks since Boris Johnson ushered in lockdown with a solemn address to the nation, economic news has been almost relentlessly grim. An uncontrolled virus has meant uncertainty, job cuts and — with new restrictions introduced this week — little sign of an end in sight.
But in amongst the gloom, some companies are thriving, reinventing themselves and growing.
Changes to our habits are, it increasingly seems, here to stay: How we shop, exercise and work; where we choose to live, where we go, and the mode of transport we use to get there.
While this upheaval has undoubtedly hurt a lot of businesses and livelihoods, it has presented opportunities too, not least for those companies able to help us live our more socially distanced lives.
How we work
It will shock precisely no one that we spent a lot more time on the internet when shops, schools and workplaces shut down in March. But what is striking is that even as restrictions have eased, we haven’t really cut back.
“We saw a major spike in internet usage over lockdown,” says Tristia Harrison, chief executive of TalkTalk.
“Perhaps more surprisingly, demand has continued to rise even after lockdown ended.”
TalkTalk customers’ internet usage rose 40 per cent between August 2019 and August this year, perhaps partly because fewer people jetted off on holidays abroad.
For Harrison, the jump in internet usage shows that office workers have adapted remarkably quickly to working from home. With the government U-turning this week on its advice to go back to the office, that may be just as well.
“It’s helping us become more productive, almost as if we are now getting five days’ work done in four,” says Harrison.
Broadband companies report that lots of firms have invested in installing dedicated business-grade lines into workers’ homes, suggesting this is no short-term fad.
How we shop
In normal times, around a third of the meals consumed in the UK are prepared outside our homes, at restaurants, school canteens and food-to-go shops like Greggs or Pret a Manger.
With millions more meals being made at home, restaurants have suffered while supermarkets have enjoyed bumper sales. Many of us have been making fewer trips but stocking up more. Others have felt safer staying local, giving a boost to convenience stores.
PayPoint, which provides digital services for 20,000 local stores and newsagents, has recorded big jumps in sales for a host of products.
Household goods sales almost tripled in March and remained more than a third higher than normal in July.
Grocery sales at local shops were up 47 per cent, sales of alcohol doubled, confectionary saw a rise of 22 per cent and sales of frozen foods quadrupled.
“Convenience stores have largely remained open through the crises, and in fact many have been a central support point for their local communities,” said PayPoint boss Nick Wiles.
“What we’re now focussed on is helping stores to sustain that growth and take full advantage of the large number of new and existing customers that are visiting their stores.”
With pubs closed for three months and many people still reluctant to return to them, online wine merchants have also seen revenues rise.
Philippa Strub, managing director of Laithwaite’s Wine toasted an 80 per cent rise in sales at the peak of lockdown as people stocked up “to make all that staying in seem a little more bearable”. The company also saw a big increase in people gifting wine as well.
While that has eased off a little in recent weeks, sales remain buoyant and Laithwaite’s is adding extra capacity in preparation for a busy Christmas season.
Big tech poses a big problem
Undoubtedly the biggest beneficiaries of social distancing have been the big technology firms, with the likes of Amazon, Apple, Microsoft and videoconferencing company Zoom, all seeing their share prices rocket.
Amazon founder Jeff Bezos, already the richest person in the world before the pandemic, has seen his fortune reach a staggering $200bn.
Numbers like these have further highlighted the all-or-nothing nature of many technology platforms, which leads to one or two companies dominating a given sector.
While Amazon is hiring thousands of staff, it will not make up for anything like the number of people losing their jobs in traditional retail. WH Smith, Debenhams, John Lewis, Pizza Express and dozens of other high street stalwarts have made redundancies since 23 March.
Despite levels of government support that no one would have thought plausible at the start of 2020, many more companies are expected to follow suit.
Online, delivery-focused businesses with no physical retail presence employ far fewer people to sell the same amount of stuff.
They also pay less tax.
That raises important policy questions as the country tries to rebuild after the pandemic, says Robert Palmer, director of Tax Justice UK.
He wants government to consider a windfall profits tax on companies that have thrived in recent months. This is not about punishing success but sharing the burden as equitably as possible.
In the longer term, he is calling on the government to rebalance the tax system by increasing corporation tax above its current level, which is low by international standards. There are also growing calls for a crackdown on corporate tax avoidance, which global tech firms have shown themselves to be particularly adept at.
“Polling shows increasing taxes on multinationals would be really popular with voters, including Conservative voters,” says Palmer.
“I think there's a feeling in the business community too that it is important for firms to pay back and contribute.”
Read more
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