Saturday Essay: Has The COVID-19 Pandemic Taught Us Why Shopping Local Matters?
The Shambles York
As Covid-19 lockdown restrictions swallow footfall and tear away at income that fuels the livelihoods of small business owners and fledging entrepreneurs across the country, once self-sufficient businesses have been forced to concoct new ways to attract income and remain above water.
Business owners dependent on sole business income are being pushed to count their funds, ensuring essential payments can be met. As lockdown restrictions ease and the roadmap out of lockdown sets into motion, this paves a route out for financially distressed SMEs across the country.
After nearly one year of pacing, businesses are revamping their stores to take heed of social distancing measures, rolling up their shutters and opening their doors wide. To recover from the pandemic triggered storm and adapt to the new trading environment overshadowed by remaining lockdown restrictions, we gauge how businesses in Yorkshire are coping.
How are Yorkshire SMEs faring twelve months into the pandemic?
Pontefract. Image by Narcis Ciocan from Pixabay
Quarterly business distress statistics released by Real Business Rescue show that SMEs in Yorkshire exhibited an 11 per cent quarterly increase in significant distress in Q1 2021, equating to 213,583 SMEs in financial distress, placing 42,273 SME jobs under threat. The stark number of employee jobs on the line represents the severity of the current trading climate and the uncertainty that lies ahead. Yorkshire ranks second to last as the region depicting a quarterly increase in distress levels, while Northern Ireland, Scotland and Wales top the table.
As the latest national lockdown in January 2021 rocked the boats of businesses across Yorkshire and the rest of the UK, small-to-medium businesses are likely to have experienced difficulty to build up sufficient cash flow and therefore unable to immediately recover from the impact of the first two lockdowns.
How are North West SMEs faring twelve months into the pandemic?
Image by robcooney1988 from Pixabay
The North West of England exhibited a 14 per cent quarterly increase in the number of SMEs in financial distress, representing 69,815 job under threat. As the latest national lockdown in January 2021 rocked the boats of businesses across Yorkshire and Lancashire, small-to-medium businesses are likely to have experienced difficulty to build up sufficient cash flow and therefore unable to immediately recover from the impact of the first two lockdowns.
As many start-ups continue to live month to month, loosely held together by emergency Covid-19 government support, larger businesses are expected to be cushioned by stronger cash flow for periods of economic uncertainty, as seen with the pandemic.
Shaun Barton, National Online Business Operations Director at Real Business Rescue, said:
"The latest Business Distress Index has tracked the continued troubles that smaller businesses have found themselves in and highlights the impact of the latest national lockdown.
“Most SMEs and start-ups don’t have the resources to fall back on like the more established companies and the early 2021 national restrictions have compounded the overall effect of a very challenging past twelve months.
“This should be a stark reminder that the fallout of the pandemic is still to peak and, despite the unlocking roadmap that is underway, for many SMEs the coming year will continue to present many challenges.”
Twelve months into the pandemic, the number of SMEs in financial distress across the country continues to climb. Overall, 713,000 SMEs are now in significant financial distress, representing a 15% quarterly increase since Q4 2020. This highlights the need to drive a collective effort to rescue the British high street, local independent brands, and fledging businesses.
What sectors have been hard-hit by Covid-19?
The Real Business Rescue quarterly summary for Q1 2020 saw the Support services industry come under increased pressure, closely followed by the Health & Education industry. Of an overall total of 3.2 million SME jobs in significant distress, nearly 600,000 belong to the support sector and 400,000 to the health and education sector. By joining hands to keep the local business scene alive and bustling, the local economy can be protected, and unemployment rates can be prevented from further dipping.
Yorkshire high street businesses set to permanently close shop in 2021 include John Lewis, placing over 200 jobs at risk. As the 200-year-old retailer, Debenhams, also entered financial difficulty, leading online fashion retailer, Boohoo, purchased the website and the brand name in a £55 million deal, excluding physical stores, leading to a string of shop closures.
In light of the pandemic, many businesses may require professional advice on formal restructuring solutions to reconfigure company finances and stabilise operations for the year ahead. From a cash injection, Time to Pay Arrangement with HMRC or a Company Voluntary Arrangement, repairing the financial health of Yorkshire businesses, inevitably hard-hit by the pandemic is likely to be the priority.
Photo by Scott Graham on Unsplash
Failure to seek advice could result in stacking up unmanageable debts, and exposing businesses to persistent pressure from creditors and, as a final resort – formal threats of legal action. The slow deterioration of company finances can eventually present a serious issue to company directors on a personal level. Personal guarantees are often imposed on competitive finance facilities, in turn – offering borrowers access to low interest rates. Failure to keep up with payments could lead to borrowers being held personally liable for the debts of the business as a result.
Active efforts in the media to drive consumers to shop local
As lockdown restrictions hit pause to retail activity and led to the closure of independent shopfronts across Yorkshire, local media organisations claimed responsibility for bolstering the position of local Yorkshire shopfronts throughout the pandemic.
As high street shopping was prohibited during multiple Covid-19 lockdowns, the need was apparent to shine the light on small businesses reliant on passers-by, tourists, and loyal locals. Without a physical presence on the high street or busy shopping districts, businesses were inevitably invisible to customers, therefore eviscerating income.
Yorkshire-based newspapers and online publications –
Many sites compiled a roundup of businesses across Yorkshire that newly introduced an online shopping service, including delivery and click and collect options in response to the pandemic.
North Yorkshire ‘Buy Local’
- Founded by North Yorkshire Council, Buy Local is an online directory that houses local Yorkshire businesses, from one-man/woman bands, professional tradespeople, and small independent companies.
Christmas Markets 2020
Photo by Humphrey Muleba from Pexels
- As Q4 2020 was absent of normal Christmas trading activity typically heightened due to seasonal tourism, local traders reliant on income from Christmas Market stalls were cut off. Following the cancellation of the York Christmas Markets in 2020, this was replaced by a virtual event to celebrate the diverse range of retailers and small businesses across Yorkshire.
As pandemic restrictions reduced the level of advertising exposure these businesses would have otherwise received if shops were open, the website developed as a result of Covid-19 aimed to bridge this gap and provide a suitable alternative.
The common theme embraced by market leaders in the advertising industry embodied that of building a more transparent support system on a local level. By propping up your local economy, you can feed money into the pockets of local business owners, reducing the likelihood of returning to an empty high street due to financial hurdles posed by the pandemic.
Promoting the cycle of shopping local for produce and services
Photo by Anna Shvets from Pexels
Customer reviews and word of mouth can go a long way in terms of promoting local brands and their services. First-hand reviews function as powerful advertising tools for small companies without the ability to direct funds towards online marketing campaigns to gain publicity.
Due to the size of local businesses and independent stores, each sale is likely to impact the take home pay of store staff directly, demanding an impeccable service level.
Whereas spending money at a well-known brand with hundreds of stores across the country is likely to feed money back into the corporation, and less likely to impact the lives of workers or counter staff.
During the pandemic, the government recognised the dire position of locally birthed businesses, shifting their focus towards promoting local shopping. They launched the ‘Shop Local Week’ that celebrated all things local.
Mike Cherry, the National Chairman of the Federation of Small Businesses, said:
“It’s vital now more than ever that we do what we can to support our local small businesses.
“The past few months have been among the most difficult that businesses have ever had and as we slowly reopen, the public can help by supporting their local businesses.
“Whether it’s your local grocer, decorators or florist, they all need the support of their communities in order to survive this crisis and thrive.”
As small businesses reopen their stores with strong hopes to bounce back from the pandemic, the power is in the hands of the customer to enable local business to grow and thrive.
Enhancing local appeal
– As customers top-up the cash flow of local businesses through regular purchasing, this not only creates a demand for recruitment but increases job availability in your area.
By preserving the local shopping scene, you can maintain high street diversity and drive tourism. The character of small businesses represents exclusivity and cannot be established by large commercial businesses.
Due to the operational setup of a small business, you can easily pinpoint the roots of the business, and their origins.
The success of a homegrown local business can drive entrepreneurship on a local level and attract investment. By reassessing your buying decisions during the current trading climate, you can provide a helping hand to local business owners hard-hit by the pandemic. In addition to assisting in their recovery, you can access products that are uniquely crafted and handmade with care.
Keith Tully is a partner at Real Business Rescue at insolvency service provider, part of Begbies Traynor Group. Instrumental in the delivery of business turnaround and restructuring solutions, Keith provides first-hand support to company directors in financial distress across the North West, including Covid-19 business recovery advice. https://www.begbies-traynorgroup.com/