The IMF recently predicted a fall in UK GDP of 10% in 2020, the biggest fall of any G7 country. Among the hardest hit by Covid restrictions is the hospitality sector. The latest figures estimate the pandemic has cost it £200m a day in lost sales. Sadly, in 2020, 6,000 licensed premises in Britain shut permanently.
The announcement of a third national lockdown sparked concerns that the UK would enter a double-dip recession. The recent extension of this lockdown until the 8th March, at the earliest, underlines an elusive and ever-changing goalpost of normality.
In response, the Government has implemented a new emergency support scheme of non-essential retail, hospitality and leisure businesses. The new support will offer companies a one-off grant of up to £9,000 through to March “to support businesses and protect jobs”.
An estimated 600,000 properties are expected to benefit from the much-needed support package worth £4.6billion. As well as the recent grant announced by the Chancellor, the Government has also implemented a Coronavirus Business Interruption Loan Scheme, a Coronavirus Small Business Grant Fund and Bounce Back Loans. And there are suggestions that more financial support could be on its way for ailing businesses in the Chancellor’s March Budget in the shape of a further extension of furlough and of business rates and VAT support.
Phil Tate, chief executive of CGA, a data insights consultancy specialising in the food and drink sector, asserted: [hospitality] will only be able to [recover] if it gets the extensive support that is now desperately needed to sustain it over the next few months. But while businesses will naturally look to the government for help first, others can play a part too.
The role of big businesses to support smaller businesses through the crisis
Beyond government support packages, a number of big businesses have offered to help shoulder the financial burden placed on SMEs by the pandemic. Amazon, alongside Enterprise Nation, has launched the Amazon Small Business Accelerator programme. The scheme is expected to help 200,000 start-ups and SMEs in the UK. The programme provides a free online diagnostic tool designed to determine the best learning path for the company, depending on the stage of their business.
The scheme also comprises week-long virtual bootcamps designed to train up to 1,000 mostly offline firms, helping them launch into the e-commerce space. Participants have access to a year of support from accredited consultants with regard to operations, finances and marketing.
Doug Gurr, Country Manager of Amazon UK at the time of the scheme’s implementation, assessed: Small businesses are the lifeblood of the economy and by helping them we can help families, communities and the UK bounce back more quickly.
In Summer 2020, American Express also launched its ‘Shop Small Summer’ offer which allowed Amex customers who shopped in small business to receive a £5 statement credit when they spent £10 or more.
Big businesses can also offer the all-important lifeline of brand awareness to SMEs. At Virgin Experience Days, we partner with over 1,000 suppliers ‘ most of which are small businesses. We act as a hub to represent these businesses and a platform to amplify awareness of their offering through the familiarity of the Virgin brand. It’s important we champion experiences run by independents as much as the more established hospitality businesses. The business plays its part by promoting them and subsequently driving a pipeline of sales, product awareness and website traffic, so that they can hit the ground running when they reopen.
Similarly, Burger King took the unusual step of encouraging its customers to order from independent competitor brands via its UK-based social platforms. The fast-food chain called on its 65,000 followers to enjoy signature dishes from other hospitality brands as opposed to its famous Whopper. The move received widespread acclaim.
A hopeful forecast for 2021
Kate Nicholls, chief executive of UKHospitality, is confident the sector can and will bounce back with the help of government and private initiatives.
Tate added: With a vaccine rollout underway there is at least some light at the end of the tunnel, and this sector is well placed to help recharge the UK economy as 2021 goes on. Matt Hancock has also issued a number of positive predictions for the sector, anticipating a ‘happy and free’ British summer.
When restrictions do loosen, a strong and rapid economic recovery, fuelled by strong consumer appetite and financial savings, can be expected. As the UK began the vaccine rollout in December, consumer confidence rose to its highest levels since February 2020. With the sustained momentum of the rollout, consumers will be raring to spend on products, services and experiences they have been missing over the past year.