On 12 April, non-essential retail, gyms, hairdressers, and outdoor hospitality businesses will be allowed to reopen as the nationwide lockdown is eased further. Azets partner and SME specialist Donald Boyd said:
“In 2008 certain banks were too big to fail. And now the SME powerhouse of the UK is too big to fail as a result of the pandemic. We’re all breathing a sigh of relief as some semblance of normality resumes, but businesses reopening face many uncertainties.
“We hear from SME clients across all industries that their main worries include: Retail desperately trying to transition from bricks and mortar to omnichannel while demand has tanked; hospitality and tourism dealing with a customer demand wasteland through social distancing, movement restrictions and changed attitudes; manufacturers and exporters struggling with supply chain restrictions and wholesale Brexit uncertainty; technology and global businesses facing decreased demand and investment as the globe plunges through recession and skills shortages through Brexit and Covid international immobility.
“CBILs, Bounceback, HMRC deferral, JRS, JSS continue to support Covid affected businesses. However, this support will fall away and businesses will have to find a way of servicing debt levels, during a deep recession. Many previously viable businesses will topple over the edge by this debt burden. The logical next step to support viable businesses struggling under the pressure of debt, unable to refinance or invest for growth, would be to turn the government’s passive equity stake into a real one. CBILS, and perhaps some HMRC debt could be converted into equity under the umbrella of a state backed investor. This would allow viable debt burdened businesses to raise additional debt or equity, provide an eventual return to the taxpayer and encourage and deliver investment for growth as a partner investor to private equity and banks. The time for Government and Business to work together in a focussed and agile way has never been so pressing.”
Azets Clients’ views
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By GlobalDataWhiskey Shop, a boutique whiskey retailer with 20 shops across the UK, managing director and co-owner John Beard said: “With 22 shops across England and Scotland we are confident about a medium term recovery, but need domestic staycation tourism to offset this year’s shortfall in international visitor hotspots such as Bath, London, York and Brighton. We are still to reach agreement with some landlords which remains a real concern, but all our stores will be up and running from April 12th, optimistically building towards June and the Father’s Day peak. Physical stores are at the heart of our whisky business, with customers eager for the reassurance from our trained whisky experts on which bottle to choose. Whilst we have seen a tremendous boost online over the last twelve months, nothing beats a friendly face offering a complimentary dram.”
Greensleeves Music, a music shop based in Northallerton, founder Iain Margetts said:
“We have many challenges with reopening from the 12th of April, mainly due to the supply of goods. Since the first lockdown, many people have chosen to pass their spare time by taking up an instrument which quickly exhausted supplies of stock within both the UK and Europe. With the pandemic affecting every country around the world – we have seen factories reduce output and there are also many shipping issues from the Far East including cost and availability. We also have well known suppliers who have stopped supplying outside the USA.
“This all means we will have a lot of demand for goods, with no timeline of supply. Also, with the majority of our major suppliers having centralised hubs in Europe, we have had to overcome significant hurdles in the last three months, with even more coming this year. The knock on effect has led to lead times changing from around 3 days to around 3 weeks. This will present a challenge to retail, as customers have come to expect both plentiful supply, and immediate satisfaction. We are still very uncertain about the future as we cannot predict demand or supply upon reopening.”
