COMMENT AND OPINION | Malcolm Scott
MALCOLM SCOTT OPINION
The KBSA corporate chair looks at the impact of the coronavirus – good and bad, what it has meant for cash other side ready for when the market picks up again
Planning for recovery W
e are in the midst of the biggest pandemic that any in our generation have ever seen, but life goes on and we need to
think of the future.
Some might simply say that ‘my recovery plan is just to survive’, yet for all but the smallest of businesses, recovery will need a lot of planning and discipline, as the recovery period for many businesses will be more dangerous than the actual lockdown period, where substantial government assistance and huge amounts of supplier and customer goodwill make a very difficult period just a little easier.
Retailers who sell appliances online have fared well as they are the only place consumers can buy
Kitchen studios should fare better than many other types of ‘non-food’ retailers during the recovery period, as consumers will have paid deposits for jobs that are already on the books and can at least provide some early work when lockdown finishes. Clearly, it will take quite some time for showroom ‘footfall’ to build up again and this cushion of existing orders will soon run thin. However, most major kitchen channel brands are likely to throw huge amounts of money at consumer promotions to get things restarted.
The construction and house-building sector have been badly affected by the coronavirus outbreak but with a lower incidence of employee furloughing than other sectors of the economy. At the time of writing in early April, 1,945 sites had closed, accounting for 26% of the UK’s total sites, but 65% by value. The larger construction sites introduced strict social distancing. Bigger sites will be quick to ramp up production when the lockdown is lifted. Smaller builders and other housing developers will
quickly follow their lead.
Before this almost-total shutdown, business was reasonably buoyant, but the scale of the economic damage done by the pandemic right across the globe is sure to lead to reduced economic activity for months. Some parts of the economy have, however, actually had a boost from the huge drive to defeat the virus and from the change in consumer buying patterns, as people stock up with food and other essential supplies. Even within our home-improvement sector, those retailers with transactional websites selling appliances have fared well as consumers find that the only place available for the purchase of a replacement for a faulty appliance is the internet.
Since most electrical retailers large and small have well-developed websites, the independent electrical sector has continued to do business, as have the larger multiple electrical outlets.
Homes to offices Large numbers of people have found themselves working from home for the first time ever as companies and organisations have provided support to enable remote working. KBB designers, office workers, administration staff, social workers, marketing and support staff, and a whole host of other occupations, have discovered how to work from home. This might well lead to a shift in how many businesses operate in the longer term – why pay the cost of an office if you do not need one? This in turn might drive through some home-improvement business, as other living spaces in people’s homes get converted to offices.
Going back to planning and what practical steps can be taken, cash flow is likely to be the biggest short-term issue for most businesses as when things restart there will be a lag between ‘more spending’ and revenue coming into the business. So all cash will need to be carefully conserved and difficult decisions made. One of the lessons I have personally picked up from this terrible experience is that businesses can and will diversify quickly to generate revenue. A small local restaurant near my home quickly converted to making premium fresh food boxes – selling all of the ingredients off their menu through in boxes delivered to local homes by them. Many other restaurants have quickly introduced home-delivered menus. Here at Swift, we have approached a whole raft of trade appliance purchasers, such as local authority buying departments and NHS purchasing groups, to try to ensure that we cast our net as widely as possible.
Could working from home become the new norm for many businesses looking to cut costs?
22
I do not have any magic answers, just straightforward commonsense advice. In all business matters, be careful, stay alert and do not give up. Look at what resources you have and make a business survival plan – hold on for better times. Things will get back to normal and until they do, we must all find what business we can.
· May 2020
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