BID Business Survey Results
The impact of Covid-19 on Leamington’s retail and leisure sector, with a particular focus on independent businesses – key findings from a business survey conducted between 04 April and 08 April 2020.
Summary and key issues
Similar to the tourism sector, the results are stark and sobering. The survey was informed by a wide range of mostly independent retail and leisure sector businesses.
Some 85% have seen a fall in revenue of 80% -100% and 95% indicated a fall in revenue greater than 50%. Critically, taking account of existing support and grants, 84% are experiencing cashflow problems. Also 78% feel that under the current lockdown conditions, they can last no longer than 3 months without further support (12% were less than 1 month).
At this time 88% are temporarily closed and 84% have furloughed staff. Of this, 56% have furloughed 76-100% of staff. Some 66% have opted to defer VAT, though there has been limited uptake of other forms of government assistance, with many reporting problems reaching banks and accessing loans.
Critical concerns for businesses relate to cashflow challenges (including rent, utilities and loan repayments) and attracting customers back. It is very clear that further support is needed, especially if emergency measures are extended, as many have limited capacity to take on debt after facing numerous years of existing challenges. A strategic recovery approach will be essential. Immediate needs cited were more support from landlords (e.g. rent reduction or holiday), VAT reduction rather than deferral, additional financial support, including grants for those that were not eligible (rateable value above £51,000) and a phased end to furloughing (beyond May 31) to avoid future job losses.
Introduction
Covid-19 has created an unprecedented crisis for the region’s business community, with the retail, leisure and tourism sectors among the first to be affected and continuing to bear the brunt. BID Leamington has collaborated with the WMGC’s Research Team and Shakespeare’s England to survey the regions businesses, and this part of the survey focuses on the retail and leisure sector in Leamington Spa. There were 41 responses from mostly independent businesses from a variety of sectors.
Business impact
Some 85% have seen a fall in revenue of 80%-100% and 95% indicated a fall in revenue greater than 50%. Critically, taking account of existing support, 84% are experiencing cashflow problems, even though 95% of businesses in this data received a grant of some kind. Also 78% feel that under the current lockdown conditions, they can last no longer than 3 months without further support (12% were less than 1 month).
Take-up of Business Assistance
At this time 88% are temporarily closed and 83% have furloughed staff. Of this, 56% have furloughed 76-100% of staff. Some 66% have opted to defer VAT, though there has been limited uptake of other forms of government assistance (e.g. Loans, HMRC helpline) with many reporting issues reaching banks and accessing loans. Some also indicated a reluctance to take on debt that they are not confident they can trade out of.
| Job retention scheme e.g. claim for 80% of furloughed employees | 83.9 % |
| VAT deferral | 66.5 % |
| Income Tax deferral (self-assessment payments) | 24.4 % |
| Self Employed income support | 12.2 % |
| Statutory Sick Pay relief package for SMEs | 7.3 % |
| Coronavirus Business Interruption Loan Scheme (CBILS) | 17.1 % |
| Support for Retail, hospitality & leisure businesses: Cash grants of 10K or £25k | 95.1 % |
| HMRC Time to Pay scheme | 29.2 % |
| Please note any other support you have utilised? | 4.8 % |
Key Challenges and Support Needs
Where possible, businesses are attempting to adapt but are limited by commission charges of outside trading platforms (e.g. Trouva, Deliveroo etc), Royal Mail and Courier Company delivery issues and charges. A limited number are doing deliveries themselves however demand is uncertain.
Looking forward, critical concerns for businesses in this sector relate to cashflow challenges (including rent, utilities and loan repayments) and attracting customers back.
If the recovery is not strategic and supported sadly some will be left with no option but to close. Also, if furlough support is not phased out (beyond May 31 or when emergency measures end) many are predicting they may have to reduce staff hours or make redundancies. The concern is that consumers may lack confidence and / or have adapted to online shopping so will need to be enticed back. Strong ‘shop local’ communications with strategic interventions to support social distancing are likely to be needed during the transition period. Many will need a ‘notice period’ to enable time to re-stock e.g. two weeks.
It is very clear that further support is needed. Key areas cited by businesses included:
- Additional support from landlords (e.g. rent reduction or holiday) and / or support for landlords so they can pass this support to their tenants.
- VAT reduction rather than deferral for a period
- Grants for businesses that were not eligible e.g. rateable value above £51,000
- Urgent additional financial support to avoid additional debt e.g. VAT reduction or further grants if the lockdown is extended.
- Phased ending to the furlough period beyond May 31st (assuming restrictions and / or limited consumer demand continues) to avoid future job losses
- A strategic approach to recovery e.g. clear communications, a notice period to re-stock
- Help with marketing, promotions etc. when the time comes.