The spread of Coronavirus has thrown the world into uncertain times – not only in terms of health but business and the economy. As we enter unchartered territory it’s becoming clear that some businesses will suffer more than others, while some, may reap benefits.
With stocks falling and the Bank of England reducing interest rates just this morning, it’s clear we could be heading for tough times.
One major airline has already collapsed (Flybe) with financial problems hastened by Coronavirus and many others are reporting their worries as flights are cancelled. But it isn’t just big business and those floated on the stock market who will be hit – there are reports of many small businesses having to shut up shop, either due to quarantine advice or because they’ve lost custom over the last few weeks.
Most of these businesses are physical stores or offices but there is one area where it seems business may grow: digital.
How Will Digital Firms Fare Against Coronavirus?
It’s been clear for the past few years that high streets are suffering, in part, due to consumers changing their shopping habits. Many people now choose to shop online and over the next few months, it will be interesting to observe how Coronavirus further impacts shopping behaviour.
Already, people are choosing to stay home and not take part in activities they would normally (shopping, eating and drinking). If the UK enters a phase where people are asked to stay at home in large numbers, this will obviously accelerate and have a huge impact on bricks and mortar businesses.
So, if we all get stuck at home, which businesses will thrive? The most obvious are digital subscriptions services, such as Netflix and Now TV. As reported in The Guardian a few days ago, digital content subscription businesses already saw a 12.4% growth last month which has been attributed to the wave of storms that have hit the UK.
Online takeaway and fast food delivery services also saw a boost but it remains to see if that will continue to rise – although the service aspect is digital, food must still be cooked in stores and delivered.
Online shopping giant, Amazon has seen an unprecedented amount of orders over the last couple of weeks too but have struggled to keep up with demand and deliveries are reported to have been delayed.
It is though business support services like Microsoft will also see benefits in the coming months – as businesses scramble to plan for employees to work from home. This effect could boost many businesses of this type, from VoIP providers to project management solutions.
Whilst we are still in unprecedented territory, it’s clear that many digital businesses may fare better in the short term.
How Will The Government Help Those That Are Struggling?
As mentioned, retail business, cafes, bars and restaurants are likely to take the biggest hit, but the government may just have a lifeline.
Over the last few hours, details of the 2020 Budget have been announced – one of which includes a complete suspension of business rates for eligible businesses. Companies with a rateable value of less than £51,000 will be eligible for the tax break.
The news will be welcomed by cafes, bars and other hospitality providers. The government also pledged that businesses will be able to reclaim Statutory Sick Pay costs if employees are off work due to Coronavirus.