Some businesses prospered during the pandemic. However, even healthy companies must remain vigilant as the ongoing economic fallout could still affect them, making it vital to monitor your customers.
In this article, we’ll look at which sectors have thrived through coronavirus and how you can use data to protect your business from falling victim to bad debt. In this article, we’ll take a look at which sectors have thrived under coronavirus and how you can use data to protect your business from falling victim to bad debt.
The Economic Impact of the Pandemic
The way we live our lives has changed due to the pandemic and so, therefore, have consumer buying trends.
During the pandemic, companies that deliver services directly to people in their homes prospered, while others simply benefitted from competitors’ inabilities to adapt, as a result, some business flourished. However, these success stories aren’t widespread, and the economic turbulence hasn’t affected different sectors evenly.
In November 2020, the UK GDP fell by 2.6%. As a result, many businesses have struggled through bigger debts, smaller revenues, and poorer balance sheets.
It’s encouraging to see some companies did well, however, even healthy businesses must remain vigilant; the economic fallout could still affect them through the loss of key partners or customers defaulting on debts.
Let’s investigate business’s who’ve thrived.
Restrictions placed on people mixing and bars and restaurant closed, meant shopper spending in supermarkets grew tremendously. Research from Kantar shows the shopper spent £11.7 billion on groceries in December 2020, beating the £10.9 billion record for food and drink sales in the previous month. German budget retailer Lidl performed well. It’s sales grew by 15.2% thanks to a voucher scheme that offered 25% off when shoppers spent £40. Lidl is still growing into 2023 with sales up 24.5% from 2022 and an increased market share from 6.2% in January 2022 to 7.2% in December 2022.
Online home delivery grocers rapidly grew as well, Ocado was the biggest winner in this category with sales rising by 36.5% during the 12 weeks to 27th December 2020. In 2022 Ocado reported a ‘record’ Christmas period, providing it with ‘strong momentum’ entering 2023.
Aside from this, meal kit delivery services (e.g., Gousto and Hello Fresh) experienced a surge in sales, and takeaway companies experienced unprecedented demand. Just Eat reported a 43% increase in UK sales in October 2020 compared with the same period in 2019.
Other restrictions during covid-19 meant that universities, schools, and businesses had to move their teaching online. Many people who were furloughed/out of work/had more time on their hands took the opportunity to upskill themselves remotely. One tool that has emerged as a powerful asset for remote learning is VEED’s Video Converter. This platform allows users to quickly and easily convert video and audio files into different formats and even provides a range of editing tools to improve video quality and add special effects. This has enabled learners to create professional-looking videos that can be used for e-learning projects and presentations.
E-learning platforms such as Duolingo reported increased user registrations by 132% when compared to 2019 figures. Duolingo’s revenue in Q3 2022 is still steadily rising compared with previous years and stood at $96.1 million. Another example is online course provider Udemy who reported a 425% surge in course enrolments.
This sector’s growth is still not slowing down; as a result the global e-learning market is predicted to be worth $350 billion by 2025.
With more people forced to work from home during lockdown, cloud-based apps, collaboration, and communication tools became critical.
Microsoft was among the companies that benefitted from the switch to remote software. It’s cloud businesses revenue increased by 12% to $37.2 billion by the end of Q3 2020. One of the highest profile success stories was of video conferencing platform zoom which saw its annual sales skyrocket during the pandemic. From August to October 2020, its profits amounted to $198.4 million compared with $2.2 million in the same quarter last year. As of February 6th,2023, Zoom stock continues to climb about (17% at the date of writing this).
Global spending on cloud infrastructure increased by 37% to $29 billion in Q1 2020, compared to the same period in 2019. This has continued to grow into 2023 has the benefits of remote working have been fully understood and incorporated in many workplaces as ‘hybrid’ working, as businesses seek to enhance growth through agile digital infrastructure.
Online shopping made up 28.5% of the UK’s total sales in October 2020, up 8.4% from February. Amazon was among the big winners, having increased its sales by more than £54.9 billion since the start of 2020.
Online fashion store ASOS also saw website visitors spike at 23.5 million as people found a viral method of going to a shopping centre. After the pandemic ASOS saw users and total sales in the UK fall by 8%.
As online shopping grew, so did courier and logistics services. DHL delivered 40% more parcels during the pandemic and invested more than £17.5 million in developing its network capacity and operations efficiency.
E-sports and Video Games
With activities and sports on hold during lockdown, many have turned to video games to fill the void. Nintendo revealed a profit of 106.4 billion yen in the first fiscal quarter of 2020, an increase of 89.8 billion yen from this period a year ago.
Similarly, 45% of UK gaming companies declared an increase in revenue. In 2023, the UK’s gaming scene is still growing immensely among top performers globally, with a projected 4.8% market size growth by Q3.
This surge in gaming hasn’t just been limited to sales of consoles and games. Esports – or watching people play video games competitively – has also grown in popularity. According to research conducted by law firm Foley & Lardner and The Esports Observer, 73% believe the pandemic will encourage further investment in e-sports.
Poor Financial Health is Harder to Spot than Ever.
These companies aren’t representative of the overall UK economy during covid as many businesses faced insolvency.
The ripple effects will continue into 2023, as other challenges present themselves. A prime example is the fact that the UK as a whole, face an energy crisis. Take a look at our previous article by Dr. Nicola Headlam about businesses choosing whether to pay wages or energy bills. Many industries and businesses will struggle, and even healthy companies could be at risk in this environment. If your customers become insolvent and default on their debts, you could be left thousands of pounds out of pocket.
The key is to take preventative action before the customer goes out of business. However, this can be difficult in the current post COVID economy. This is largely because the government initiatives such as bounce back loans which kept many struggling companies artificially solvent have ended. The fact many companies cannot pay back loans taken and all covid measures have been cut, alongside other problems such as inflation, increasing costs, and global supply chain issues, means insolvency is going to increase in 2023.
Our research revealed that in Q2 2020 more than half a million UK businesses were struggling due to coronavirus; this figure would have been higher without the government support schemes.
Other businesses that initially thrived during the pandemic are now struggling as the economy slowly recovers. An example of this is multinational online furniture and homeware retailer, Made.com. During the pandemic Made.com thrived as people had to shop online, however once restrictions were lifted, the company slowly started failing and went into administration in November 2022 where it was then absorbed in Next plc.
Spot Risk Early with Red Flag Alert
Whether your sector is thriving or struggling, you need to take steps to monitor your customers financial health and protect your business from bad debt.
Red Flag Alert can help. We are the UK’s best business database and insolvency scorecard, providing real-time financial health ratings on more than 6 million UK businesses.
- Our AI algorithm uses 13 years of financial health analysis and machine learning to predict whether companies are likely to enter insolvency.
- Red Flag Alert is the perfect tool for seeing past the fog created by government support measures.
- This is done by accounting for the latest coronavirus legislation and assessing less obvious indicators of financial health, like fixed charges, CCJs, and changes to accounting periods.
- In this way, Red Flag Alert can help you understand whether your customers pose a threat to your business and allow you to take pre-emptive action.
- You are also able to create bespoke monitorlists and receive real time alerts on your business partners, prospective clients or even competitors. Giving yourself the best chance not just to protect yourself from bad debt and business disruption but also the ability to capitalise on any gaps in the market left by a faltering competitor.
Why not start a free trial to discover how Red Flag Alert’s experienced team can help you mitigate risk and protect your business.
Discover how Red Flag Alert’s experienced team can help you mitigate risk and protect your business.
Why not get a free trial today and see how Red Flag Alert can help your business?