Professor Lawrence Bellamy is warning that the damage from Covid could rival that of the 2008/9 global financial crisis.
IT could take the country a decade to recover from the long-term change in people’s consumer habits and the economic damage done by the tightening national Covid-19 restrictions, a University of Sunderland (UoS) expert has warned.
Professor Lawrence Bellamy, academic dean of the Faculty of Business, Law and Tourism, said: “There are businesses at risk, and some will not survive.
“It is entirely possible that, depending on the restrictions applied, prolonged constraints upon a sector are likely to cause a shock impact, in which consumer habits are permanently changed.
“Our consumption for online has certainly accelerated, within a long-term trend of shifting this way.
“The issue of how this will hit the economy long-term depends upon how quickly it can adapt. We will continue to lose businesses, there will be less city centre footfall, where workers stay at home, and an increased demand for home entertainment, home delivery and holidays in the UK perhaps?
“However, this is a percentage shift. What happens is that as demand falls in product and service areas, then it often increases in another and good companies will respond accordingly by repositioning. The caveat being, of course, about the total demand.
“If that falls, as it has done, then recovery can be a very long road indeed and the 2008/9 financial crisis really took around 10 years to get over.”
Prof Bellamy added that ironically, in the run-up to Christmas – the very point at which businesses traditionally enjoy bumper trading – some could be going bust.
He continued: “Even the 10pm curfew was a substantial impact for restaurants; one sitting, not two, for example, on top of reduced covers due to social distancing. This is a contrast to Help Out to Eat Out, which was a very successful initiative for many.”
Prof Bellamy believes a tightening of restrictions could be the final straw for organisations which have suffered heavy financial losses over the past months, and reduce the vibrancy of the sector through less choice and competition.
He continued: “Whilst the Government has committed to further support, this cannot mitigate all eventualities and we know that some businesses – your lunchtime coffee shop, Sunday pub lunch, Friday night cinema and restaurant trip – all rely on footfall being driven by regular custom and set patterns of consumer behaviour.
“Breakpoints in behaviour are sometimes hard to regain, as people develop new habits. Online continues to be a winner throughout all of this.
“Those businesses which are likely to negotiate through this difficult period will successfully bring confidence to their customers that they are operating safely, and adapt their product and service to meet new kinds of opportunities.”
He added that “flexibility and responsiveness are everything” in business survival, with companies which embrace new ways of working and reaching customers online the most likely to survive.
“Many have predicted a potentially severe second wave: not all businesses, however, will have been prepared, with the weakest likely to leave the market,” he concluded – adding that: “Perhaps local insight and controls would be the most effective decision-making position under a varied regional picture.”