How to mitigate economic uncertainty – act now to recover

by | Sep 14, 2022

The Local Data Company reports a recovering retail and leisure sector. However, as businesses prepare for impending economic uncertainty, leaders must act now for recovery – and survival. 

The first half of 2022’s financial year brought with it the repercussions of the pandemic, the war in Ukraine and – despite all of this – a marked high street recovery. Not only are beauty and nail salons being dubbed the ‘saviours of the high street’, but new data from the Local Data Company (LDC) also shows that retail locations across the UK see their best results in over 5 years.

Remarkably, overall net closures are the smallest in over seven years, this is less than half the level seen in 2020 and 2021. Of course, when considering this data, we must be wary of the atypical rush of closures witnessed due to the impact of coronavirus. 

The new data offers some interesting insights into the varying results seen in different locations. The report reads: ‘City centres saw significantly more net closures than other areas, while villages and commuter towns recovered. Shopping centres were hard hit by fashion and hospitality chain administrations while retail parks prospered.’

It also notes that shopping centres have entered a recovery period, highlighting that single landlord spaces may now offer more stability than high streets which work off of a ‘patchwork of different landlords’. 

Despite this optimism, the British Beauty Council and the wider industry are warning of a short-lived reprieve in light of the impending cost of living crisis. 

In its Act Now to Recover report, the LDC says: ‘As inflation climbs upwards, its increasing borrowing costs, squeezing household budgets and eroding the business and consumer confidence that had built up during the latter part of 2021.’

The organisation offers three steps for recovery which business leaders must implement now to ensure their ventures stay on course. 

Be proactive

It may seem like most businesses made it through the pandemic but it is easy to forget their reliance on government schemes. Furlough and bounce-back loans provided support – after some pushing – for businesses. This help has now come to an end. 

The report reads: ‘Finance is also more expensive and harder to secure. For example, some of the refinancing arrangements that would have been readily available three months ago are now being closed to all but the most financially secure firms.’

Do not back away from finances and secure operations now to ensure your business enters uncertainty strong. 

Keep up with the consumer 

Whether it’s coming to terms with new social media opportunities or tackling environmental messaging, consumers are becoming increasingly conscious and you need to keep up. 

LDC says that remaining ahead in digital is key for engaging and keeping, consumers whilst also remaining ‘cost competitive’. It also says: ‘Businesses’ ability to attract talent and secure credit and institutional investment are increasingly dependent on your progress on ESG.’ 

The message? Although the cost of living might seem archaic, now is not the time to forget about innovation. 

Act now for recovery

LDC puts liquidity as a top priority, saying: ‘Have a laser-like focus on liquidity, including the optimisation of working capital and identification of locked-in cash, while exploring all possible internal and external sources of finance.’ 

It also highlights the importance of involving a varied cross-section of your business in financial decisions as everyone affects cash decisions. It recommends formulating a ’13-week projections and forecasts based on solid inputs from the business, not just the finance team and that include a range of best- and worst-case scenarios.’

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