I had a fascinating conversation with the manager of a local business yesterday. The discussion was about her stock displays. It was apparent that she was agonising over how to present what was available, and given that we are acquainted as a result of my being a long term customer I could not resist asking why this was the case.
Her problem, it transpired, is in securing supplies of some very basic products that are core to her overall sales mix. I was a little surprised by some of the items that she could not easily procure. But she explained the problem was not that they were not on sale, but that her main supplier had gone bust, and a replacement had also already done so, and securing credit from anyone else was proving to be a problem, and cash flow was not so good that upfront payment was an option. To be blunt, the impact of Covid-19 was such that securing what she needed to make her business work was already problematic.
More significantly, whilst she was optimistic on some grounds, and most especially that come September some people might return to work and that this, plus schools back in operation, might restore an element of normality to her trade, she retained doubts on the viability of the store she managed. Almost none of her staff are wholly off furlough as yet, and if that scheme ends she knows she will have to face difficult decisions on redundancies. And, as I have long predicted, she agreed that there was no way that the current level of trade - constrained as it is - can cover the rent that the business owes, which makes her worried for the whole operation.
What I came away from the conversation with was a range of sentiments. The first was that here was an ‘on-the-ground' manager already struggling with the reality of the trading problems that Covid 19 is creating.
The second was that in all this she was having to cling to the straw that a return to work, plus school reopening, would deliver a lifeline when no other currently seemed to be available. As she noted, a spike in infection rates and more lockdown would end that hope, and most likely (although it was left unsaid) the business itself.
And third, underneath her confident manner, which her job demands, there was a sense of realism that I sense to be wholly absent from political, and even broader debate at present, which apart from the likes of Larry Elliott's recent articles, still seems to assume that we are on our way to a V-shaped recovery, fuelled by the reckless irresponsibility of the likes of Andy Haldane at the Bank of England and the Daily Mail audience that he panders to.
One other thing that the manager in question agreed with me upon was something that I have been saying on this blog since March. That is that any attempt to fully reopen the economy is riskier to businesses like the one she manages than anything that has happened to date. But I very strongly suspect that those in the economic ivory towers have no clue of that. They need a lesson from the person I was talking to.
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I note from the BBC’s website a few relevant articles. One about current furlough levels and how low they are, another including vox pops about how well the government is doing in such difficult circumstances (which shows how little people understand about what governments do and who they do it for) and one about how confident businesses feel about their business survival. No surprises that the picture being painted was favourable to the govt on every count. It seems that the media is trying it’s best to recreate the world as it was before there was such a thing as Covid-19. Maybe they believe that the world will simply become whatever picture they paint of it. So far removed from what you and others write here and outside of MSM.
Slightly off-topic, but I also noticed a BBC article referring to a slight increase in inflation. Made me realise that they’re starting the propaganda to justify tax rises, spending cuts and the necessary pain of unemployment to pay back all that debt. Cue even greater inequality.
I agree, the propaganda is under way
Yes. There are common trends in my “group” of businesses:
Increasing supplier base (with focus on local – PPE anyone?);
Simplifying product/service offering;
On-line initiatives;
Greatly increased joint planning between customers/ companies/ suppliers;
Automation where possible;
Freeze on hiring;
New rules on credit management;
Credit balances (where available!) held in euros;
Monthly review of manpower requirements with detailed forecasting updates;
Happy days.
It seems to me that what we need is some sort of ‘business support’ scheme administered by Local Government offering tailored support in particular grants rather than loans.
On a positive note there were no covid deaths yesterday in English hospitals. Yes there might be a second wave but there is grounds for optimism that we might be putting this behind us and moving to some kind of normality.
You have to be an optimist to think that
“You have to be an optimist to think that”
What a strange reply? It’s as if you welcome bad news and want to sideline good news? A state of mind I suppose.
I am simply referring to the evidence
Good morning Richard. We met briefly when you gave a talk in Glasgow last year and you have my email address as one of your many donors. Please let me know privately in what trade your friend works. I too have experienced those difficulties and can maybe provide some guidance to her… free of charge and I promise you no scam or illegality involved. Glad to see your ideas are at long last gaining some traction. Fair tax should be the engine of any recovery.
Ron
I think that would be inappropriate
And she is anyway a manager, and not a director
But a very aware manager, based on our conversation
Richard
Given so much of China’s underwater now, and how much we rely on it for supplying goods for retail, and how long it’s likely to take before supplies can be resumed, many businesses aren’t likely to last long enough to be finished off by the effects of the virus.
Note that the real problem here is a system that does not have a level playing field. We are all obligated to use money today to be able to survive, but not everyone has access to enough money to do that.
Annually we throw away millions of tonnes of perfectly good food produce instead of distributing it efficiently so no one goes hungry.
There are millions of houses around the World sitting empty, many more than people who don’t have a home.
The list of inequalities due to lack of purchasing power is appalling, because we do not all have the same opportunities in life.
We need a new system based on the intelligent and sustainable management of the planet’s resources. The most complete and holistic plan for systemic change I have found worth looking into is here:
http://www.thevenusproject.com