The Online Businesses that Thrived in the Pandemic – and the challenge for the High Street
While many Welsh bricks and mortar businesses struggled through the pandemic, many online giants thrived.
Sectors that thrived
From food delivery specialists like Deliveroo and Just Eat, to the likes of Amazon and other online marketplaces, the pandemic presented a massive business opportunity to help bored householders shop, stay entertained and spend money, with sectors like online betting seeing massive growth, and revenue now predicted to grow at 11% annually.
Social media giants also saw revenues grow rapidly, more people at home spending more time on social platforms delivered far more opportunities to sell advertising.
It’s therefore no surprise to learn that the pandemic was good news for many tech billionaires – at least according to Oxfam, who reported that the planet’s 10 wealthiest men, including Amazon founder Jeff Bezos, Tesla Founder Elon Musk and Facebook Owner Mark Zuckerberg saw their wealth rise by $540bn (£400bn) during the pandemic.
The cost to the high street
The rising spend was clearly good news for big tech leaders, but small Welsh bricks and mortar businesses struggled with restrictions and reduced trading opportunities, not helped by insurers refusing to pay out initially on business interruption insurance. By the time the eventually successful test court case was settled, and insurers were told to pay up, many local service businesses like hairdressers and beauty therapists had already been forced to shut their doors for the last time and simply lacked the energy and funds to find new premises and start up again from scratch.
It was a similar story for offline retailers, who faced multiple closures, increased online competition and ongoing restrictions, hindrances that did not apply to their online competitors. This has been a challenge for small Welsh towns, indeed many town centres and retail parks in Wales continue to struggle despite the initial bounce back as restrictions were lifted. Figures released in July by the British Retail consortium reported that 1 in 5 units in shopping centres are now empty, with fashion retailers especially hard hit – with big names like Debenhams and Top Shop calling in the receivers.
Some towns, such as Llandudno are now starting to see a bricks and mortar resurgence and many local councils are pulling out the stops to support their retail businesses but in a time of winners and losers, and with rising COVID numbers and calls for restrictions to return, we aren’t necessarily out of the woods yet.
The cost to consumers
While a booming online marketplace has it’s positives for small online business owners as well as huge players like Amazon, there’s also concerns at how easy it is to get online credit even if you can’t afford the repayments – and whether the spend is coming with a heavy cost that few are currently counting.
A concerning report from poverty think-tank the Bevan Foundation released in September revealed that household debt is rocketing in Wales since the pandemic began, with low income, BAME and renting households being hit the hardest. Where an increase in spending comes from credit cards and BNPL booms, repayments may be unaffordable, and with the UK Government’s £20 per week cut to Universal Credit, financial pressures will only increase.
The online future looks stable – but who is paying the bill?
It’s clear that the online boom has far from hit it’s peak.
Global online spending is set to continue, with e-retail revenues projected to reach over 4 trillion pounds p.a. in 2022. For online businesses this is positive news – and many offline retailers are now looking to enhance their online offering as a result.
However, while celebrating the soaring success of online, we also need to keep track of the cost – both to hard-up households and to our high streets – because sooner or later, the bills need to be paid.