The Big Conversation: Helping Britain Recover - Wales event
On 30th September, we brought our Big Conversation to Wales. The virtual series of events brings together voices from the region’s business community to discuss the challenges and opportunities they face as they deal with the impact of coronavirus.
- Ian Price, Regional Director Wales, CBI
- Sion Pritchard, Managing Director, Pet Place, a chain of retail spaces across Wales selling pet products, and the UK’s first cinema, coffee shop and play park for dogs
- Hannah Williams, Chief Financial Officer, Tiny Rebel, an independent craft brewery based in Newport with three taphouses
- Paul Gordon, Managing Director SME & Mid Corporates, Lloyds Bank
Hosted by broadcast journalist Declan Curry
- The current business situation across Wales
- Rising to the coronavirus challenge
- Targeting growth opportunities
- Improving efficiency and productivity
- Innovation and resilience
There has been a mixed picture of the impact on businesses in Wales. The needs of businesses in North Wales, for example, are very different than those in the South East of the country near Cardiff and Newport. There is a real divergence in the pace and scale of recovery for different sectors and regions and a ‘one size fits all’ approach won’t work and as a result the country is facing its own unique challenges.
Hannah Williams, Chief Financial Officer at Tiny Rebel summed up the feeling of businesses across the country when she remarked that 23rd March will be a date she’ll never forget. Ninety per cent of the brewery’s trade fell off a cliff when lockdown was announced and bars and restaurant were closed. The business had to make some fast decisions about how to keep things going, maximising whatever revenue streams were still open to them.
They rapidly scaled their online retail arm – having luckily invested in their website just prior to lockdown starting – and diverted their resources from trade relationships with bars to supermarket contracts. They were able to grow their presence in household retailers like Sainsbury’s and Waitrose to tap into the growth in people buying beers and spirits to enjoy at home, and their popular brewery tours have continued – albeit now conducted via Zoom.
For Pet Place, their business had already been through a period of massive change in recent years. From its origins in animal health products, it diversified into experiential retail centres where pet owners can socialise with their dogs at pet-friendly cinemas and coffee bars. Despite its stores being classed as essential retail and therefore permitted to remain open, they decided to revert to a click and collect only model whilst they made the stores safe for teams and customers and with a scaled-up website, they were able to meet the ongoing demand for online orders even now stores are reopened.
The view from the CBI is that it’s been a “real challenge for everybody” and it’s not set to change any time soon. But thinking on their feet and adapting quickly are the hallmarks of businesses that will fare the best.
Switching focus to online sales has hugely benefitted both Pet Place and Tiny Rebel, which saw a 575% growth in revenue from online sales during lockdown. Luckily, both businesses were well placed to capitalise on this, having recently invested in their websites.
But it’s not only exploring new routes to markets that can provide growth opportunities. Tapping into trends and introducing complementary product and services can pay dividends. Tiny Rebel has moved from its initial focus on beer into gins and is exploring launching other spirits in the future.
Pivoting business models has been a hallmark of Welsh business success in the last six months more generally. For example, the country’s biggest producer of disposal masks, a packaging company in South Wales, didn’t make any at the start of the year.
However, the CBI warned that talk of diversification can feel like a pipedream for some companies with many only having the bandwidth to think about survival at the moment. There is however support to be found at organisations like the CBI and funding providers like Lloyds Bank.
“There’s been fantastic work done by lenders to get money out of the door to businesses during the last six months.” Ian Price, Regional Director, CBI
Wales’ first ever International Strategy was launched in January 2020, marking the nation’s renewed ambition in this area, and the uncertainty surrounding Brexit is making firms more creative when it comes to looking at overseas expansion and potential target markets.
The emphasis on overseas trade was echoed by Paul Gordon, who noted the wealth of support and expertise out there for businesses looking to start or continue exporting. Lloyds Bank’s own International Trade Portal offers guidance on more than 190 countries and is designed specifically for small businesses looking to take their first exporting steps. He also pointed to the Department for International Trade and encouraged firms to speak to peers and those in their supply chains about their own experiences of selling abroad.
According to the CBI ‘The productivity puzzle’ has been going on forever. However, anecdotal evidence from the start of lockdown suggested many businesses experienced a small increase in productivity while working from home. Investing in digitalisation and technology to make this easier can therefore unlock major productivity gains.
That was certainly the case for Pet Place. A new cloud-based phone system meant its head office staff could continue to work from home seamlessly. But there’s work to be done to make sure that the digital infrastructure in Wales is match fit such as better broadband provision.
Poll 1: What would help business recovery most in the Wales?
Creation of regional growth funds - 43%
Grants to retain existing/ take on new employees - 24%
A stronger network among the local business community - 14%
Improved digital connectivity - 14%
Tax breaks - 5%
More local (i.e. devolved) decision making by public bodies - 0%
The results of the first live poll from the event reflected this. Forty three per cent of responses said the creation of regional growth funds would most help business recovery in Wales suggesting that people want their decision making and support closer to them to reflect their realities.
Paul noted the range of support on offer for businesses from Lloyds Bank that can be used to invest in projects to boost productivity. For example, the Clean Growth Financing Initiative is available for sustainable project and trade products such as forward exchange contracts can support exporting.
The second live poll results suggested that Welsh businesses in general, like our two panellists, have seen a jump in innovation and resilience throughout lockdown.
Poll 2: Which of the following would you say is most relevant of your business?
We’re more innovative than we were six months ago - 50%
We're more resilient than we were six months ago - 32%
Our workforce is more productive than six months ago - 9%
We have more positive cash flow than six months ago - 9%
None of the above - 0%
For both businesses, improving ‘behind the scenes’ systems to reflect the new normal has really paid off. In Tiny Rebel’s case, a brand-new canning production line meant they could meet the upsurge in retail and online sales – diverting resources away from the cask and keg production line, for which there was zero demand while bars were closed.
- Does the CBI feel there is a boost to productivity to come if schools and learning facilities are modernised?
- Covid has separated leaders from managers. What are the qualities that make a good leader and how do we encourage them?
Ian Price, CBI: “To be fair to the Welsh government they’ve done an impressive job in investing in education and training. There’s new further education campuses all over the country. That being said, you can never spend too much in this area, and a skilled workforce is essential to future productivity.”
Ian Price, CBI: “There are some really good examples of leadership out there at the moment. To a certain extent, managing is maintaining – but leadership stands out in a crisis. The quality of decisions made in crisis show you who the leaders are.”
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