It is not startling that the official government statistics relating to the Gross Domestic Product (GDP) record the most significant slump for a considerable time. It should be remembered that the quarterly statistics are actually provisional. Also, the Bank of England has consistently taken a more optimistic view, as reported in the Financial Times,it is sticking to the belief that there will be a relatively speedy recovery at first followed by a slow but steady return to pre-coronavirus levels. Given the crippling effects of the coronavirus pandemic lockdown the situation could be considerably worse.

This is not the moment for businesses to panic. Whilst nobody would pretend the country is in good economic shape, however, it is not all bad news. Not all businesses are shedding staff and those businesses that are quick to see opportunities, and there are opportunities, will be the winners. The move to online shopping has provoked Tesco to announce the creation of 16,000 new permanent jobs to support the current growth and intended expansion of its online business. Marks and Spencer has also recognised the fact that shoppers are increasingly taking the online option and has linked with Ocado. Home delivery appears to be a way forward for both customer safety and convenience. Giambrone's corporate and commercial team reminds businesses considering expanding into online shopping options that they must ensure that their terms of business and insurance policies are reviewed and varied in consideration of the differences between conventional retail and online shopping.

Another possibility for business survival is merger or takeover. Mike Ashley the CEO of Fraser's Group (formerly known as Sports Direct) has announced his latest acquisition, DW Sports, which has been bought out of administration. Fraser's has acquired most of the assets of the gym and fitness business and will be able to put the business back on its feet. The purchase will save a considerable number of jobs and pave the way for DW Sport to rise again under the iconic Everlast brand owned by Fraser's.

Nick McEwen, an associate, commented “merger or being bought out by a stronger competitor may not be the ideal option for many businesses but if there is a clear choice between a business ceasing to exist and all its loyal staff being out of a job and merging to continue trading and be able to survive, survival seems to be the obvious choice” he further commented “at present the economic future across the globe is poor but the current situation will not remain so forever and in two or three years' time the future is likely to look infinitely better. The survivors will have the option for change.”

Giambrone's corporate and commercial team points out that those acquisitive organisations that are in the position to acquire and bolt-on companies in administration may also need the additional weight of the business they obtain to secure their own survival and in the end result may offer a surprisingly successful outcome. Looking for a suitable merge partner may be a viable option and pose the best chance of weathering the storm.

The statistical information available today shows a higher degree of bounce-back signalled by encouraging signs such as the increase in retail footfall in greater London and the southeast, the two areas that generate the largest volume of footfall anywhere – 6.8% for London and 7.1% for the southeast. Keith Wade Schroders' chief economist, commented in City AM, “we saw a strong bounce-back in retail sales,” he says. “We saw small business surveys and housing surveys improve pretty sharply. The economy did appear to be coming back pretty strongly.” The world will work its way out of the crippling grip of the coronavirus pandemic in one way or another and the businesses that are still standing will be the winners.

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Originally published 25 August, 2020

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