Watch the webinar
Today's webinar took the form of a conversation between Josh Hardie, the CBI’s own Deputy Director-General; Amelia Brophy, Head of Data Product at YouGov UK; and Laurent Ezekiel, Chief Marketing & Growth Officer at WPP. It was a wide-ranging – and illuminating – discussion. Here are some of the subjects that were dealt with:
- The amazing Bounce Back numbers
- Other policy issues
- The restart planning
- Consumer behaviour
- Business reputation.
The amazing Bounce Back numbers
This has been, as Josh said, a “pivotal week”. The government’s new Bounce Back loan scheme was launched on Monday, having been designed to get smaller loans to smaller businesses in a more straightforward and speedy way than the main Coronavirus Business Interruption Loan Scheme (CBILS) was managing previously.
It seems to be working. “So far,” observed Josh, “there are huge volumes going through.” Barclays, as one of the participating lenders, saw 200 applications in just the first minute. HSBC had almost 60,000 applications on day one. Overall, about 180,000 businesses have applied to date, for loans worth an average of £30,000. “Even my next-door neighbour has got one!” added Josh.
What’s more, the money is already hitting bank accounts, as per the government’s aim to have applications dealt with within 24 hours. “It won’t be perfect,” cautioned Josh, “but it does show that there was genuinely a need there – and simplifying the system has made a big difference.”
The CBI’s hope is that the Bounce Back scheme will also relieve the pressure on the banks over CBILS, giving them more time to deal with the bigger applications from bigger companies.
Other policy issues
As always, the CBI is keeping a close eye on the Job Retention Scheme (JRS). The next cliff-edge date, when companies might need to make redundancy decisions to comply with the 45-day consultation period, is at the end of next week. If, by then, the government hasn’t confirmed whether the JRS will extend beyond the end of June, then there may be a wave of job losses.
Josh said that, in this respect, there are now “three issues” with the JRS. The first is “clarity on the scheme as it is” – will it be extended beyond the end of June? The second is the “longer-term issue for those firms that could be on the ‘closed list’ for a longer period” – will the support be extended even further for them? The third is “for those firms that are starting up again, can furlough be made more flexible to allow, for example, for part-time working?”
Josh also raised – as did the CBI’s Chief Economist, Rain Newton-Smith, in yesterday’s webinar – a concern that has “received less attention”, Trade Credit Insurance (TCI). About 14,000 businesses rely on TCI to support their finances and to mitigate the risk around trade, which will be crucial during the restart. But the provision on TCI is, in Josh’s words, “shrinking daily”.
We and others have raised this with the Treasury and the Department for Business, Energy & Industrial Strategy (BEIS). According to Josh, “we hope we can update you on that soon.”
And we had an update, on a different policy, whilst the webinar was happening: Robert Jenrick, the Communities Secretary. announced that the revaluation of Business Rates for 2021 will now not take place. The CBI will “still push for more”, said Josh – specifically, a three-month rates holiday. “But it does show that the government is listening and ready to evolve things on an almost daily basis.”
The restart planning
The other big event of this week, in terms of government policy, is the potential publication of the government’s guidelines for businesses that are reopening. The CBI has been very closely involved with the formulation of these guidelines, so we have a good idea of what’s in them.
As Josh explained: “There are very strong parts of it. The segmentation by working environment does work quite well. There’s consistency between the different documents. The scope is pretty comprehensive. It does allow for flexibility.”
But Josh did warn that there are currently some “grey areas” and that “in those grey areas lies the potential for conflict”. Some of these areas will be filled in naturally: “PPE is the most obvious one; the government has written that the guidance will follow.” Some are going to be complicated and evolving: “schools and transport.” But there are some where the CBI would simply like “more clarity”.
Also this week, the Labour Party and the major unions have been discussing their own ideas for the restart. The CBI has been working closely and cooperatively with both, as we have been throughout the crisis, and we’re delighted that much of their thinking aligns with our own.
“However,” admitted Josh, “there is one [idea] we find challenging from the unions: full publication of risk assessments for businesses of five people or more.” We sympathise with the Trades Union Congress (TUC)’s emphasis on safety, but we worry that this measure could just be a “bureaucratic burden for small business” and slow down the restart, as well as about the fact that a “snapshot [of a risk assessment published at any one time] might not capture the situation”.
“We are in conversations with the TUC,” said Josh, “to find a middle ground.”
“We have never seen anything quite like this in terms of people changing their daily habits overnight.” So said Amelia when discussing YouGov’s ongoing surveys of consumer sentiment. She explained that one tracker, looking specifically at Asian markets, shows that “60% have switched from spending in-store to spending online”. And added: “Are people going to continue with those behaviours? Or revert? Or are we going to see a new combination?”
It’s difficult to answer those questions because sentiments are changing constantly. Amelia described the situation of late March, in Britain, as one in which there was peak fear about what the coronavirus meant for us personally, peak trust in the government, and peak behaviour change. However, “that fear has dropped down over the past four weeks; some of the behavioural changes have softened a bit; and support for the government has softened a bit too.”
YouGov is now doing more research on what consumer sentiment will mean for the economic recovery. There are no firm conclusions yet, but Amelia did suggest that: “People are feeling okay about their own finances, but not feeling good about the general world. If they were going to get a windfall now, they would save it rather than spend it.”
Laurent emphasised that this is not a time to stop engaging with consumers – quite the opposite. “What I’m hearing from a lot of our clients is that [they’re] pausing now, but [they] still want to follow consumer patterns.” Continuing “personalised”, “digital” communications with customers is crucial to that process.
“Lots of companies are using this moment,” said Laurent. “How do they want to evolve what they stand for at the moment?” This is, he suggested, an opportunity for businesses to think about their operations from the ground up – “if the pandemic doesn’t shock you across the company, then nothing will.”
And people do notice. Amelia described how YouGov measures sentiments towards about 15,000 brands globally, including about 1,500 in the UK: “The British public love talking about high street brands that aren’t treating their staff well. Word-of-mouth goes down. Recommendations go down.” She explained that “small things” can “change people’s minds”, whether in a positive or negative direction.
“Character comes out in a crisis,” added Josh. There has been some evidence that general attitudes towards business have improved during the pandemic; “the question is, how do we make that business bounce sustainable?
Key questions we answered:
- To Josh, what are the CBI’s surveys revealing about consumer trends during this crisis?
- We heard last week from Tesco Chairman John Allan about the changing trends in retail – including some positives.
- There are three big trends across most major retailers (not necessarily surprising ones):
- First, in the immediate Covid-19 response, there was a spike in demand for health and hygiene items. One retailer reported volumes were higher than Christmas and still accelerating – with about a 50-60% increase in sales.
- Second, we’ve seen more gradual consumer demand for ‘working from home’ items (food, home cooking and technology). The knock-on of this has also meant less spending on certain types of clothing (such as workwear and occasion wear)
- Finally, of course, there’s been a huge shift to online retail, including a lot of customers who hadn’t engaged with online shopping before.
- Overall, these trends are likely to continue for some time. One global retailer said customers are not shopping like they did before the outbreak, even in countries where restrictions are beginning to lift.
- So there are big opportunities for some. Others are in extreme distress and some global trends are more worrying, such as the negative price of oil etc.
- The CBI conducts a lot of research on consumer sentiment relating to businesses. What are the key takeaways from that research?
- We run a business reputation tracker. The results will come in the coming weeks but we’re hoping for a positive trend as people see how firms have responded to the crisis.
- We know that how a business acts and communicates determines the trust it holds and shapes its reputation. Maintaining trust will be key for the UK restart.
- Our data shows the key relationship is between employer and employee.
- We also know that customers trust the insight they get from a company’s employees more than the company itself. Employees remain key ambassadors for companies and poor treatment is noticed. In addition, the economic crisis also means added scrutiny of things like executive pay and dividend payments.
- So, what should companies do?
- Focus on employee engagement: in particular safety, physical well-being and mental well-being.
- Check employee sentiment as well as safety
- Are you communicating consistently, constantly, and concisely – ensuring the tone is right?
- Be mindful of consumer expectations.
- Finally, think about how you can ‘build back better’.
- To Amelia, for businesses concerned about managing their reputation, what does ‘responding well’ to this crisis look like?
- Supermarkets are being viewed as an essential in public life. They have some of the best sentiment that we have seen for some time.
- Consumers are responding very well to companies who are being seen to help the national effort.
- We’ve also seen falls in the reputations of brands who are continuing to put their frontline workers to work against guidance, abd brands who are seen to place their profits ahead of their employees’ health.
- The British public loves talking about high street brands not treating their staff well. This has an impact on people’s recommendations.
- Be relevant and personalise your communications. If your business was set up for digital already, you are able to personalise your communications now. Businesses who communicate to their consumers directly are improving their standing.
- To Laurent, what advice do you have for companies who want to ensure they are best prepared to reopen with their reputation intact?
- Two key points, brand and operation. Businesses are thinking about what their brand means now. A lot of companies are using this moment to re-think what they stand for after this crisis.
- On operations, we are seeing a move to e-commerce and digital trade. My primary advice is to use this moment to do as much as you can to make that shift.
- If a pandemic doesn’t shock everyone in your company, then nothing will.
- To Amelia, what are YouGov seeing in public attitudes?
- We began running a public sentiment tracker in our Asian markets nine weeks ago and have since spread it across 25 countries.
- Consumer behaviour has changed very quickly, in unprecedented ways.
- 60% switched to spending online in a very short period of time. The implications of that are still to be understood by us. Will people continue with these patterns or will they revert to their day to day habits? Or will we see a combination of the two?
- To Amelia, we keep hearing that people continue to support the lockdown. Is that support dropping off?
- There is a real link between people’s direct fear of the virus affecting them, how they think the government is handling the situation, and their overall support for the lockdown.
- At the end of March, we had the highest level of fear about the virus and the highest level of faith in the government’s handling of the crisis.
- In the last couple of weeks, we have seen the level of public fear decrease, so some of their behavioural changes have softened. People’s support for the government has softened as well.
- While people are less scared about catching the virus, they are naturally reigning in their spending. As the lockdown has gone on, it has changed their financial behaviour as they don’t know what is going to happen next.
- We have also seen a considerable drop in people planning to purchase holidays, clothing or health and beauty products in the next three to six months.
- We have also picked up that people feel pessimistic about the future economy. Therefore, when asked what they would do if they were to get a sudden cash windfall, the majority said they would save it as opposed to spend it.
- It’s important to note that if the government announces that we are going to ease the lockdown in approximately a month, our research tells us that the public generally interprets that information to mean ‘we are easing the lockdown immediately’.