Economics for Business: COVID-19 Impact, Policies, and Recovery in UK

This report examines the impact of the COVID-19 pandemic on the UK retail sector, analyzing changes in consumer behavior, supply and demand dynamics, and the influence of governmental and economic policies. The introduction highlights the effects of the coronavirus outbreak on the business sector, including shifts in consumer shopping patterns and the need for businesses to adapt. Task 1 focuses on supply and demand analysis, exploring the income effect, employment shifts, and the impact of regional and local demand factors, including complementary and substitute goods. Task 2 delves into the governmental and economic policies implemented by the UK government to aid the retail sector's recovery, including liquidity assistance and measures to support employment and business sustainability. The report concludes by emphasizing the importance of government intervention in mitigating the economic impact of the pandemic and fostering recovery within the retail industry.

Economics for
business
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INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Supply and Demand analysis to determine the factors impact on consumer retail demand. .3
Task 2...............................................................................................................................................4
Governmental and Economic policies of UK for economic recovery from loss of consumer
retail spending........................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8
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INTRODUCTION
Nearly all the business sector is however being get affected due to corona virus outbreak,
this not only affected their growth and development of this sectors but also makes changes in the
behavioral pattern of consumer shopping. This makes businesses to attract customers with more
attractive offers in order to retain them and conduct sustainable business operations. B2B, E-
Commerce, B2C and all segments specially retail sector really affected due to COVID-19
outbreak. This report includes information and data that are required to be understand by retail
brands in order to determine consumer behaviour that get changed in past few months after
corona virus outbreak and lockdown. In order to effectively present this information, demands
and supply analysis technique is being undertaken through which business can identify negative
as well as positive shift in demand for retail services and goods. In addition to this report also
includes manner in which economic and UK Government Strategies and policies are helping
business sectors to overcome the losses.
Task 1
Supply and Demand analysis to determine the factors impact on consumer retail demand
The income effect and shift in employment –
Employment is determined as most essential element that is having high influence upon
demand of services and goods in retail industrial sector. Individuals who are having steady
income generation sources are having expectations to continue revive the same then it makes
discretionary more spending purchases that shifts demand curve towards right. Unemployment
increase will lead opposite outcomes in which individuals with less income sources lesser down
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the purchase of a necessary and luxury goods. This will negatively impacted upon each and
every sector of UK market that make individuals to loss their job. However many segment in
retail area still engaged in the process of hiring, such as doorstep delivery. According to the
report of BBC, many companies in United Kingdom forces employees to take voluntary
retirement and other job quitting options which affected growth of economy (Unemployment
rate: How many people are out of work?, 2020). This will affect decrease in the power of
customers of purchasing. This has raise the demand of consumers for retail goods or services that
meet their basic needs rather than on luxury goods.
rather than on luxury goods.
Price
D1 D2 here, D2 = Rise in demand of food and groceries
D3 D3 = Decrease in demand of other retail goods
Quantities of retail goods
UK regional or local demand factors –
Covid-19orr corona virus in pandemic massively shocks almost all the countries around the
globe and severely affected growth development economies of all the sectors in every nation.
Likewise in United Kingdom this pandemic causes negative impact on country GDP in many
business sectors. However food retail sector continued to conduct their sustainable business
operations as it is basic necessity. According to the forecasts it has been evaluated that this sector
expected to grow by 7.5 billion, however footwear and clothing retail segment will continue to
suffer losses approximate to 13 billion British Pound, in their annual sales. While identifying and
emphasizing upon combination of local sector differences in sectoral performance acts a major
driver in variability of economic performance. This plays major factor in economic reform
variability according to regions. For example regions who are mainly depends upon manufacture,
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hospitality and tourism will continue to expect a sharper outfall in 2020 comparatively to retail
segment who are having strong presence in online platforms. Covid-19 makes government to
impose restriction on travel and tourism in both domestic and international level that developed
issues in front of individual to fulfil their fundamental need. In this digital services turned out to
be the most important factor due to relative exposure of retail and other factors to determine
impact of covid-19.
In addition to this other factors get affected which likely to be affected the relative
vulnerability of regions to the pandemic mainly includes raw material supply through chain,
degree of exposure to international trade and region, region’s reliance on the components. In the
provinces of United Kingdom it has been evaluated that many retailers are performing their
business in small scale which make them less resilience comparatively to others. Along with is
comparatively to large business retailer such as ALDI who have extensive consumer base
retailers who are operating the business in small sector faces heavy decline in their sales ratio. In
relation to this by emphasizing upon consumer demands in retail segment negative decrease in
furniture, health and beauty, flooring, electrics and home furnishing is also been seen. Food and
grocery products keep on increasing sales of food and industry in this especially those entities
that are performing their operations through different digital platforms comparatively to physical
storage sees tremendous growth.
Figure 1: Annual Retail sales in UK with pre and post coronavirus forecast. 2020
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Complementary or substitute goods –
This is another key factor which is having direct impact upon demand of customers for retail
goods, after the pandemic of coronavirus there is an adverse impact upon both economic and
social living of individual such as increasing the rate of unemployment that lead towards
affecting the behaviour pattern of consumer spending. However during lockdown period there is
significant increase in demand of food and groceries in United Kingdom and even in other
nations around the world, however it lead towards increasing prices of some commodities.
However in these situation individuals those who are having low income sources get outreach
from these products demand of complementary or substitute goods more. This has shift the
demand of luxury retail goods to left and demand of complementary towards right in following
way –
Price
D1 D2 here, D2 = Increase in demand of complementary goods
D3 D3 = Decrease in demand of luxury retail goods
Quantities of retail goods
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State of the economy –
As individuals feel more confident when there is stable economic growth in a country on
continuous manner, thus, it is considered as other essential factor that leads toward influencing
consumer demands in terms of retail goods. Continuous rapid spread of corona virus made
government to impose strict restrictions in order to break the chain of this virus in the provinces
of United Kingdom. Along with this, Lockdown also lead towards reducing the unit of Pounds
that has been wiped from the stock market that really affected economy of country. However
after lockdown period customers are gradually returning and purchasing products and services in
retail industrial sector which is leading businesses to get back in track and measure slow
economic growth. This positive sign is however reviving business sectors within this segment,
but the second lockdown probability will lead Britain to fall into deepest reception. Along with
this there was 0.8 % increase in retail segment, but fashion and clothing segment sales is
continuously decreasing which is negatively affecting this segment economy.
Task 2
Governmental and Economic policies of UK for economic recovery from loss of consumer retail
spending
Number of economic and governmental policies is being enforced by United Kingdom
government in order to slow down the negative impact of novel coronavirus upon growth and
development of business. This pandemic severely affected profitability and sustainability of
businesses from past few months and also affected daily operations, demand and supply of retail
industry (Seetharaman, 2020). This industry covers majority of business portion in United
Kingdom that provide customers with the services from daily basis need to luxurious demand.
Thus, it is essential for government to revive this sector with relaxing economic policy in order
to provide them support to effectively overcome from this pandemic. Retail segment effectively
contributes in GDP of UK along with this, this sector also provide efficient rate of employment
thus negative impact of corona virus also affected employment opportunity that lead towards
decrease in household income. Being labour intensive industry in United Kingdom employment
opportunities also faced serious consequences that effects demand and supply curve of this sector
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(Paul and Chowdhury, 2020). In order to assure sustainable growth and revive this sector from
COVID- 1 United Kingdom government is required to formulate effective policies and measures.
However it has been evaluated that COVID-19 pandemic affected large number of retailers
in United Kingdom that made them to nearly manage their sales performance, but there are some
firms those who are still engaged in the process of hiring individuals. This policy is being
required to be evaluated by policy makers in order to underline the manner in which these
businesses are still managing to hire individuals (Roggeveen and Sethuraman, 2020). For
instance ALDI which is performing their business operations as largest retailer in the provinces
of United Kingdom, this company even in this period is going to recruit 12000 and more than
and new individuals as this entity is looking to open a new store before Christmas. Along with
this rival of this firm Lidl is also planning to open 25 new stores in upcoming 6 months. This will
lead towards offering job opportunities thousands of individuals by the end of this year (The
companies still hiring in the UK during coronavirus crisis, 2020). It has been evaluated that even
these organisations are not serving customers via online channel but still able to ensure
continuous growth in the sales performance. Main reason behind their sustainable sales is that
company maintained proper hygienic and sanitize their stories while taking care of both
employers and consumers on same manner. With the help of different type of health safety
measures and government standards are also supporting small retailers.
Retail is turned out to be the most important segment through which government of a
country can mitigate the impact of covid-19 upon economic and social factors. In this it is
essential for government to provide significant aid to this segment as businesses in this segment
contribute up to 5 to 6% in GDP (Gray, 2020). Along with this, large scale of employment
opportunities is also being offered by this sector through which government can effectively
overcome from the economic losses and can increase household income. In order to overcome
from losses it is essential for government to frame policies and measures while relieving various
aspects like high taxes and more. With the help of this government can overcome worst impact
of covid-19 upon employment businesses and other factors. Mentioned below there are some
certain form of policy that can be considered by government:
 It is essential for government to make sure that schemes of liquidity assistance will be
easily accessible to all the business segments in retail industrial sector irrespective of
their size and scope.
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 Provide additional assistance to those retailing businesses that are facing severe issues in
terms of labour supply and in context of smoothing demand supply matching for retailing
jobs.
 Provide assistance to retail firms in terms of maintaining social distancing measures,
proper Health Care guidelines and other safety standards.
 Make sure that competition in retail industrial sector which was more aggressive before
covid-19 remains sufficient after the results of this crisis as well.
 Diversify sales channels for retailing firms in order to maximize resilience. Along with
this provide significant support in context of small brick and mortar retailers in order to
develop their online presence.
Government authorities by providing liquidity assistance in a quick and ready manner can
help many retailers to conduct their sustainable business operations. Since number of issues has
been arise because of lower down demands of non essential retailing products and services
during lockdown period in this situation, liquidity assistance will turn out to be the one of the
most effective measure through which this crisis can be overcome. However it has been
evaluated that governments provide large emergency support but there is still a need to make
sure that all the businesses in retail industry segments have access of them, especially for small
shops and stores. Policies and measures of liquidity support must be available to firms in order to
support them to overcome the business losses (Donthu and Gustafsson, 2020). In addition to this
it has been evaluated that United Kingdom government is also required to consider four different
key aspects in order to ensure that consumers have easy access to essential goods, in this is it is
essential for government to make sure that dependency on digital online services get reduced in
order to balance or enhance sales ratio of physical stores. This will lead towards maximizing
financial incentives for employees those who are performing their roles and responsibility in this
segment. Along with this it is also essential for government to relax labour and tax rates of this
sector in order to smooth the demand and supply curve and make retailers to perform their
businesses effectively. Lastly government is also required to provide significant assistance in
terms of guiding retail businesses to maintain proper health and safety measures in their storage
in order to serve customers and employees better.
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CONCLUSION
According to the above mentioned report it has been concluded that corona virus affected
nearly all business operations in every sector that makes some of the sectors to nearly survive. It
has been underlined that this outbreak not only affected individual needs but also impact upon
economies of countries around the world that lead towards increase in unemployment and
decrease in sources of income. In this it is essential for government to provide significant aid to
industries like retailing segment with the help of relieving policy such as relaxation in tax and
more in order to provide assistance to the sectors to revive and overcome the losses due to this
pandemic.
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REFERENCES
Books and Journals
Donthu, N. and Gustafsson, A., 2020. Effects of COVID-19 on business and research. Journal of
business research, 117, p.284.
Goeb, J., Boughton, D. and Maredia, M.K., 2020. Monitoring the impact of COVID-19 in
Myanmar: Agricultural input retailers (Vol. 8). Intl Food Policy Res Inst.
Gray, R. S., 2020. Agriculture, transportation, and the COVID‐19 crisis. Canadian Journal of
Agricultural Economics/Revue canadienne d'agroeconomie.
Nicola, M., Alsafi, Z., Sohrabi, C., Kerwan, A., Al-Jabir, A., Iosifidis, C., Agha, M. and Agha,
R., 2020. The socio-economic implications of the coronavirus and COVID-19 pandemic:
a review. International Journal of Surgery.
Paul, S. K. and Chowdhury, P., 2020. Strategies for managing the impacts of disruptions during
COVID-19: an example of toilet paper. Global Journal of Flexible Systems
Management, 21(3), pp.283-293.
Richards, T .J. and Rickard, B., 2020. COVID‐19 impact on fruit and vegetable
markets. Canadian Journal of Agricultural Economics/Revue canadienne
d'agroeconomie.
Roggeveen, A. L. and Sethuraman, R., 2020. Customer-Interfacing Retail Technologies in 2020
& Beyond: An Integrative Framework and Research Directions. Journal of
Retailing, 96(3), pp.299-309.
Seetharaman, P., 2020. Business models shifts: Impact of Covid-19. International Journal of
Information Management, 54, p.102173.
Singh, S., Kumar, R., Panchal, R. and Tiwari, M. K., 2020. Impact of COVID-19 on logistics
systems and disruptions in food supply chain. International Journal of Production
Research, pp.1-16.
Verma, S. and Gustafsson, A., 2020. Investigating the emerging COVID-19 research trends in
the field of business and management: A bibliometric analysis approach. Journal of
Business Research, 118, pp.253-261.
Online
How Coronavirus (COVID-19) Is Impacting Ecommerce. 2020. [Online] Available Through:<
https://www.roirevolution.com/blog/2020/10/coronavirus-and-ecommerce/>. The companies still hiring in the UK during coronavirus crisis. 2020. [Online] Available
Through: https://www.theguardian.com/world/2020/jul/31/how-covid-19-has-reshaped-
the-jobs-landscape-in-the-uk Annual Retail sales in UK with pre and post coronavirus forecast. 2020. [Online]
Available Through: <https://www.statista.com/statistics/1111013/pre-and-post-
coronavirus-growth-forecasts-for-retail-uk/ >. Covid-19 and the retail sector: impact and policy responses. 2020. [Online] Available
Through:< http://www.oecd.org/coronavirus/policy-responses/covid-19-and-the-retail-
sector-impact-and-policy-responses-371d7599/>.
 Unemployment rate: How many people are out of work?. 2020. [Online] Available
Through:< https://www.bbc.com/news/business-52660591>.
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