A Conversation with a Postman 2
Back in June, I wrote an article called A Conversation with a Postman. The basic premise was that we needed to look carefully at what was really going on with Covid, what was actually happening and what did the data points mean.
Our article got a good response and a number of people encouraged us to do more – many of the strategies we flagged still remain valid and so we have focussed more on data points and a snapshot of where we see the market being at now. We are lucky that our work spans sectors, geographies, in-house teams, corporates, law firms, litigation funders, tec businesses and more, and so we see a lot.
As previously stated, we don’t have all the answers but are keen to contribute to the solution.
And so, to the data points:
- Amazon creating 7,000 new permanent jobs in the UK. This is on top of the 3,000 already created this year bringing the overall total this year to 10,000. (link)
- Costa may axe 1,650 jobs as it struggles to recover after lockdown. (link)
- Virgin Atlantic to cut another 1,000 jobs after £1.2bn rescue. (link)
- Heathrow is preparing to axe up to 25% of its frontline jobs unless it agrees on a revised deal with unions. (link)
- Co-op announces up to 1,000 new jobs from new and extended stores. (link)
- Morrisons had about 97,000 workers before the pandemic and took on 45,000 extra temporary staff during the coronavirus crisis. About 25,000 of those staff are still working for the supermarket, and more than 6,000 have already been given permanent jobs. (link)
- Pizza Hut faces 450 job cuts and turnover rent switch in test of landlords’ appetite. (link)
- Pizza Hut has revealed the full list of 29 restaurants it plans on closing, putting 450 jobs at risk. (link)
- UK construction is on the up, with demand now at 79% of pre-lockdown capacity. The best performing regions are the north-west (5.6% increase), north-east (up 2%) and London (up 0.3%) (Paul David’s Linkedin).
- Britain’s unemployment rate rose to 4.1% in the three months to July as the total number of jobless rose by 62,000. (link)
- Squires enters redundancy consultation with administrative roles at risk. (link)
- McDermott cuts business support roles in London. (link)
- Butlin’s: 1,000 jobs at risk when furlough ends. (link)
- Home working expected to double after pandemic, new study suggests. (link)
- From the start of the pandemic to the end of July, the number of furloughed workers in the retail sector fell from 1.85m to 789,000 as more and more people returned to work. (link)
- Premier Inn owner Whitbread to cut 6,000 jobs. (link)
- Company payrolls have plunged by 730,000 since the start of lockdown, data released by the Office for National Statistics showed in early August.
- The latest Sky News figures show at least 136,966 UK jobs have been lost in major companies due to coronavirus. (link)
- TSB to close a third of branches and cut 900 jobs. (link)
- Shell to cut up to 9,000 jobs as oil demand slumps. (link)
- Cineworld is temporarily shutting 128 theatres in the UK and Ireland, making the majority of its 5,500 workforce redundant, while Odeon says around a quarter of its venues will now only open at weekends. (link)
- About 450 jobs are to be cut at the NEC Group which has reported “almost zero revenue” due to coronavirus. Proposed redundancies equate to 55% of its permanent workforce. (link)
- Shop vacancies have risen to their highest level for more than six years after a raft of store closures caused by the coronavirus crisis, new figures show. Data from Springboard shows that 10.8% of shops stood empty in July, up from 9.8% in January. (link)
- Aviation and retail worst hit in the UK economy. (link)
- Eat Out to Help Out: More than 100 million meals were claimed for in scheme, says chancellor. (link)
- The latest BRC ShopperTrak footfall monitor shows that footfall across the UK’s city centre shops was down by 34.3% in August, compared with the same month last year. (link)
- Coronavirus costs of £155m take gloss off profits at Morrisons. (link)
- Caffe Nero, which has 660 UK stores, has asked KPMG to assist negotiations with landlords. (link)
- H&M to close 250 shops as Covid drives sales online. (link)
- Halfords bumps upcycle supplies as ‘unprecedented demand’ lifts profit. (link)
- Burger King serves up restaurant closures in a pre-pack deal. (link)
- Tech stocks have tumbled on Wall Street, in a sign that America’s economic recovery could be stalling – The S&P 500 lost 3.5% when it closed in New York on Thursday 3 September while the Nasdaq closed down by almost 5%. (link)
- Amazon pays £290m in UK tax as sales surge to £14bn. (link)
- Coronavirus: Lloyd’s of London expects to pay out £5bn in claims. (link)
- The US budget deficit has hit a record high of more than $3tn (£2.3tn), driven by the government’s massive spending on coronavirus relief. (link)
- The economy remained 11.7% below its coronavirus pandemic peak in July as the UK emerges from its sharpest recession on record, official figures show. (link)
- Bank of England to hold fire on policy despite growing pressure. Despite signs of a fragile economic recovery and inflation running well below target, the Bank of England is expected to leave policy unchanged on Thursday. (link)
- Coronavirus: $7trn could be lost to world economy due to pandemic, says OECD. (link)
- Eat Out to Help Out discounts push inflation down to 0.2%. (link)
- UK firms have voluntarily returned more than £215m to the government in furlough scheme payments they did not need or took in error. (link)
- Banks in talks about the joint recovery of £35bn Bounce Back Loans – High street banks are examining the creation of a “recoveries utility” that would collect Bounce Back Loans. (link)
- BoE warns recent case increases could hold back the economy. (link)
- UK economy contracted by 19.8% during the second quarter of the year.
- The ONS calculates that, during the second quarter, households cut their spending by a record £80.5bn. (link)
- Mortgage approvals bounce back to highest level since 2007. (link)
- Unemployment rate climbs to 4.5% – highest for three years. (link)
Other (for now):
- Coronavirus hurts the motor industry: Demand for new cars fell by 5.8% last month compared with the same month in 2019, according to new figures. (link)
- Deloitte, the ‘big four’ accountancy firm, has begun secret talks about the sale of its UK restructuring division, even as the coronavirus pandemic triggers a deluge of corporate insolvencies that should fuel a surge in its profitability. (link)
- An accountant and company director were detained on Thursday (10 September) on a suspected case of £70,000 Coronavirus Job Retention Scheme (CJRS) fraud following an HMRC investigation. (link)
- COVID19 sees a median of 5% additional annual IT budget spend amounting to $15bn per week during the first 3 months of the pandemic, according to @HarveyNashGroup. (link)
- Ford Bridgend is ending production after 40 years and 22 million engines in the south Wales town. (link)
- Jaguar Land Rover raises UK production after post-lockdown sales boost. (link)
- Low-deposit mortgage deals available to borrowers have plummeted in recent months as lenders play safer during the economic fall-out from coronavirus. Borrowers able to offer 10% of the value of a home as a deposit could have chosen from 779 deals at the start of March, data from Moneyfacts shows. Six months later, the choice was now down to around 60, the financial information company said. (link)
- The number of homes finding a buyer within a week of coming to market is up 125% compared to the same period last year and is the highest number recorded over the past ten years.
- Across Great Britain, the hottest market is in Scotland, where a third of all three-bedroom semi-detached homes sold by agents took a week or under to sell (32%), compared with 20% in 2019.
- The slowest market is in London where one in nine homes sold within the first week, though this is up from one in 20 in 2019. (link for above)
- Pandemic pushes price tags on larger homes ‘to record high’. (link)
And so, what does this mean in relation to professional services? Without repeating my previous observations, it might mean the following:
- We are seeing some law firm redundancies but also many success stories. Many/most firms are busier than they expected to be in the last quarter. For some turnover and profit is higher, and some firms have already announced that they are paying back Furlough money.
- There is still some hesitation in the market. The throttle is being slowly released by law firms as trading improves but they are still cautious and concerned about what next year looks like.
- A lot of activity for some firms is being fuelled on the back of the stamp duty holiday and employment law, both of which could fade away. Some feel that “resi” market prices are rising but will drop when the stamp duty holiday ends.
- The view on real estate still seems the same. Many want to drop a proportion of their real estate as soon as break clauses allow and perhaps move more to collaboration hubs. They recognise people want different things; they can get talent anywhere. Contrary to Lincoln’s quote law firms will need to please all of the people all of the time and will have to be able to operate in multiple ways to do this.
- Diversity has always been an issue in professional services. Some are now recognising “talent anywhere” and the ability to deliver genuinely flexible working to people with a wider range of backgrounds, skills and ethnicities. The remote working family who mutually supports each other better could be a feature of the future.
- The mental health issues have been well aired but from what I am seeing they seem to be coming to the surface more. As someone in a Tier 2 lockdown area, people feel things are much more draconian than before. The previous lockdown was in blazing sunshine and not the dark cold days with curfews we have now. Previously it felt like it was for up to 3 months and in a way, there was novelty value. Now it is life for the foreseeable future and with significant job losses, the rubber is hitting the road. For many sleep seems to be becoming an issue. Perhaps there are mental downsides in swapping your 10-mile commute for 10 meters and literally walking from one room to another. My Fitbit broke just before lockdown, but I suspect it would have been depressing to see my step count drop from 14000 a day to 20!
Some firms are making real strides in digitalization – Covid obviously accelerated everything but some (we are lucky to be working with a number) are seizing the moment to step things up a gear and transform their operating model and processes. It is a refreshing reminder that we have some very smart people in the profession. Regarding clients their position seems much more certain – if you are in IT, Pharma or Insurance you seem to be trading well in a secure position. Cinemas, Cruise ships or hospitality less so. Clients in the former camp again seem to be embracing change. They are not transforming things overnight but are certainly on a journey and again we are seeing some ambition and radical thinking. For all Brexit is looming. Some say Covid has pushed it away from clear focus but that is not what I am hearing. Both clients and law firms are very concerned. For some, this is giving rise to caution. As I have previously said Law firms don’t need a buoyant climate to make money. They just need things to be happening. What I have been reminded about is how much the world is generally “getting on with things” – I have lived through a number of recessions (please see 10 lessons for recessions) and I have been staggered to see how increasingly resilient the world is. After 9/11 the world froze. It took an unprecedented body blow and for two weeks the world froze and did nothing. Deals stalled and house transactions were stopped in their tracks. 3 weeks later things felt normal and for whatever reason, the human race seems to find a way. None of us has lived through anything like Covid but the world seems to be finding a way through it.
What should we all do? I don’t have all the answers (and I won’t repeat what I have said before) but:
- Stay circumspect – it has never been more important.
- Digitisation is here to stay. It will accelerate and so do not delay.
- Work out your new purpose. Has your purpose changed? What do your clients and people (and your family) need from you now? Adapt. Develop your new vision and make it happen.
- Take mental health seriously – your own and your people’s. Whatever you are doing double it. Train and support your people to get through these difficult times and sleepless nights.
- Work out the new growth areas. Logistics? Storage? Technology? Campsites?
- Don’t spend recklessly but don’t stop spending either. We all have a responsibility, and this is a time to improve our offerings and to become more efficient and leaner. I can already see the firms and corporates who are becoming stronger by the day.
- Could this be the age of knowledge management? For years people have focused on the technology and not the information in Information Technology. Those that excel will perhaps get both right and will ensure they get the right information to the right people and clients at the right time whether remote or in the office. Those who can be frictionless in how they work for clients will thrive.
- Be human. Everyone is dealing with a lot and none of us knows what people are dealing with beneath the surface. I am dealing with a difficult third party on behalf of a client at the moment who seems to lash out at those around him. This is never good, and I am sure his organisation does not fully appreciate the level of damage he could be inflicting on his colleagues. “Play Nicely” is perhaps the mantra for everyone.
- Now we have moved away from “being present” in the office let’s not replicate it virtually. Some organisations are hugely efficient, but I am seeing some individuals perhaps confusing action with progress. Some are perhaps feeling the need to be visible but done badly digital can sap our time; done well it is game-changing.
- Take some risks. A strange thing to say, you might think. These are tough times, but we will not trade out of them by not adapting and taking some risks. To quote Erica Jong: “The trouble is if you don’t risk anything you risk even more”.
As a final point is now the time to change our relationship with our smartphones? We apparently touch them 1800 times a day on average and “screen time” is going up. If we are now in a world where we are in a stream of Zoom and Teams meetings does something need to go in order to compensate for the huge uptick in screen time? If you don’t believe me perhaps read “The Shallows – what the Internet is doing to our brains” by Nicholas Carr. Let’s switch our brains on and take some conscious choices about what our life looks like and where we spend time. Deactivation from social media appears to be increasing but I am currently looking for stats to support that – if I find them, they will appear in Postman 3.