Normally, it is a case of survival of the fittest. Not this time.
With the Office for Budget Responsibility forecasting that the economy could shrink 35% by June and the International Monetary Fund starkly warning that the global economy faces its biggest downturn since the Great Depression of the 1930s, the future does not just look bleak for businesses already in dire straits, it looks gloomy for plenty of previously robust companies, too.
While some have moved from panic into planning mode, others have moved from panic into desperation mode as they try to avoid being among those chancellor Rishi Sunak admits the government will not be able to protect.
I am not talking fast-fashion brands Warehouse and Oasis or department store chain Debenhams, which were already looking down the barrel of administration, or businesses that, in Prestbury chairman Nick Leslau’s words, “Covid-19 will prematurely euthanise” but “would have expired in relatively short order anyhow.”
I’m talking hospitality operators begging for nine-month rental holidays to avoid a “bloodbath” and landlords consequently contending with significant rent as well as service charge shortfalls. I’m talking gyms and leisure centres in danger of being evicted from their premises as landlords use a legal loophole to penalise them for non-payment of rents. I’m talking office tenants and flexible workspace providers currently paying business rates on empty premises as if it were business as usual – while grocery chains pay nothing for 12 months despite experiencing far better business than usual.
Never have so many businesses, through no fault of their own, found themselves teetering on the edge. Just weeks ago, many were celebrating the great start they had to 2020. Now, having gone from thriving to barely surviving, even the fittest face challenges that they may not be able to overcome. For many with no underlying health conditions at all, the Covid-19 pandemic could be an extinction-level event.
However, as in every war, there will be winners as well as losers. You would have to think some of those winners will be in the residential sector. In our first View from the Top, seasoned campaigner Tony Pidgley certainly comes out fighting. Although the Berkeley chairman concedes there are operational challenges, not least the suspension of construction on many sites, he notes that the housebuilders are “financially quite stable” and while they “might not like the choppiness”, it’s their “job to get the housing market moving”.
Grainger chief executive Helen Gordon is equally sanguine, pointing out that the business was in a “very strong position” financially when it went into the lockdown and arguing that she sees it as “a chance to set ourselves apart”. Encouragingly she believes the industry is in better shape to weather this storm than it was to deal with the global financial crisis in 2008.
Time will tell, but sectors such as grocery retail, healthcare and industrial are already looking like winners, which is why the companies that typically invest in them remain committed to dividend payments while others have suspended theirs. Let’s hope there are plenty more where they came from and that the industry not only emerges “chastened but better”, as Leslau puts it, but fit enough to continue fighting the good fight.