“There will be a growing need for their specialist services”
A new report by AXA has measured the effect of the pandemic on High Street health services including optometry, but suggests that small businesses will continue to adapt
A new report by the insurance company, AXA, has highlighted the adverse effects of the pandemic on health services in the High Street such as optical practices, dentists and independent pharmacies.
The report, Small Business, Big Picture, developed in partnership with the Centre for Economics and Business Research (CEBR), studied the state of the UK’s small and medium-sized enterprises (SMEs) on the High Street.
The study found that while many SMEs are in a strong position, established health services including optometry practices struggled during the pandemic, with some in “dire straits.”
Data revealed independent dentists, optical practices and pharmacies saw a 12% decline in turnover. There was also a “drastic” drop in new practices opening on High Streets, with the health and pharmaceuticals sector seeing a fall of around 20,000 in new businesses opening – accounting for an almost 40% drop year-on-year.
Commenting on the research, Claudio Gienal, CEO of AXA UK and Ireland, suggested the fall in turnover could partly be down to the temporary closure of optical practices and dentists during the first lockdown in 2020, also pointing to the need to take on locum cover if staff members were required to isolate.
“However, we also saw many businesses successfully adapt to these unique challenges and, as restrictions continue to ease, we believe there will be a growing need for their specialist services within the local communities they serve,” Gienal added.
Reflecting on the report, AOP Councillor, Tushar Majithia, optometrist and director of Lunettes Opticians, said he was not surprised at the data, telling OT: “I know several practices that have reported a drop in income.”
Sharing his own experience, Majithia explained that the business saw turnover “significantly” affected at the start of the pandemic, but witnessed a strong recovery when practices were able to resume services.
“We have seen a moderate increase in turnover over the last six months due to pent up demand and patients feeling more confident about come back into practices,” Majithia said, though pointed out, “we have noticed a slight drop off in spending behaviour as the supply chain issues have affected consumer confidence.”
With Lunettes Opticians practices based in market towns, Majithia acknowledged: “Our experience is probably likely to be very different to practices located around city centres and near large office hubs, due to reduced footfall and people working from home.”
The broader picture: the effect on the High Street
The AXA report highlighted that the most common issue reported by many SMEs over the pandemic was falling turnover, with 61% of businesses surveyed reporting a decline in turnover over the last 12 months, and with retail in particular seeing a 25% drop on average.
Analysis of data found that SMEs run by younger individuals were more resilient to the negative effects of the pandemic on turnover, with 18–24 year olds reporting a 7% decline in turnover on average, and 25–34 year olds seeing a 12% decline. This was compared to a drop of 15% reported by 35–44 year olds, 24% seen by 45–54 year olds, and 29% reported by 55–64 year olds.
For 45% of respondents, “helping people in need” had been an important part of their business during the pandemic, while 39% agreed that their business had played an important role in the local community during the crisis.
Many respondents (42%) said their business had adapted to provide new products or services during the pandemic to support the national effort.
The survey also saw a level of “community-mindedness” from both SMEs and consumers, with 42% of SMEs reporting their business had seen an increase in customer loyalty during the pandemic. A further 43% said they had a new-found appreciation for their wider community, while 39% said their business had been supported by their local community.
The report suggested customer loyalty had also risen in the last year, with 57% of SMEs reporting that more of their visitors were repeat customers over the past 12 months, while 49% said that more of their customers were from the local community.
With more consumers visiting local businesses, 41% of SMEs experienced a rise in revenue from local customers and only 21% saw revenue from this group fall.
Commenting on this pattern, Majithia told OT the practice had also noticed a change in patients’ habits, suggesting: “We have definitely noticed an increase in customer loyalty, with patients less likely to shop around during the lockdowns,” also agreeing, “there appears to have been an increase in a ‘sense of community’ and desire to shop local.”
Business support in the pandemic
Evaluating the use of the support available for SMEs during the pandemic, the report found that over half of businesses surveyed made use of the furlough scheme, with 76% finding it useful.
More recently-established businesses, set up between two and 10 years before the health crisis, were found to be particularly reliant on support.
The report highlighted that it can be harder for smaller businesses to face shocks than larger or more established companies, but Josie Dent, managing economist for CEBR, highlighted: “Smaller businesses tend to be more dynamic and adaptable to change.”
“During the pandemic, they’ve created new products and services and built new relationships with customers both local and further afield,” the report said, adding that with continued support from the government, partners, employees and communities, “SMEs will bounce back.”
Asked about their concerns over the next 12 months, 23% of SMEs admitted that future restrictions due to COVID-19 or other diseases remains a worry, while high levels of debt accumulated during the pandemic concerned 24%.
Another 19% are concerned that the pandemic will have resulted in “lasting changes” to consumer behaviour, 18% are worried about continued weak domestic demand, and 18% highlighted rising labour costs.
SMEs also identified opportunities, however. A fifth of businesses said that new technology will bring efficiencies in the near future, while new ways of working were seen as an opportunity for growth by 27% of SMEs.
New domestic clients and the chance for expanded local business was identified by 26% of respondents, and the introduction of new goods and services was mentioned by 23%.
The report suggested SMEs are “uniquely placed” to take advantage of the opportunities, as a result of their adaptability, adding, “We’re also likely to see a whole new generation of SME decision makers crop up – supported by local communities with strong links to their local businesses.”
Considering how SMEs can be supported in the pandemic recovery, the report suggested that government must play a central role.
Supporting the health and wellbeing of decision-makers will also be important, and continued expert advice, support and services for businesses will be required.