3 UK industries that are thriving during the COVID-19 pandemic

The global COVID-19 crisis has adversely affected a range of UK industries and forced many businesses to close. But there are several key UK sectors that have capitalised on new opportunities and generated major success in 2020.

The COVID-19 (coronavirus) pandemic has drastically altered the way UK companies do business. Intense government restrictions have forced consumers to change the way they buy goods and services – affecting what, how and where businesses can reach their target markets.

The result of those changes has turned many UK industries totally upside down.

According to researchers at PwC, the UK officially entered into a recession in the first quarter of 2020. Countless shops, venues and offices were forced to shut their doors for weeks on end – slashing footfall by 45% and erasing about a quarter of the UK’s overall GDP.

Even with restrictions lifting in some areas over recent weeks, projections indicate the UK’s economy will continue to shrink right into 2021.

Translation: 2020 has been the most challenging year many business owners have ever faced. But the good news is that the global pandemic has also created some fantastic new business opportunities in certain key sectors.

Changes in market behaviour have pushed businesses and customers to flock to companies in the courier, ecommerce and supermarket industries – and new rising stars are meeting consumer demand and reaping the financial rewards.

Here are a few key UK business trends in 2020 that have emerged as a result of the COVID-19 pandemic:

  • Retail footfall has shrunk by 45%.
  • Courier, postal and delivery activity has increased by 50%.
  • Online sales have gone up by 20%.
  • 1 in 5 UK households now buy groceries online.
  • The market for independent convenience stores has increased by almost 70%.

This guide breaks down each of these up-and-coming sectors, what they’re doing well and how new market entrants can get involved in sector activity and capitalise on fresh demand.

The courier industry

At a market size of £11bn, the UK’s courier industry has always been a bustling hive of activity that’s ripe with opportunity. But COVID-19 has totally redefined how crucial it is for both retailers and customers to have efficient and reliable courier companies.

According to the UK Government’s Office for National Statistics (ONS), post and courier activity has shot up 50% since 2019. In fact, the courier sector is one of the only UK industries that hasn’t declined in 2020.

And with government restrictions still in place in many areas, both convenience and necessity are bound to consolidate that growth.

Researchers are projecting the courier market to increase in size by more than 11% in the next two years. With relatively low start-up costs and minimal market entry barriers, that makes the courier sector a pretty smart place to start a new UK business or expand existing UK services.

The sector itself is incredibly varied. Existing service providers range from push bike or motorcycle takeaway food deliveries and van parcel delivery services to document distribution, temperature controlled parcel deliveries, heavy load distribution and everything in between.

That means there are plenty of openings for enterprising companies or new start-ups to join the fast-rising UK courier space.

UK courier providers can be both licensed or unlicensed depending on the type of vehicle a business is operating, the type of products they’re transporting and more. Various courier services are also obliged to follow certain consumer protection and fair trade rules based on the particular goods they’re moving or the services they’re providing.

For more information on consumer protection laws and how they impact the courier industry, consult the GOV.UK website.

The ecommerce industry

Government lockdown orders forced a huge proportion of brick-and-mortar retailers to shut their doors in 2020 – pushing the bulk of consumer spending online, instead.

According to research conducted by retail insights firm Edge by Ascential, this surge in online shopping has added £5.3bn to the UK’s already successful ecommerce industry.

By the end of 2020, ecommerce businesses in Britain are expected to rake in just under £79bn. That represents market growth of 19% since 2019, with UK retail ecommerce sales now accounting for 27.5% of all retail sales.

But with the pandemic far from over, in-person shopping restrictions are still (and will continue to be) a reality in many parts of the UK. That’s why ecommerce is only expected to keep growing over the coming months.

By 2024, analysts are forecasting online sales will represent more than one-third of all purchases.

A large chunk of those sales are understandably being generated by titans of the ecommerce industry. Amazon alone has added an extra £2bn to its UK sales in 2020 as a result of the pandemic.

But smaller online traders with 10 employees or less are starting to earn a larger proportion of that market share – and joining the ecommerce sector has never been simpler.

Company formation and web domain registration can both be completed online in a matter of minutes, and there are a number of intuitive and affordable web hosting options that enable anyone to create a slick and functional ecommerce website quickly and efficiently.

But you’ll also need to set up an Internet Merchant Account (IMA), which is a type of payments account that many payment service providers (PSPs) require an online business to create so that they’re able to accept credit and debit card payments online.

For more details on how you can get started selling your products on the web, check out this comprehensive guide.

But forming a company and launching an online store aren’t the only considerations you should bear in mind when entering the ecommerce sector. You’ve also got to develop a business plan that takes into account how you’ll be fulfilling your online orders for goods or services.

That means making arrangements with a reliable courier or postal service, considering regulations on packaging and labelling your items, customs obligations if you’ve got customers overseas and more.

If you’d like a list of the rules you must follow when selling products online, consult the GOV.UK website.

The supermarket industry

With bars and restaurants drastically limited in the services they’ve been able to provide in 2020, the UK’s supermarket industry has exploded in size.

Official ONS figures have revealed the UK’s food sector has grown by 140% in the past few months alone – and take-home sales from UK supermarkets has increased by nearly 19% year-on-year.

As we’ve already touched upon, online sales have been driving that growth. According to researchers at Kantar, UK online grocery sales have risen by 91% in 2020.

One in five UK shoppers say they’ve booked an online delivery or click-and-collect order in the last three months. That equates to around 5.7m customers, and this trend is only expected to continue.

Analysts are anticipating the supermarket industry will grow by 5% per year between 2020 and 2027. That means UK supermarkets could see their sales increase by up to 40% in the next seven years alone.

In addition to higher uptake in online orders, customers are now spending more at supermarkets than ever before. Although shoppers are visiting or ordering less frequently from supermarkets, they’re spending 42% more per shop than they did in 2019.

And although huge importance is placed upon the UK’s big supermarket chains like Tesco, Sainsbury’s and Asda, the truth is that convenience stores and small supermarkets have experienced higher growth this year than big stores.

Independent supermarkets have grown by 69.3% in 2020 – indicating a genuine market demand for small grocers and convenience stores across the UK. That presents enterprising business owners with a solid opportunity to capitalise on this growth by joining the supermarket sector.

That being said, there are plenty of considerations you should bear in mind before setting up your own supermarket. In addition to adequate market research and a comprehensive business plan, the start-up costs associated with setting up a shop can be higher than other industries.

That’s because supermarkets generally require a premises (unless you opt for an online-only option), a variety of consumable stock, and there are additional regulations and legal requirements you’ll be expected to follow.

Fortunately, the UK Government offers a comprehensive set of how-to guides and advice on starting up a supermarket, labelling rules and safety guidelines on the website of its Food Standards Agency.

Looking ahead to 2021

While the UK’s courier, ecommerce and supermarket industries all represent outstanding successes in 2020, it’s worth pointing out these are not the only sectors to have experienced considerable growth during the pandemic.

COVID-19 has introduced a variety of both challenges and opportunities for businesses operating in all industries – and so it’s up to business owners to demonstrate ingenuity and flexibility in order to find those opportunities and generate success.

Want to learn more about improving company performance, company formation and risk management?

Check out the Linnear COSEC knowledge centre to ensure your business stays up-to-date on the latest industry news, or get in touch to find out how our company secretarial services can drastically reduce your costs and free up your time to help you focus on running your business.

About the author

Nicholas joined in 2018 to set up the Company Secretarial Department in the group’s company formation divisions. After establishing the department, he was a key stakeholder in the development of Linnear CoSec. Prior to joining the group, Nicholas worked in a variety of client-facing positions at an international provider of corporate services, caring for a diverse portfolio of companies. He is a Chartered Secretary and Governance Professional, and holds a bachelor's degree in Politics as well as a Masters in Corporate Governance.

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