European small businesses that survived the first coronovirus lockdown are getting creative for the second wave and the epidemic of long-term fall weather.
In the face of another recession and uncertainty crisis, how long the crisis can last, firms are fighting to retain existing customers and are hunting for new ones to stay. Many have previously learned from the painful experience of lockdown to navigate the work brought on by the virus and some drastic long-term changes in consumer behavior.
In Brussels, Laurent Gerbaud was determined not to be caught again after his city tea room shut down during the initial outbreak. His plan was simple, if unexpected: expansion in the midst of an epidemic-induced recession.
With fewer tourists and office workers in the city center, he opened a second store in the residential neighborhood to respond to one of the major changes of 2020, to capture more business from the house-to-house crowd, and One that can continue.
“This is very different from earlier imprisonment. We are very much prepared.
Although the euro-zone economy is likely to shrink this quarter in the current round of sanctions, they are less severe than the blanket lockdown imposed in March. Better use of masks, better testing, and rules of social distortion are allowing more businesses to remain open.
For many people, however, it is about the damage threshold until a vaccine arrives. It will not be easy.
A report from McKinsey last month showed that one in five small business owners feared they would default on a loan. More than half worried their business would not survive for more than five months.
In response, lobby groups are demanding more government support. Cesare Phumgalli, head of Italy’s trade association for artisans and small businesses, this week prompted the government to broaden patronage, saying it “needs to finance all businesses that have suffered serious revenue losses.”
The future of small businesses is important for the euro area. They are the backbone of the region’s economy, accounting for about half of employment. 99% of all non-financial enterprises in Europe have companies employing less than 50 people.
One area doing well is manufacturing, which in recent months helped to lead Europe’s economic recovery in the form of services – especially hotels and restaurants – faced failures.
But even there it is far from clear. A survey by the German industry body DIHK found that one in five engineering companies lacked liquidity. About half were withdrawing investment, unwilling to give much needed funds in times of uncertainty.
This caution is being demonstrated at the German industrial fan-maker EBM Papast, even though it does not require government loans and no longer staffs the furloughs.
“We keep investment and expenditure low, because we don’t yet know how sustainable the levels of business are,” said Chief Executive Officer Stephen Brandle.
For retailers, the immediate concern is the Christmas season, when they make up a large portion of annual revenue. While economists at JPMorgan Chase & Co. have said they expect activity to pick up before the holiday season, governments are not sure. France will only gradually lift its lockdown, with bars and restaurants remaining beyond the December 1 expiration date, and Italy will continue its regional lockdown system with different levels through the winter.
In Rome, Sara Petrucci is busy putting together contingency plans.
His toy store Il Pacicino Rosso is on a small sloping street near the Spanish Steps, usually filled with tourists. That business went away, while the semi-lockdown has wiped out a lot of local business.
To prevent the migration of customers to large online shopping sites, Petrucci is emphasizing a personalized approach and is using food delivery app Glavo to capture customers. The store sends emails with photos of new toys and special offers. It’s all click and toys are wrapped and packaged, handed to a Gloveo runner and sent across the city.
“We try to innovate,” Petrucci said. “I personally deliver if a customer is nearby. If they want to see new things in the store, I can videoconference with them and show them so that they can choose the things they like. “
Self-employed Dutch agent Terry Groen said the companies are re-booking the model, although sometimes days pass without contact with customers. She fills the gap by working on her online branding to “put herself on the radar”.
“People are finding creative solutions,” she said. “What can you do, okay?” You just can’t do anything. We need to move forward. “
But for some businesses, the options to adapt are limited because they cannot survive without customers coming in the door. The optimism that Spanish businessman Maria Teresa Coris tried to contain earlier this year was eluded by tourists on the Mediterranean coast, where he runs a 24-room hotel in the town of Tosa de Mar.
Corris is wary of exploiting the more government-backed debt state because it does not want to keep debt accumulation.
“Companies can try to do all they can to survive, but they can still be ruined,” she said. “Those are the dark clouds hanging over us all.”
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