Covid

Bumping elbows

Freedom Day – a British Experiment

19 July 2021 is “freedom day” – the day when the UK government has relaxed the last Covid restrictions in England.  But does it mark a return to normality (whatever that is), or is it, as some have suggested, a dangerous British experiment?

For many of us, the relaxing of restrictions is a welcome relief.  The cost in economic and social terms has been high.  Many businesses in the hospitality sector have really struggled to survive the restrictions.  That’s not to mention the impact on our social lives.  Covid has left some people feeling incredibly isolated and others struggling on reduced incomes. 

Most of us are keen to see life return to normality.  After all, we cannot go on like this forever.  Sooner or later, we must find a way to live with Covid.

Dangerous experiment?

However, some experts have dubbed “freedom day” as a dangerous British experiment. 

In an article in the Lancet, on 7 July 2021, the idea of relaxing restrictions on 19th was branded as dangerous and premature in a letter signed by 100 experts that has since been endorsed by many scientists around the world. 

These experts highlighted five of key risks:

  1. A significant proportion of the population are still unvaccinated (especially younger adults and children).  This will lead to high levels of infection running the risk of leaving many people with long term health problems.
  2. It risks high levels of infection amongst children that will accelerate when they return to school.  This will lead to further significant disruption of children’s education.
  3. Such high levels of infection represent fertile ground for dangerous new strains of Covid to emerge.  This includes the risk of a vaccine resistant strain emerging.
  4. It will lead to more hospitalisations which will place significant pressure on the NHS.
  5. Deprived and vulnerable communities are the most at risk and likely to be hardest hit by rising infection rates.

The experts recommended delaying easing restrictions further until the vaccination program has covered most of the population.  This would imply a delay until late August or possibly early September.

As it stands, on 19 July 2021, the government statistics show that nearly 88% of the population had had their first jab and 68% had received both jabs.  These are high numbers and positions our vaccination roll out well ahead of other countries.  However, it is nevertheless the case that one in three of us are not yet fully covered.

Infections are rising

Infections have risen significantly since the beginning of June, as restrictions have been eased and we have had to deal with the impact of the more infectious Delta variant. 

Graph of UK trends in cases: July 2020 - July 2021

The number of cases is fast climbing towards 60,000 and could easily hit 100,000 by the end of the month.  There seems little doubt now that case numbers will exceed the peak we saw back in January 2021.

The link between cases and hospitalisation: weakened but not gone

It has been claimed that new cases are not leading to new hospitalisations. 

A few weeks ago, we wrote a blog in which we created a Covid Index to allow us to view trends in cases, hospitalisations and deaths in parallel.  So now seems like a good time to revisit this to see how well the data supports this claim.

Unfortunately, if we look at the data, we can see that this claim is not entirely true.

It is now clear that we are seeing a gradual but distinct uptick in hospital admissions.  More cases does mean more hospital admissions, even if the link is now a lot weaker than before.

UK Covid trends INDEX: July 2020 - July 2021

The good news is that the level of increase is not tracking new cases anywhere near as closely as was the case back in January.  At that time rising cases led to a similar rise in both hospitalisations and deaths.  These followed on fairly quickly behind case reporting. 

Now, the immediate impact is much reduced and instead we are seeing a more gradual but nevertheless notable increase in hospitalisation.

Clearly, the fact that so many people are now vaccinated (especially amongst the most vulnerable groups) means that a much higher proportion of infections are now mild or asymptomatic.

A modest increase in deaths

A closer look at trends over the past month also show that as yet we are not seeing any major uplift in deaths.  However, the figures do show a slight overall increase.

Graph of Covid Trends INDEX: Summer 2021 Trends

Overall case numbers have grown to be around four times higher than the average for the past 12 months. 

Hospitalisations are rising at a slower rate but rising, nonetheless.  The current levels of hospital admissions sit are around 75% of the average number recorded over the past 12 months.  At the current rate of increase it is likely that hospital admissions will exceed that average before the end of the month.

Deaths, at present, show only a relatively modest increase since the start of June.  We’d have to say that at present it is too early to fully judge the likely medium-term impacts on death rates.  Death rates are still low at around 10%-15% the average of the rate we have seen in the past 12 months.  However, this is still up from a rate of under 5% recorded during late May and early June.

Likely trend

As vaccination continues to roll out, it will inevitably have an increasingly depressive impact on infections.  However, the relaxing of restrictions will serve as an accelerant – especially amongst young adults who are the least protected and the most likely to wish to congregate together in large social gatherings at pubs and nightclubs.

It is always difficult to predict numbers given the changing nature of the pandemic and the ongoing rolling impact of vaccinations.  However, it seems that by the middle of August we are likely to see:

  • Infection rates; will probably exceed 100,000 cases.
  • Hospital admissions; likely to be c.1,300 per day.
  • Deaths; likely to be c.50-70 per day.

This would mean that hospitalisations would be around the levels we were seeing in mid to late February and deaths at around the levels we were seeing in mid-to-late March. 

With infection rates about 100,000, many people would be forced to self-isolate based on current test and trace rules, which could be very disruptive.  Although the government plans to modify rules of self-isolation for fully vaccinated people, this will not happen until mid-August.

A race to roll out

We are now in a race between a virus that has been given significant freedom to spread on the one hand and a vaccination programme that is fast progressing to a point where the population will be fully vaccinated on the other.  These two factors combine to push the numbers in different directions.

Of course, we have to re-open society and adapt to live with this virus at some point.  Let’s just hope we have not made that step a month or two too soon.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

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Sources

Government Coronavirus Data

Lancet, 7 July 2021

The Guardian, 16 July 2021

Covid in Numbers – why have some countries suffered more than others?

As vaccinations roll out, we are beginning to see some light at the end of the covid pandemic tunnel.  It will take a few months yet, but it seems almost unreal to think that by the end of 2021 we may finally be back to some kind of post-pandemic normality.

Now seems like an appropriate time to take stock.  What might we learn from the traumatic events of the past year?  We might ask ourselves the question – why is it that some countries appear to have faired so much worse with Covid than others?  How have some countries experienced relatively low death rates, whereas others have experienced such tragically high numbers?

The Worst Hit

If we take a look at the numbers, the worst hit of the larger countries include many European nations (eight from the top ten worst affected) as well as the USA and Mexico.  All ten have experienced more than 150 deaths per 100,000 population.  The worst affected at the time of writing is the Czech Republic, with over 230 deaths per 100,000.

Other countries have escaped relatively lightly.  Amongst the other European nations Germany has suffered significantly less – ie, experienced a death rate less than half that of countries like the UK, Belgium and Hungary.

Healthcare Quality

One thing we might look at is the quality of healthcare.  More developed countries generally have more established, advanced and comprehensive healthcare. That being the case, such nations should be better placed to deal with a pandemic such as covid.  Unfortunately, it is plain to see that there must be a lot more to it than this; with countries like the USA, UK and Italy all suffering badly despite their relatively advanced healthcare systems.

India has a comparatively small proportion of deaths (under 12 per 100,000 on official figures).  Despite this, India’s healthcare system is ranked only the 112th most efficient healthcare system in the world according to the WHO.  The USA is ranked 37th, the UK 18th and Italy 2nd.  Clearly there must be other factors at play.

One factor is potentially under-reporting.  One source estimated that this could mean that the true level of covid deaths is as much as five times larger than the official numbers in India.  However, even taking that into account, India’s death rates have still been significantly lower than those of the ten hardest hit nations.

Whilst the standard of healthcare has no doubt played some role here, there are clearly other aspects involved.

Population Demographics

One factor is population demographics.  Older patients are much more likely to become seriously ill and die from covid than younger ones.  Here India’s age demographics counts in her favour. 

Only 6% of India’s population is aged over 65.

Compare this to most European countries and the difference is striking – with around 20% of population in the hardest hit European countries being aged over 65.  Italy was the most vulnerable in this sense, with 23% aged over 65 before the pandemic hit.

Of the 10 hardest hit countries, 8 were nations where 19% or more of their populations were aged over 65.  The USA has a slightly younger demographic (16% over 65s) which would help to limit its vulnerability a little but is still clearly more exposed than somewhere like India.

Mexico represents the odd one out here.  Only 7% of Mexicans are aged over 65, giving the country a youthful demographic that is closer to that we see in countries like India.  We must therefore look for other explanations as to why Mexico has suffered so badly.

Urbanisation

Covid spreads best in environments where people live in close proximity to each other and, in general, people living in towns and cities are more likely to live in closer proximity with others.  Indeed, although India in general has seen lower death rates, it has nevertheless suffered more in major urban centres like Mumbai.

Many of the countries that have been worst hit have high levels of urbanisation which has likely contributed to higher death rates.  Belgium has an particularly high level of urbanisation (with 98% of its population living in urban environments), making it especially vulnerable in this sense.  Several other countries on the list have high urbanisation levels (80%+), namely the UK, USA, Mexico and Spain.  A country like India has much lower level of urbanisation overall (36%), which means its population is more widely dispersed and people in more rural environments are therefore less likely to come into frequent contact with others who might be affected.

Lockdowns

The lockdown measures taken by different countries at different times would also have an impact.  However, as these measures are often taken in response to the pandemic getting out of control in the first place, it is no surprise to find that many of the countries with the worst rates have had to impose longer and stricter lockdowns.

According to the Oxford Covid Government Response tracker those countries on our list that have taken the strictest measures for the longest periods of time over the course of the pandemic would include the UK and Italy.  This has not prevented either country from registering high rates however, although it has no doubt helped to prevent the problem getting even worse.

Based on these measures, those countries which have been laxer from this list would include Bulgaria (most notably), the Czech Republic, Hungary and Belgium.  So, it is possible that in these cases a more relaxed approach has contributed to a higher death rate.

Test and Trace

Another factor would be the efficiency of a country’s testing and tracing regime.  On this measure Mexico does especially badly, having only managed to test 41 out of 100,000 people in its population to-date – far fewer than any other country listed.

Nevertheless, the UK has now tested 1,585 people out of 100,000 – more than any other country on the table.  Despite this, the UK still has the third worst death rate overall.  But here the devil lies in the detail.  The UK has massively improved its testing regime over the course of the pandemic but, initially, the UK lagged behind somewhat.  During the first 60 days after the first five UK deaths the British managed to test just 23 people in 100,000.  This compares poorly to a number of other affected countries. 

Germany’s lower death rate overall is partly down to its test and trace efficiencies, especially during the early phase of the pandemic.  The Germans managed to test 37 people in every 100,000 during the first 60 days after their fifth death.

Of all the countries on the list, Mexico stands out as the most behind on test and trace at every stage of the pandemic.  No doubt this is a major reason as to why the country now ranks so highly in terms of death rates.

International Travel

Another factor is the level of international travel.  Countries that experience a large volume of people travelling through their airports and transport hubs are more likely to import covid from overseas. 

Of course, travel restrictions now apply across many nations but this was not always the case.  The UK and the USA would, under normal circumstances, see significantly more international traffic than most other countries.  And so they, along with Hungary, would have been most exposed to importing infection in the absence of strict border controls and quarantine measures.

The Czech situation

It is worth taking time to consider the Czech situation, since this country has experienced the most serious problems to-date. 

In terms of many of the risk factors nothing immediately stands out that would explain why it tops the list.  The level of urbanisation is high but not unduly so at 73%.  Likewise, its population demographic is not notably different from many other European countries (20% aged 65 plus).  It also receives limited international traffic compared to many other countries.

However, over the course of the pandemic its lockdown measures have been the second laxest of the ten worst affected countries.  It is also the case that its figures for test and trace do not appear as comprehensive as many others (although it appears to be testing a reasonable amount of people now).

According to Dr. Rastislav Maďar, the dean of the University of Ostrava’s medical school, the Czech situation can be attributed to three key mistakes.  The first of these was a failure to make mask wearing mandatory, the second a decision to open shops in the run up to Christmas and the third a failure to react quickly enough to the presence of new strains in the new year.

Key lessons learnt

Hopefully, it is clear to see that no single factor or measure can in and of itself entirely explain why any particular countries experiences a high death rate.  There are many factors working together in combination. 

However, the nature of the pandemic is such that it is clear that just a few missteps at any stage can very quickly lead to the situation rapidly deteriorating.  Hopefully, we can all learn from that and avoid making any future silly mistakes in the final stages of the pandemic.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We provide a wide range of market research and data services.  You can learn more about our services on our website.  Also, please check out our collection of free research guides for more information on specific services offers.

Sources

John Hopkins University https://coronavirus.jhu.edu/map.html

United Nations https://population.un.org/wup/Download/

Our world in data: https://ourworldindata.org/grapher/covid-stringency-index

Worldbank: https://data.worldbank.org/indicator/SP.POP.65UP.TO.ZS?name_desc=false&view=chart

ITV https://www.itv.com/news/2020-12-09/is-indias-covid-19-death-rate-five-times-higher-than-official-figures-suggest

CNN https://edition.cnn.com/2021/02/28/europe/czech-republic-coronavirus-disaster-intl/index.html

Assessing the Impact of COVID on Retail and Online Shopping

A far from reasonable year

COVID has had a huge impact on most businesses over the past year.  One of the sectors which has seen some of the most significant change is retail.  Lockdown restrictions have hit some parts of retail harder than others and prompted an unprecedented acceleration of the general trend towards more online shopping.  In this article we will examine some of the key changes revealed by UK national statistics, taking stock of what happened and its longer-term significance.

Back at the end of 2019 (remember then?) UK retail was reflecting on another year of modest growth. It was another year in which our shopping habits continued to move increasingly online at a steady albeit not spectacular pace. Overall retail sales were up a modest 3% and the proportion of business done online had edged up from 18% to 19%.

In the absence of any global pandemic a reasonable person would have predicted that 2020 would have seen a similar modest 3-4% rise in retail sales overall and a steady increase in the amount of online shopping from 19% to 20% or maybe 21%. 

But 2020, as it turned out, had no intention of being a reasonable year.

Now here we sit at the start of 2021, reflecting on a year in which retail growth has overall remained flat and the proportion of business done online has rocketed up to a staggering 28%.  That has led to a massive 10% decline in offline sales, hitting the high street hard.

And now we are looking at the prospect of old high street names like Debenhams and Topshop being snapped up by the new e-kids on the block in the shape of ASOS and Boohoo.  Who would have predicted that at the end of 2019?

Can the High Street bounce back?

Of course, much of the growth in online retail has been driven by the fact that COVID restrictions have meant that people have been forced to buy online.  At various times in 2020, pretty much nothing was open on the High Street except for supermarkets, chemists and convenience stores.  But the big question that many people are wondering is whether, once this pandemic is finally behind us, how many people will return to the high street and how many will continue to shop extensively online?

There is some evidence that we can expect to see at least some bounce back.  We can see that from a closer look at the 2020 data.  Q2 of 2020, when the first lockdown came into effect, saw the biggest drop in offline sales.  31% of retail business in this period was done online; up from 21% in Q1.  However, once the High Street started re-opening in Q3 sales did start to pick up.  And, whilst the level of online retail business continued to rise, it fell back from 31% of the total to 27%.  This suggests that, when COVID is behind us, we can expect to see some migration of shoppers back to the high street.

But how much of a recovery might we expect?  Can we expect the High Street to return to something like a healthy (if diminished) condition? 

Without question we would expect to see a short-term uplift.  People have been locked in for a while now, so being able to shop on the High Street without worrying about social distancing and COVID will have a strong novelty appeal.  High Street retailers will then have a short window of opportunity to persuade people to stay on the High Street rather than returning online.

That said, some might argue that COVID has simply accelerated a process that was happening anyway.  The historic trend has been for online to take an increasing share of retail sales.  This has been evident for years now; the last decade having seen the proportion of online sales climb steadily from 7% in 2010 to 19% by 2019.  Now, whilst the jump to 28% in 2020 clearly results from exceptional circumstances, the fact remains that many people have now grown used to shopping online.  Many customers are more comfortable with shopping online now, which was not the case back in 2019.  So, we can be sure that the proportion of online shopping is not going to drop back to around 20% again. 

But not all sectors of retail have been equally affected

Looking at the details beyond the headline figures reveals a more interesting story.  For not all sectors of retail have been equally affected by COVID and, as a result, a migration to online sales has occurred far more rapidly in some sectors than others.

Food retailing has held up well but has still seen a gradual move online

If we look just at food retailers (defined as businesses whose retail stores primarily sell food, like butchers, bakers, supermarkets and convenience stores), we have clearly seen some movement to increased online shopping.  However, this has been more gradual than that seen elsewhere. It remains the case that over 90% of sales continue to be made instore. 

This sector has doubtless benefited from the fact that its stores have been able to remain open throughout the pandemic.  Indeed, during the periods of the strictest lockdown restrictions, food retailers could remain open while most other retailers were shut.

However, food retail does have certain characteristics that would encourage consumers to continue to shop in store.  When it comes to buying fresh food, many consumers want to pick the product in person rather than leave it to chance.  Freshness is not something you can easily judge online.  So then the question is, how much would you trust the order picker to pick the freshest product?  (Of course, if all you buy is packaged and processed food then this is clearly much less of a barrier to shopping online.)

Another limitation on online shopping here is the whole question of supply.  Early on during lockdown, home delivery services were put under great strain.  At times it was difficult to book a delivery slot from a supermarket, which naturally limited how much business it was possible to do online.

We can expect to see more online shopping, but even given the pressures created by a global pandemic, instore sales of food products continue to remain very resilient.  The future here will be one of a steady migration to an increased level of online business, but physical stores will continue to remain the key channel to market.

Non-Food Retail stores have been hardest hit by the pandemic

Other retailers have been a lot less fortunate and have had to endure long periods of enforced closure during lockdowns.  This has clearly had a dramatic impact on sales and has forced a much higher proportion of business online.  In-store sales have dropped from £150 billion to a little under £113 billion in a single year.  Over the same period, online shopping has seen a dramatic increase from £27 billion to just over £41 billion.  And these numbers don’t even include any of the pure-play online retailers, like ASOS and Boohoo.

Unfortunately, the growth of online sales here was not enough to offset the decline seen in store.  These figures underline the harsh trading realities that have seen the demise of such well-known high street brand names as Debenhams, Top Shop and Dorothy Perkins.

Here the migration online has been gathering pace for a while, but the past year has seen a particularly dramatic acceleration in that trend.  This form of retail increasingly needs to rely on a strong online presence to survive.  In a way, many of the principles of the High Street still apply online – you need an attractive storefront, your store needs to be easy for the customers to navigate and the products need to be well presented (and of course you still need the right mix of products).  A strong brand image remains just as important online as in the High Street.  The media through which sales are conducted may be changing fast, but many of the underlying criteria for success remain the same.

The rise and rise of the pure-play online retailers

Retail businesses that have no stores are, as you would expect, primarily the pure-play online businesses.  These businesses have had a great 2020 with sales increasing by around one third. 

However, a small amount of business here is not done online.  This would include such businesses as mail order catalogues, telephone selling and automated vending machines.  This type of retail saw a modest rise in 2020, no doubt driven in no small part by the ability of these models to continue to operate during lockdown (and potentially even benefit from it).

Nevertheless, the big story here remains the rise of the online retailers.  No doubt we can expect this sector to continue to see significant growth into 2021.

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Understanding Change and the post-COVID Normal

There is little doubt that 2020 has brought considerable changes to our world.  Who could have predicted how dramatically COVID would have turned our world upside down at the start of 2020?

Hopefully, as 2021 begins, we can see some light at the end of the tunnel.  The new vaccines are starting to roll out (not a moment too soon) and perhaps we might dare hope for a return to normality during the spring.

But what will that normality look like?  Quite apart from the radical disruption to our social and working lives that COVID has wrought, it has quite likely accelerated and even inspired some long-term changes that will remain with us for years to come.

Remote working was forced on a large section of the working population for much of 2020.  By and large it worked.  Will office culture ever be the same again?  Or will the future of office work point towards an inexorable march toward the remote/virtual office.  The practical savings for office-based business are potentially huge – just think how much many businesses spend every year on prime location office space and business travel.  Imagine if you could slash that by cost by half or, perhaps, by even more than half.  Well, it turns out you probably can.  Tools and technologies that support the virtual office will become increasingly critical.  Who knows, in five or ten years from now we could all be holding international business meetings in VR simulated boardrooms.  In fact, I predict we will.

Many businesses have had to adapt to a world where trading online has, at times really been the only option.  Buying and selling at fixed locations and in-person has been hard hit.  Post COVID it will surely bounce back to some extent but the long-term trend to online retail has surely been greatly accelerated.  ONS figures showed that the % of UK retail business done online rose from around 16% in 2017 to 19% in 2019.  Without COVID we might have expected it to climb to around 21% for 2020 maybe.  However, the pandemic has meant the final 2020 figure is likely to end up closer to 26% or perhaps even a little higher.  

I’m sure people will want to return to the bricks and mortar shops to some degree once the pandemic is over – but online commerce has undeniably come of age and will, without question, form an increasingly critical part of any future marketing.  In future the look, feel and effectiveness of online sales and marketing will be just as important (and probably more so) than any in-person selling.

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