The RSMR Weekly Broadcast - 2020: a year of stark differences in our physical & virtual worlds

There's no shortage of knowledge and expertise at RSMR! Each week we get our heads together and talk about events in the world and how investments are affected by them. Our broadcast tackles a wide range of topical issues facing investors from liquidity to the future of alternatives to politics and the pound. We like to think of it as cracking content for the financial adviser. Have a read & get clued up...

Prime Day, delayed by months this year, typically runs in mid-July and although Amazon doesn’t release specific revenue numbers, it said that it sold more than 175 million items during last year’s event. E-commerce has been embraced in the UK, it’s steadily grown and become a larger part of overall retail sales but has taken a lasting leap forward during the pandemic. We’re spending the same, we’ve just changed how and where we buy. If you have an online presence right now, your business has a chance to survive and flourish.

It’s safe to say that Amazon is a bit like Marmite, to some it’s the most convenient thing since sliced bread but to others it represents exploitation and comes at a serious cost to people and the planet. Campaign groups and small business representatives called on consumers to shun the Amazon Prime extravaganza in support of small retailers, but this is a double-edged sword since lots of small businesses are using Amazon Prime to sell their goods by accessing the world of e-commerce, generating more revenue and bolstering their chances of getting through the pandemic.

Amazon has a global headcount of around 1,000,000 and as a large employer, issues are inevitable. A German trade union called on workers at seven Amazon warehouses to go on strike to coincide with the global Prime Day promotion event. The two-day strike was organised as part of a long-running battle with Amazon in Germany over better pay and conditions, noting that a coronavirus bonus introduced for workers in Germany in March had been scrapped again in May. The vast numbers of orders generated through Amazon Prime Day was said to escalate the workload, increasing the number of people in the warehouses to potential breaking point in terms of the measures put in place to control the spread of coronavirus, potentially further damaging Amazon’s reputation.

What will the fallout of the rise of e-commerce and the increasing power of commercial giants like Amazon look like? With everything going virtual, the high street will really struggle. Commuting is unlikely to return to previous levels and even with a vaccine, people’s psychological outlook and behaviour won’t just rewind and carry on as before. Cities that rely on high footfall will seriously suffer and their future is unknown. The footprint of department stores is already reducing, reflected in successful property funds that have diverted away from the high street; the death of many city centres may well be on the cards.

People are placing more emphasis on their home and life in their immediate vicinity. Families are moving and as a direct result, towns may prosper from an influx of new residents wanting to take advantage of local facilities, leisure and entertainment, once we can interact more.

There will be winners and losers in this situation and only the most robust and agile businesses will survive. Demand has changed so drastically that the recruitment spectrum has reduced to a fraction of our pre-Covid world. Delivery drivers are one of few roles that are in high demand and with businesses failing and redundancies commonplace, there’s a migration of workers from different sectors and levels to this area.

2020 is a year of stark differences, we are all in the same storm but not in the same boat. Some businesses will fail and others will thrive, the future of our physical world is uncertain and unknown, yet the horizon burns bright in our virtual universe.

QUIZ QUESTION: According to a press release from Amazon, how much did Prime members save during Prime day this month?

LAST WEEK'S ANSWER: The turnout for the Brexit referendum was 72.2%