How economies influence idustries

The last six years have been quite upsetting in terms of business, economy and finance, The Great Recession having been so destructive that the much awaited economic recovery set to succeed it has only recently begun to make itself known (and in a slight fashion, at that). The impact of the economy on business and industry has been severe at best, resulting in all manner of baleful shocks, the brunt of which has been felt most by the everyman. 

With this in mind then, how exactly does the economy as a whole affect everyday industries in the UK?

Economies and businesses are highly intertwined. When economies experience shocks, investment goes into freefall and the effects are felt in a number of ways. Businesses across every sector end up curtailing their steady investing in stores, offices, products and employees. Walking down the high street this means store closures for the most vulnerable industries, particularly the retail sector; a stagnating or steadily degrading trend in the state of stores- fewer redesigns, decaying storefronts etc; and a comparative slowdown in the number and variety of new products.

The make-up of businesses also undergoes a change if the economy as a whole experiences negative growth prospects too. Take supermarkets; in the early to mid noughties, stores such as Tesco, Sainsburys and Asda, taking advantage of rising levels of car ownership, low petrol prices and the spread of out-of-town shopping centres, embarked on a superstore spending spree, opening hundreds if not thousands of vast megastores. Consumers were happy with the increased selection of goods and services on offer; the trade-off between jumping in the car and driving to the store (as supposed to frequenting local stores) was fine in the eyes of consumers, up until 2008, of course.

After the crash, with squeezed budgets, high utility bills and a massive drop in the levels of consumer credit on offer, customers stopped travelling to these huge stores, instead opting to do smaller, everyday shops in an effort to save cash. Supermarkets, faced with declining profits, then decided to diversify their store portfolios away from big stores and moved towards providing lots of smaller, local supermarkets. Take one look in the centres of cities across the UK and this trend becomes immediately obvious.

Industries dependent on entertainment spending have also had to adapt. Betway, a sports betting operator, recently announced that it was launching a cash-out feature that will allow customers to take out their winnings or cut their losses earlier than before, even whilst live sports events were taking place. With this, more choice and financial safety would be felt by customers, stabilising the consumer base for this particular business.

The ways in which economies affect industries are numerous, many of which are far too complex for this article to touch upon. Finding out how each affects one another can only be a good thing though, especially since these aspects of our financial system are often hidden behind industry-specific lingo and confusing statistics.