Jubilee celebrations won’t save Britain’s consumer economy
After two years of Covid restrictions, the bank holiday will be a time for large gatherings of friends and family. This means more demand for clothes – you need the right dress or costume for these garden and street parties. When Prince William married Kate Middleton in April 2011, the flurry of events sparked a rush for new outfits, according to British retailer Next Plc.
It helps that fashion is having a moment, as women are ditching their pandemic tracksuits and spending on trendy going out clothes. The current range of floaty dress styles work well with sneakers – practical for outdoor events – but those looking for more formal footwear could also boost sales. High heels could come back in force.
All these festivals also mean a greater demand for food and drink. The Diamond Jubilee in 2012 generated a 10% increase in supermarket sales in the week leading up to the festivities, according to data provider Kantar. This time around, Brits should stock up on barbecue food – which also tends to have a higher margin – as well as alcohol and soft drinks. During Jubilee 2012, sparkling wine sales more than doubled from the previous year, according to Kantar, and the drink is even more popular today than it was 10 years ago.
Consumers will also seek out indulgent desserts and cakes, either making them from scratch and increasing demand for supplies, or buying them from a store. Wm Morrison Supermarkets Ltd. saw decorations, her Clarence the Corgi cake and her Victoria Sponge – renamed Elizabeth sponge – are all selling well. Tesco Plc said it expected Britons to spend on Scotch eggs, scones, gin and party hats.
Meanwhile, pubs have been granted an extension to stay open until 1am from Thursday to Saturday. With paydays for many businesses arriving at the same time, it could be a big weekend for bars and restaurants, which could provide a much-needed recovery after a post-Easter trade slump.
Springboard, which tracks the number of shoppers, estimates that foot traffic will increase by 8% across all UK retail destinations this week, compared to the previous week. High streets are expected to lead the way, with a 10% lead, also likely thanks to the mid-term school holidays.
However, the UK should not expect a lasting improvement in consumer confidence or retail and hospitality.
For starters, many people took advantage of the two-day holiday to get away. With pent-up demand for leisure travel, especially to sunnier climes, much of the population is expected to be out of the country during the festivities.
It’s also worth remembering that past royal occasions have kicked off great sporting summers. The Diamond Jubilee was followed by the Olympic Games. In 2018, the World Cup closely followed the wedding of Prince Harry and Meghan Markle. That year was also blessed with a heat wave to get people socializing outdoors and splashing on shorts and sunscreen. This year, the World Cup will only start at the end of November.
But perhaps the biggest drag on the celebrations is the cost of living crisis. Prince William’s wedding, the Diamond Jubilee and the Olympics took place as Britain emerged from the financial crisis. Perhaps that’s why consumers felt comfortable indulging themselves.
The economic context is now gloomy. Inflation means higher prices for this festive shop, which may well reduce the amount of Britons in their shopping carts. For example, the average amount spent on a bottle of sparkling wine in 2012 was £5.20 ($6.56), according to Kantar. Now it’s £7.05.
Of course, the situation could be saved by soaring temperatures. Nothing lifts the British spirit like a bout of warm weather, although at the moment the forecast looks mixed.
While the government’s promise of winter fuel support has eased some worries about the spiraling cost of living, conditions are set to get even tougher in the fall as people turn on their heating and lockdown savings exhaust themselves with the summer holidays.
Add to that rising borrowing costs, and even if Jubilee jingles store and restaurant coffers this week, it will likely mark a final hurray rather than a sustained increase in spending.
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Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.
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