Trading, cash v plastic, holiday discounts, JDW, DGE & other:

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A DAY IN THE LIFE:

So, I’ve been driving to Leeds quite a bit recently and it’s drawn my attention to all of the ‘in-Elmet’ places.

You know like you get Westcliff-on-Sea, Westgate-on-Sea and, of course, for readers of a certain age, Walmington-on-Sea, we also up here have Sherburn-on-Elmet, Barwick-in-Elmet and a few others and it prompted me to wonder what or where Elmet was.

I mean ‘sea’ is pretty obvious but Elmet, it turns out, was a Celtic Kingdom that somehow survived into the Saxon period without being absorbed into Yorkshire, or Northumbria as it was then, until the seventh century. 

So, given all of the strife and whatnot that would have been going on at that time, they must have been hardy blighters but the only genes that seem to have survived into the twenty-first century, are the ones that make them terrible drivers.

Because they seem to excel in waiting to turn left onto the busy A64. And waiting and waiting. And waiting a bit more until they see a lorry thundering along towards them in order to pull out in front of it and then tootle leisurely through the gears up to a stately 30 or 35mph.

Natural selection may have something to say about that over time but, for the moment, be warned, that is what it is.

Let’s take a moment to congratulate Hull City on their four match, not losing streak. Weak, to be sure, but about the best run of the season. On to the news:

PUBS & RESTAURANTS:

Trading:

CGA has reported its Daily Drinks Tracker for the weeks ending 1st and 8th March. It says that drink sales rose as ‘On Premise bounces into Spring’ with LFL sales across all drinks up by 4% in the first of the two weeks and up by 8% in the week to 8th. Although perhaps aided by some good, early Spring weather, both numbers are comfortably above the prevailing rate of inflation…

• In the week to 1 March, CGA reports that all drinks categories bar spirits performed well. Long alcoholic drinks beer and cider were up by 4.9% and 6.5% respectively whilst soft drinks and wine performed better still at plus 5.3% and up 6.2%.

• In the second of the two weeks, beer, cider and soft drinks benefited from better weather at plus 8.7%, plus 16.5% and plus 8.7% respectively. Wine was up 6.1% and even spirits managed a positive number (though still negative when the impact of inflation is taken into account) at plus 0.4%.

• The Tracker notes ‘after a challenging January and early February, sales recovered in the third week of February—and momentum has continued.’ It suggests that ‘a spell of bright weather moved in and February pay cheques unlocked some extra spending.’ The Rugby helped.

• CGA’s Rachel Weller says ‘after tough Winter trading conditions for suppliers and venues, these figures are hopefully a sign of brighter times to come. Sales were well above current rates of inflation across nearly all days and categories and with the triple celebrations of St Patrick’s Day and Mother’s Day to come, we can be cautiously optimistic about further real-terms growth.’

• Ms Weller adds ‘however, much will depend on the weather, consumer confidence is still volatile and some significant cost rises are looming. Businesses will have to stay laser-focused on people’s needs and On Premise trends to sustain sales and protect margins.’

• Langton: March is often a reasonable to good month but the weather (and sporting fixtures) can play a large part in how the month turns out. And the biggest days, Mothers’ Day and St Patrick’s Day, are yet to come. Nonetheless, the above suggests that the trade has made a good start to the month and the weather, at least for the next week or so, looks fair.

Money:

Interesting to note that the FCA is considering scrapping the contactless limit of £100. The government is under pressure to stimulate growth and it is clearly looking at options. Elsewhere, the Guardian notes that ‘campaigners and politicians say the law should force retailers to accept coins and notes….’

• Some consumers are reported to have turned to cash in order to help them budget their spending. With this in mind, The Guardian reports ‘major high street chains and restaurants, including Gail’s bakery, Itsu and Zizzi, are being challenged by campaigners over their refusal to accept cash after a jump in consumers turning to notes and coins for daily spending.’

• Langton: You know a trend is underway when bar staff return to you from the till with a card reader in their hand. They simply don’t expect you to use cash and, to a large extent, many people do not.

• However, some consumers have been reportedly returning to cash as they find it easier to budget. They see their spending as it happens rather than when their credit card bill or bank statement arrives but this is currently clashing with the move across some retailers to decline to accept cash. The horse may already have bolted in some areas – car park machines etc and the FCA says that 85% of consumers make contactless – not just plastic- transactions each month. Nonetheless, it is hard to see cash being totally removed from trade in the near future.

Lobbying:

UKH CEO Kate Nicholls has taken the occasion of the report of a drop in GDP in the UK in January to say ‘increasing costs across the board are putting intense pressure on both businesses and consumers, and this will only intensify in April, when £3.4 billion hits hospitality businesses….

• She adds ‘hospitality growth had been storming ahead in November and December but, like the economy, contracted in January.’ Whilst the services sector actually grew at a decent lick in January (with construction and manufacturing in decline), Ms Nicholls says ‘this shows how vulnerable businesses are and emphasises the need for action at the Spring Statement to reduce costs and boost business confidence.’ UKH concludes ‘with the right measures, namely delaying the lowering of the employer NICs threshold, hospitality has proven to be a sector that can react most strongly and deliver much-needed economic growth, alongside social value.’

Other news:

Wasted beer. Waste-watchers, which is backed by UKH, has pointed to data produced by beer quality services company Avani Solutions as suggesting that poor pouring techniques and suboptimal cellar management are a major cause of beer wastage in the UK….

• It says that some two billion pints are poured annually in the UK but as many as 860 million pints of beer being lost every year. That does seem a little hard to believe. If 43% of pints pulled never make it to the punter, then something is seriously amiss.

• Avani Solutions MD Amanda Thomson says the above is ‘severely impacting pub revenues’. She says ‘through our experience of working with draught beer dispense systems, and by the independent research we’ve conducted across licensed UK hospitality venues of all sizes from village pubs to licensed retail groups, we have identified that approximately 43% of pints poured suffer from wastage. Do the maths and it’s an incredible amount of beer and over £200m in revenue that is literally being poured away.’

• Far be it from Langton to question the maths here – and beer wastage is doubtless a serious issue – but, if some 860m pints of beer are lost a year and this equates to just £200m in revenue, then somebody, somewhere, is being offered beer at 23p a pint and that, last seen, was what it was selling for in the late 1970s.

Exports: The Food and Drink Federation reports that British food and drink exports to the EU have fallen by 34% since Brexit. Meanwhile, the total volume of food and drink imported into the UK rose to the highest ever level last year…

• The FDF says ‘these latest figures show the stark reality for the UK’s 12,500 food and drink businesses who are struggling to deal with the complexity and bureaucracy that comes when trading with Europe.’ It says ‘government must prioritise working with the EU, and our industry, to remove as many of these barriers as possible.’

Mitigating cost increases: The MA reports that reducing labour costs, creating products in-house and utilising technology are some of the ways operators are mitigating the price rises that are due to hit the sector from the end of this month.

Sweet beers: Tesco reports that younger consumers seem to be demanding fruit beers with a sweeter taste.

In the US:

• Restaurant sentiment. NRN reports that ‘consumer sentiment fell again in March, after sliding nearly 10% in February, according to the University of Michigan’s latest index released Friday. It says the fall was experienced ‘across age and income demographics as concerns mount over persistent inflation and a slumping stock market.’

• Consumer spending. The FT reports Retail Next saying that ‘US shoppers are cutting back on spending and sentiment is sliding as President Donald Trump’s tariffs and market volatility threaten to undermine one of the key drivers of the world’s largest economy.’ It says ‘many retailers reported solid sales at the end of last year, but warned of slower growth in 2025, and industry data shows that their forecasts are already playing out.’

COMPANY NEWS:

Diageo has cautioned that Donald Trump’s proposed import tariffs will put thousands of American jobs at risk.

The Sun reports that JDW is to cut ‘steak, mixed grills and gammon from menus across the country in a cost-cutting shake-up.’ It says ‘the pub chain’s top brass John Huston told staff on Friday that the popular dishes would be disappearing in May after an increase in meat costs made them the company’s “biggest loss-makers”.

BOXHALL City, which is due to open on 10 April, has confirmed the full line-up of food and drink operators due to trade from day one. There are 13 operators including a new concept from the team behind the  Argentinian steak restaurant, Gaucho.

The MCA comments on the newly-opened venue BLOODsports, which has been opened by MEATliquor founder Scott Collins in Covent Garden…

• The MCA says it is ‘an outrageous and entertaining blend of live sports, cult horror screenings, arcade games, and a bold new food and drinks offering. CEO Scott Collins tells the MCA ‘this was supposed to be a one-off, but I might need to move fast before people start copying the model.’

Rare Restaurants, which operates the Gaucho and M Restaurants chains of outlets, has appointed Baton Berisha, formerly at The Wolseley, as CEO.

Shares in ready-meal maker Bakkavor rose sharply last week as the company revealed that it had turned down two takeover bids from rival Greencore.

HOLIDAYS & LEISURE TRAVEL:

Discounts are said to be spurring holiday bookings at the moment. This will need watching…

• Travel Weekly writes ‘earlier-than-usual discounts and keenly-priced offers for summer are helping to spur cost-conscious families to book, according to the trade.’ It mentions Jet2holidays’ discounts of up to £300 per family.

• As mentioned on a number of occasions, demand sometimes isn’t the problem and supply often is because, particularly in an industry with high fixed costs, discounting is always a temptation if demand shows any signs of undershooting supply.

• Because, the only thing worse than flying a plane at a fully costed loss is failing to offset any of your overhead by not flying it at all. Hence, the depreciation, head office costs etc may be discounted in the heat of the moment and, provided the plane can be flown with revenue ahead of its literal running cost, then discounting is a temptation. If this is coming earlier this season than last then, as we mention above, it will need watching.

The 19th annual Holiday Money Report from Post Office Travel Money has reported that the Algarve is once again the cheapest region globally in which to take a holiday…

• The most expensive destination is said to be New York. The PO’s Laura Plunkett says ‘it’s interesting to see the Algarve back at the top of the barometer chart again and this is largely down to the remarkable consistency in its low prices for meals and drinks.’ She says ‘even though the Algarve has featured in the best value top 10 since 2010, it has struggled to match the cheapest long-haul destinations on price in recent years. Now prices have risen in its closest competitors but remained low in Portugal.’

IHG reports on the China tourism market saying that, ‘supported by favourable policies, Greater China’s tourism market continued to recover [in 2024], with both the number of travellers and tourism spending wholly surpassing the level of the same period in 2019.’

OTHER LEISURE:

The FT suggests that TDR Capital may sell gym chain David Lloyd to another internal fund.

Tesla has warned that it could be damaged by President Donald Trump’s trade policies. President Trump is urging Republicans to buy a Tesla themselves.

FINANCE & MARKETS:

Splitting the 0.1% drop in GDP in January into its constituent parts, the ONS says that manufacturing fell by 0.9% whilst services rose by 0.1% and construction fell by 0.2%.

The price of gold went through $3,000 per ounce last week.

The RICS reports that a net balance of 14% of estate agents saw a drop in enquiries (rather than a rise) last month….

• The RICS says ‘the UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches.’ Chief economist Simon Rubinson says ‘some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment.’

Rightmove reports that average prices are rising in March by less than would be the seasonal norm. it says ‘the big milestone ahead in England is the stamp duty deadline, and with a massive logjam of 575,000 moves going through the legal completion process, many cost-conscious buyers will be doing all they can to get their move over the line and avoid unnecessary extra tax.’

Chancellor Rachel Reeves is to meet with regulators across UK industries today in a bid to remove red tape and encourage growth. She may find she is asking turkeys to vote for Christmas. Ms Reeves says ‘by cutting red tape and creating a more effective system, we will boost investment, create jobs and put more money into working people’s pockets.’

Sterling lower at $1.2933 and €1.1893. Oil higher at $70.99. UK 10 year gilt yield up 1 basis point at 4.67%. Markets better on Friday and into Monday and London set to open around 9 points higher as at 6.30am.

RETAIL WITH NICK BUBB:

• Saturday’s Press and News (1): On Saturday, the front-pages of several papers led on the PM’s warning that President Putin is not taking attempts to secure a ceasefire in Ukraine seriously: the main headline in the Guardian was “PM: Putin must not ‘play games’ over ceasefire”, whilst the Daily Telegraph went with “Stop your games, Starmer tells Putin”. In other news, according to the Times: “1m to have disability benefit cut by Labour”, whilst the Financial Times ran with “Spending cuts ruffle ‘tense’ Cabinet”. The Daily Mail decided to highlight a silly story about the House of Commons Speaker, Lindsay Hoyle (“Hoyle handed lobbyist pass for Commons”). And if you’re wondering how the wretched Boris Johnson tried, in his Daily Mail column, to defend Donald Trump’s handling of the situation in Ukraine, given the lack of the “brutal squeeze on Putin” that he predicted a week ago…he
claimed that “I trust and believe Trump WILL hit Putin with every shot in his locker – he can’t let the world think he’s lost to a cowardly mass murderer”. 

• Saturday’s Press and News (2): In terms of Retailing news in Saturday’s papers, the main focus was on the Asda results and their promise of more price cuts. The main Business story in the Guardian was headlined “Asda to cut prices and increase staff to boost sales and market share”, whilst the Daily Mail flagged that “Asda boss warns of no quick fix at troubled grocer” and the there was a small article in the Telegraph noting that “Asda is struggling, new Chairman admits”. In similar vein, the Times noted that “Asda revival won’t happen overnight, boss insists”, whilst its market report highlighted that there was a big sell-off on Friday afternoon in the Food Retail sector on price war fears: “supermarkets run for cover”.

• Saturday’s Press and News (3): The FT didn’t cover the Asda story, but, in other news, it flagged that shares in the French luxury giant Kering fell 11% on Friday, on the back of the news that the new Creative Director of the struggling Gucci will be Demna Gvasalia (aka ‘Demna’). The FT also caught up with the comments from Shein boss Donald Tang on the much-trailed IPO of the fast fashion giant: “Shein boss plays down questions over valuation”. And the Lex opinion column in the FT caught up with the news about the lack of a JLP Bonus for the third year running, thundering that “John Lewis sends staff a glum message about state of retail in UK” and concluding that “Tarry can be forgiven for skipping this year’s bonus, but he would be unwise to ditch the tradition for good”. The News pages of the Telegraph had an article about the revolt against self-checkouts by elderly food customers
in Bridgewater in Somerset (“Queue here for a chat: The shoppers in revolt over self-checkout”). The Guardian had a big Business feature on Frasers (“The dealmaker: What next for Mike Ashley’s patchwork retail empire?”), highlighting the staff unrest about the plan to move the HQ 70 miles south from Shirebrook to Ansty in Warwickshire and noting that, although the company denies that Mike Ashley ‘still calls the shots’ (as Michael Murray is the CEO), ‘everything on the market or in trouble comes across his desk’. 

• Sunday’s Press and News (1): On Sunday, the front-page headlines were focused on the backlash against the welfare cuts planned by the Government. The Sunday Times highlighted that Liz Kendall, the Work and Pensions Secretary, is “expected to back down on plans to freeze some disability benefits next year” after a backlash from Labour MPs, whilst the Observer flagged that “PM considers U-turn on cut to benefits for disabled people”. The Sunday Telegraph reported that the Health Secretary, Wes Streeting, in a column for the paper, said he is preparing to “axe more health quangos” (“Streeting: War on NHS waste just beginning”). The Mail on Sunday dredged up a story about the origins of the COVID pandemic in China, reporting that “a former spy chief submitted a secret dossier to No 10 early in the pandemic reporting that the virus had originated with a leak from a Wuhan facility”.

• Sunday’s Press and News (2): On Sunday, in terms of Retailing news in the papers, one of the front-page stories in the Business section of the Sunday Times was about the problems of the Fenwicks department store chain, which has brought in restructuring experts from Alix Partners (“Fenwick cost-cutting puts jobs in jeopardy”). The Sunday Times also had an interview with Simon Roberts, on a tour of Sainsbury’s recently refurbished store in Cobham in Surrey (headlined “The big shop is back”), noting that he is not worried about a potential price war. And the first ever Beauty Rich List in the Sunday Times was headed by Charlotte Tilbury, with her wealth estimated at £350m. The Mail on Sunday flagged that the Waterstones boss, James Daunt, has raised the hopes of a City float for the business.

• Sunday’s Press and News (3): In terms of the Economics comment columns in the Sunday papers, we give our usual shout-out to the column by David Smith, the Sunday Times Economics correspondent (headlined “Uncertainty rules, so treat forecasts with a pinch of salt”), in which he noted that “America’s on-off tariffs will be bad for global growth if maintained”. We also enjoyed the column by the veteran Economics commentator William Keegan in the Observer (headlined “If Germany is embracing spending, why can’t Labour?”).

Today’s News: It’s a typically quiet Monday, apart from the usual flurry of share buyback announcements, but back on Friday lunchtime there was a flurry of excitement, firstly with the builders merchant giant Travis Perkins announcing that its finals, previously planned for tomorrow, were being delayed, “as a result of the group’s auditor requesting additional time to complete its standard audit procedures”. Then the Asda Q4 results, which were embargoed until 2pm for some reason, came out, with the message from ‘a source close to Asda’ that “We have a substantial war chest to deliver a sustained, long-term investment in lower prices for customers”. The supermarket’s total revenue declined by 0.8% to £21.7bn in y/e December, while LFL sales (excluding fuel) were lower by 3.4%, but Asda grew adjusted EBITDA after rent by 5.8% to £1.14bn during the year, “driven by improved gross margins,
particularly in non-food reflecting the strength and scale of its George business, as well as a full year of profit from the 356 Asda Express convenience stores and forecourt sites acquired from EG Group”. Allan Leighton, Asda’s Executive Chairman, said: “While regaining customers’ trust will take time, we will undertake a substantive and well backed programme of investment in price, availability and the shopping experience to deliver this. This will materially reduce our profitability this year, which we expect to reverse as our market share recovers and improves over time”.

Today’s Press: The excellent press summary email from the Guardian about today’s front-page headlines notes that the Guardian itself leads with “Anger grows over Starmer’s ‘£675 a month’ disability cuts”, while the Times has “Labour war of words on disability benefits”. “Death of the work ethic” – the Daily Mail cites findings that one in four young people don’t want to work at all. “Labour disabilities benefits cuts rebellion grows despite No 10 concessions” – that’s the i while the Telegraph’s story on school reforms takes aim at the education secretary: “Phillipson under fire for bowing to unions”. “Streeting: Docs over-diagnose mental issues” reports the Metro. The Financial Times goes with “US shoppers tighten belts as tariffs and market volatility sap confidence”.

BDO High Street Sales Tracker: The weekly BDO High Street Sales Tracker for medium-sized Non-Food chains gets a lot of focus, because… it is the only weekly (as opposed to monthly) guide, that’s publicly available, to what’s happening to Non-Food Retail spending. The survey includes a few Homewares and Lifestyle retailers, but we must make our usual caveats, as, in our view, it is over-concentrated on relatively upmarket/small Fashion retailers and underplays “big ticket” household spending. We also think that the survey’s approach is statistically flawed. However, the latest survey, for what it’s worth, shows that the recent break in the surprisingly good trading trend continued in the w/e March 9th, despite the fine weather, with Total BDO LFL sales down by 7.4% (with overall Store sales down by c9.0% LFL on last year, although overall Online sales were up by 3.3% LFL), albeit total
Fashion sales alone were down by only c0.8% LFL. Lamentably, BDO failed to flag that Mothering Sunday is much later this year (it’s on March 30th, compared to March 10th last year), as Easter is also so much later, so that those weekly figures faced distorted comps…

News Flow This Week: After the postponement of the finals from Travis Perkins that were due tomorrow, the week gets off a quiet start, but the US jewellery giant Signet has its Q4 results on Wednesday. On Thursday we get the Wickes finals and the latest MPC interest rate decision, as well as the Retail Week Awards event in the evening, along with the Nike Q3 (in the US). The widely followed GFK Consumer Confidence index figures are then out first thing on Friday.