Subjects: We must go again for hospitality, being multi-channel must be the Apple of a company’s eye, the four groups of customers
Authors: Mark Stretton, Glynn Davis, Ann Elliott
We must go again for hospitality by Mark Stretton
It’s been a long week. Without wanting to sound too much like Boris (who would want to do that?) there’s little doubt the sector is once more on a war footing.
The last time I contributed to Propel’s Friday Opinion, we were about to go into lock-down and it was clear that many hospitality and leisure businesses faced an existential battle. And whatever you wish to call it, we are back there again; it’s a different phase and, for many, it’s a matter of survival. The mood has certainly flipped from the sector’s reopening in July and the dizzy days of Eat Out To Help Out in August.
We’re still taking stock of yesterday’s speech from the chancellor when he outlined his winter support package for the economy and for jobs. While all, and any, support is, of course, welcome, for the first time there were no rabbits pulled from Rishi’s hat. To many, it looked like he might have made a very significant number of hospitality workers redundant. People who would have jobs when the world normalises, but don’t have them right now.
The initial reaction to the announcement from the sector’s leadership was palpable anger and frustration. It was all the worse, of course, for coming on the heels of the illogical 10pm curfew that was foisted on the sector this week. And the prime minister’s somewhat risible address to the nation, including a directive for people to stop getting back to the office and to resume working from home where possible, effectively abandoning many city centres.
There is also little doubt in my mind that having spent most of the past few days in an understandably reactive mode, many of the sector’s leaders will now turn their attention to positive and proactive action; what to do, how to make it work and how we pull our businesses through. It was one of the things that was so impressive in the dark days of March – how quickly the sector’s leaders were able to absorb and process what was happening, and react accordingly.
What to do now must include a continuation of the concerted and co-ordinated campaign to make the seismic challenges facing hospitality matter as political issues. We must make the case for the chancellor to go further in his support for the industry, and to make hospitality a special case – not least for jobs, for the recovery and growth, and for the career paths and opportunities we provide to thousands (millions, actually) of young people.
Since March, spearheaded by UKHospitality and the indefatigable Kate Nicholls, the industry has been making the headlines and been a key part of the news cycle. A glut of industry leaders have stepped up to speak on these national platforms including, to name a few, Will Beckett, Zoe Bowley, Graham Cook, Jonathan Downey, Ann Elliott, Simon Emeny, Natalie Feary, Tim Foster, Charlie Gilkes, Des Gunewardena, James Hacon, Robin Hutson, Luke Johnson, Karen Jones, Mark Jones, Charlie McVeigh, Hugh Osmond, Alex Reilley, Matt Snell, Brandon Stephens, Phil Urban, Martin Wolstencroft, and many, many more. Apologies to all those missed.
We must now go again. As an industry, it’s crucial we maintain the very vocal and visible presence on television, on radio and in our national newspapers. We need our leaders to be making the case in every key news programme and current affairs programme, to continue to educate and articulate what is happening in our industry, and the positive and constructive support we need in order to come through this crisis, and to be able to protect jobs and our businesses, so that hospitality and leisure can full participate in the recovery. Not to mention the idiocy of the curfew.
The reason why is because it really makes a difference. When one of our leaders is on the 6pm and the 10pm BBC News, or the Today programme, it matters. When The Sun takes an interest in hospitality, the government has to, too. It was tremendous to see Peter Borg Neal of Oakman Inns on Question Time on Thursday (24 September).
We must harness the media to implore the government to act and go further. The sector also desperately needs a more measured approach – to put a stop to this jittery approach of announcing rules, then leaving the industry to interpret them with no notice. To provide some evidence for what they are doing and to apply the common-sense test to any measures or restrictions.
Many parts of the hospitality industry are now not able to operate in part or in full because of covid-19-related restrictions. Some are closing early, some are in business districts with no customers and some, in the case of nightclubs and theatres, are unable to open at all. These businesses and the jobs attached to them deserve help, and we need the chancellor to go further.
As Peter Borg Neal said on Question Time: “There is a difference between a business that isn’t viable and one that isn’t allowed to operate.”
Mark Stretton is managing director of Fleet Street Communications, and part of the UKHospitality communications team
Being multi-channel must be the Apple of a company’s eye by Glynn Davis
Apple’s market cap recently hit an incredible £2tn, which represents a doubling in only two years, and this has happened during a period when sales of its core iPhone have been slowing. The reason for this apparent disparity is largely down to a realisation by investors that the value of Apple is not so much down to its sales of hardware but is increasingly about the revenues it drives from its eco-system – including its App Store, add-ons like its AirPods, and services such as iCloud, Fitness+ and Apple Pay.
All the major technology firms such as Apple have a laser focus on building-out their ever-broader eco-systems that ensure customers remain tied to them for a growing number of services and this keeps their virtual tills ringing. Such is the potential value to be had from locking customers into these eco-systems that it’s not surprising companies of all types have sought to tap into the trend.
The most obvious route is through subscription services. Even the most non-tech-focused of companies can bolt on a proposition that delivers goods or services to customers on a regular basis for a recurring subscription fee. It’s clear that many businesses are doing just that because, since lock-down, 22% more companies have set up such services, to add to the existing 28%, according to Barclaycard. Take-up by consumers had increased by 39.4% year-on-year in July as 65% of UK households now spend an average of £552 on a typical seven different subscription services.
Against this backdrop Pret recently launched its in-shop coffee subscription “YourPret Barista”, which – for £20 per month – enables subscribers to enjoy up to 150 coffees and other drinks. It’s an interesting move because Pret has, until recently, eschewed anything loyalty-related and digital, preferring to do everything by gut feel.
However, in reality it had already been working on addressing this outdated view under new chief executive Pano Christou who, last year, sought to kick-start a digital transformation to make the company more multi-channel. Its historical focus – purely on the store model – had served it well, just like it has for many other foodservice companies, but Christou understood major change was needed.
He had begun early stage trials of digital labelling on shelves and scan-and-go technology as well as installing iBeacons on tables. But covid-19 has accelerated things massively and prompted much more than this tinkering around with the stores. The game plan is now all about aggressive, full-on multi-channel and the creation of an eco-system.
To this end, as many as 30 outlets have been closed, click and collect has been introduced into some stores, the chain is rapidly building up its delivery business through Deliveroo, UberEats and Just Eat, and has formulated plans to open up to ten dark kitchens dedicated purely to producing food for these delivery partners.
There is also a trial of “Pret Office Drops” that is a replica of the scheme popular in the US, which enables orders to be taken on an app and the customer then collects the goods from Pret shelving, located in their office. Plans are also afoot to launch pre-packed food in supermarkets in the new year and to sell bags of coffee through Waitrose and Ocado later this year. Christou has suggested that between a third and a half of turnover could be derived from off-premises sales.
Pret is, by the admission of its chief executive, very much in the eye of the storm of covid-19 and is feeling the full impact of the massively reduced footfall in major city locations. Its actions to create a multi-channel model are, therefore, being undertaken at a critically rapid pace. Although other companies might not be in such an acute situation, it could well be advisable for them to take an equally proactive approach because the direction of travel is very much away from physical stores being the sole revenue generators for any business.
What will likely link the different channels for Pret is its YourBarista scheme that will form part of the backbone of the burgeoning Pret eco-system. Anybody questioning such a focus merely needs to look at Apple for inspiration and recognition that using such tools to engage with your customer base are the critical levers on the dashboard of future prosperity.
Glynn Davis is a leading commentator on retail trends
The four groups of customers by Ann Elliott
The only thoughts that are really filling my head at the moment are around covid-19, the new rules that came out earlier this week and their impact on customer behaviour in our sector.
From my own experience of listening to customers recently, they tend to fall into one of four groups and each of these groups will be reacting in different ways to the national news (and to their own specific local lock-down situation).
1. Very cautious. Concerned about their own health and/or shielding others
For this group of people, the new rules will not, potentially, make a great deal of difference in terms of their own socialising plans. They are not likely to go out any more than they have done over the past few months. The escalating situation though could make them feel more vulnerable and more concerned.
This is now the time when those operators who were heavily involved in their communities from March and lock-down number one, might spring back into action. This time though they will be running their normal-ish business as well as trying to help those in need. They may not be able to handle delivery, cope with click and collect, open a community shop, sell online, rally round their customers or run errands in the way they did before but they will try.
I have just received this from an NHS Volunteer Responder that suggests concern and activity is ratcheting up: “With reports of a significant increase in the number of covid infections, we need your help so we can continue to support the NHS and vulnerable people in your community. I am writing to ask you to please switch back to on-duty and start volunteering by accepting tasks. If you didn’t receive any tasks earlier this year, please be assured that more than 70% of volunteers on duty each week now receive a task notification.”
2. Cautious. Not necessarily shielding but also not prepared to take unnecessary risks
These customers will be reassured by the new measures with regard to face masks for teams in pubs and restaurants. I have seen this to be their biggest concern in surveys along with wanting lots of stations for hand sanitising and feeling reassured that places are being kept clean.
Anecdotally, they tend to believe that young people are blatantly ignoring the rules (a perception fanned by the likes of The Mail) and that the curfew will, therefore, be a good thing. This government action may well convince them they are OK to go out now more than they have done recently.
Operators could contact these people, socially and digitally, and reiterating the steps they are now taking in line with, and perhaps even beyond (eg, loo cleaning/table cleaning/kitchen cleaning) government requirements.
3. Realistic. Would admit they don’t always abide by the rules (“everyone has done something that they shouldn’t have”) but generally comply
These new rules are unlikely to change their re-adopted eating-out habits after Eat Out To Help Out. They take their own precautions and expect others to do the same. If they want to go out then they will go out – they feel safe. Communication is key to these to maintain their loyalty and visit frequency.
4. Defiant. Had enough or didn’t take much notice in the first place
There have always been groups who have ignored the whole crisis and continued in their own way. Increasingly now, I hear customers, who have been supportive throughout, intending to ignore both local and national regulations. They have just had enough. They will interpret the rules in their own way. If they ate out before, they will certainly be eating out now.
There is a “however”, and it’s a big however. I was in London on Tuesday, and again on Thursday, this week. There was markedly less footfall on Thursday. It felt as if all the positivity generated through August and continued through September, had been drained out of the city.
I don’t believe this change in behaviour has been driven by curfew or face masks but rather the fact, as espoused by the government, that this crisis is here to stay for the next six months. This has had a dramatic impact on how our customers see the future panning out. Now they see a real risk to jobs, their income, their ability to provide for their families, their Christmas plans and their whole security. They have lost confidence. This is the biggest single threat now to our sector.
Ann Elliott is a hospitality strategist, connector and adviser