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Morning Briefing Strap Line
Fri 15th Jul 2022 - Friday Opinion
Subjects: A week is a long time in politics, London-centric businesses must look to the regions, implementing a sustainability strategy across a nationwide business, turning sunshine into sales 
Authors: Paul Chase, Glynn Davis, Jane Bates, Jean-David Thumelaire

A week is a long time in politics by Paul Chase

So, on 3 July, I jetted off to Turkey for a much-needed break, and what happened? The prime minister resigned! Sitting in my hotel room high above Turunc Bay, I watched this political-cum-psycho drama unfold on BBC World News. Ostensibly, the mass resignation of 52 members of the government was triggered by Boris’ lies and memory lapses about what he knew and when concerning the sexual shenanigans of an obscure deputy chief whip. It has been obvious ever since the Profumo affair that it’s not the scandal that brings a politician down, it’s the cover-up. But, in just a week, the whole kaleidoscope of domestic politics has shifted, and never has Harold Wilson’s old dictum “a week is a long time in politics” been truer. 
 
Plato once said: “One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.” The parade of second raters currently standing to succeed Boris – and their equally uninspiring counterparts in the opposition parties – is testament to this truth. And how uninspiring it is to see most of them engaged in a tax-lowering arms race to garner votes. This, of course, has been taken up on social media, with various ‘midwits’ proclaiming that cutting VAT and other taxes will reduce inflation.
 
I’ve explained in this column numerous times what inflation is and isn’t, and I’m not going to bore readers with a further explanation. But tax cuts must be funded either by more borrowing or money printing, which will fuel inflation, or by making cuts elsewhere in the government’s spending plans. Cutting VAT from 20% to 12.5% – one of the more inane demands of the ‘midwittery’ – could potentially cost £62.6bn a year, and making cuts that big would require a reduction in government spending of 5.7% across the board in just a year. Are these people mad?
 
Of course, I understand why operators in the hospitality sector want VAT reduced, but a more thought-through response is required in terms of reducing the unfairness in the VAT regime – particularly with reference to the ability of supermarkets to heavily discount alcohol prices as a traffic-builder to generate grocery sales, most of which don’t attract VAT. And the same applies to business rates – wholesale reform is what’s needed, not one-off relief measures, however welcome they may be in the short-term. And yet, none of those competing to succeed Boris have announced serious policy initiatives that could enable us to grip inflation or reform taxes to ensure greater fairness.
 
The Tory leadership race is an ideological contest. This is interesting to political anoraks like me, but will, I suspect, leave most members of the public unmoved. Which is a pity, because ideology increasingly drives policy when politics polarises, as it is currently. If you ask a communist why they still support communism despite the disaster it has been everywhere it has been tried, they’ll invariably reply: “Ah, yes, the Soviet Union, but that wasn’t real communism, real communism has never been tried.”
 
But there are people who believe that real capitalism has never been tried either. These are the people who tell us that the only way to reap the benefits of Brexit is to create Singapore-on-Thames, a low tax, small state economy where it is possible to cut taxes across the board but still afford world-class public services – because tax cuts will unleash a tsunami of entrepreneurialism, innovation, and economic growth, and lower tax rates will always generate higher tax takes. And that is supposedly how we square the circle. The only thing missing from this utopian narrative are the words “and then they all lived happily ever after”.
 
I’m backing Rishi Sunak in this contest because he’s the grown-up in the room – prepared to state clearly that wild tax cut promises are fairy tale economics. I don’t believe he is, by instinct, a big state high spender, but the covid pandemic required extreme emergency measures – including the money-printing that is the underlying cause of the current inflation in the UK and abroad, where similar lockdown policies were implemented.
 
These are serious times, and we need a prime minister who understands how markets work and does, in fact, know how to grip inflation. Our sector desperately needs price stability and well thought-through tax reforms that will underpin the contribution we can make to economic growth and recovery. Will Rishi succeed where Boris didn’t? No, but I think he will fail better than the alternatives.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health
 

London-centric businesses must look to the regions by Glynn Davis

When returning to the Marble Arch area of London recently after some years, it was noticeably subdued until I turned a corner onto Seymour Place and saw a throng of people enjoying post-work drinks outside The Carpenters Arms. This felt more like the atmosphere I was looking for, and I pointed out to the landlord that he had by far the busiest place in the area. He was nonplussed and suggested it was nothing like the numbers he used to enjoy consistently.
 
This is a feeling that has been conveyed to me by other pub operators in central London, who have acknowledged they are doing good trade compared with the dark days of lockdowns and stop-start reopenings, but it remains way short of those pre-covid levels and it is very inconsistent. From a consumer perspective, it seems we’ve almost forgotten how rammed many places were at peak times in the centre of the capital city.
 
The fact is, London remains stubbornly slow to recover to its pre-pandemic levels and found itself in tenth place in the recent Top Cities report from CGA (by NeilsenIQ and Wireless Social) that seeks to create a vibrancy ranking league table. The likes of Glasgow, Bristol, Manchester and even Leicester featured above the capital.  
 
To address this situation, the Mayor of London, Sadiq Khan, has launched the latest phase of his Let’s Do London campaign, which he hopes will encourage visitors back to the capital through a £2m advertising spend. He is looking to make some headway on the fact that footfall is currently 24% down on the levels enjoyed back in 2019. While his efforts might get the tourists back, it won’t do much for those people whose offices are based in central London, but who are resolutely sticking to working from home for a decent part of the week.
 
Google data shows that trips to workplaces in the capital were down by 30% in mid-May compared with pre-pandemic, and in the City of London, traffic through stations was recorded at levels 42% down on pre-covid on certain days. On Fridays, the situation can be pretty dire, with sales at Pret A Manger dipping by up to 80% in the financial district, according to the Bloomberg Pret Index.
 
The UK is certainly an outlier in commuting activity within Europe as Germany is only 7% below pre-pandemic levels, while Italy is just 6% down. This has contributed to office occupancy across the UK sitting at around the 30% level, which is half that recorded in 2019, according to Freespace. 
 
The problem for London in particular compared with other cities, both in the UK and overseas, is that it is largely a services-based economy, with a high level of professionals employed in these sectors who can easily work remotely. Another issue involves the fact that time and money needed to commute to the capital is generally higher than elsewhere, and therefore a serious deterrent to people returning to their offices in the City.
 
This situation could be short-lived, and we could fully return to the pre-pandemic scenario. But it looks increasingly likely that we are immersed in the new normal, and that businesses could be well advised to assess their operations and adapt their models.
 
Pret A Manger is an example of an operator now benefiting from swiftly moderating its exposure to central London and spreading it chips more broadly. It has made great strides to build a regional stores business, whereby its non-London portfolio now accounts for 36% of its UK store base, and the performance of these units has outstripped those in London on both a like-for-like basis and total revenue.
 
The differential in the performances of those operators wholly wedded to London versus those that have a wider trading base has certainly been apparent over the past year, but the expectation had been that the capital would eventually roar back and equilibrium would be enjoyed again. The way things are going, it might be prudent to analyse that forecast a little more closely.
Glynn Davis is a leading commentator on retail trends

Implementing a sustainability strategy across a nationwide business by Jane Bates

Once viewed as a nice-to-have, sustainability has become absolutely central to the requirements of a respectable and responsible business. Whether in response to the threat of tariffs, new reporting requirements, changes in procurement policy or consumer pressure, it semes like pretty much every sector, from automotive manufacturers to the energy industry and fast-moving consumer goods brands, has ‘gone green’ at some point. 

Holiday park operators, however, have lagged behind, and as the UK’s leading operator, here at Parkdean Resorts we are taking it upon ourselves to inspire our sector to catch up and put sustainability at the heart of staycations. For us, sustainability can no longer be a tick box exercise – it has to become part of our DNA, and we’ve set out a series of commitments to care for our parks, people and planet.

Parkdean Resorts touches the lives of millions of people around the UK. We provide economic stability to 66 coastal and rural communities, and our parks are home to more than 3,500 acres of land in some of the UK’s finest beauty spots. We want to be a force for good. Our passion is to secure the sustainability of our business, create positive change in our sector and leave a beneficial footprint for future generations to enjoy. Here’s how we’re going about it.

Get buy-in at every level
In order for a strategy like this to be successful, it can’t simply be implemented ‘from on high’. Working with every park and department to change how we run our business is no small task, which is why everybody needs to buy in to what we’re doing. Sustainability is something that affects all of us on a personal and professional basis, so the best way to make a difference is by empowering people throughout our business. 

We have identified 25 environmental, social and governance (ESG) commitments to achieve by 2025, and each one has an owner and a set of deliverables. There is also a steering group to make key decisions, and our chief financial officer is the board sponsor. We have looked at what is possible, and we’ve set out ambitious plans. We have a cross-functional ESG approach within our business, and we have a clear strategy. We now focus on embedding sustainability across our entire operation, bridging the gap between other arms of the business to ensure that sustainability is at the heart of the way our business operates. 

Empower teams 
Every park has the freedom to work on their own initiatives with local communities or charities. For example, working with Plastic Free North Devon, park rangers at Ruda Holiday Park regularly host groups from local schools to teach them about the Area of Outstanding Natural Beauty at Croyde Beach. They pick litter, sift for microplastics and use sweep nets to examine the dunes and learn about the threats that these diverse habitats and species face. 

They also collected more than 120 discarded beach tents and chairs, 40 windbreaks and countless broken toys, shoes and goggles left on the beach to create a 45-metre temporary art installation of a whale, to highlight the impact of single-use plastics on marine wildlife. A great example of our teams using their initiative!

Small changes add up
Looking at the big picture is crucial. Hitting every area we think of will have the biggest impact, but it’s not all done by making radical changes. For example, our commitment to achieve a 25% reduction in CO2 emissions by 2025 can start in a small way with operational best practice – like switching lights off. And we are making short term improvements by investing in infrastructure that can be something as simple as fitting timers to integrated building control systems.

Work with suppliers
Calor have been our liquefied petroleum gas (LPG) supplier for years, and working with them, we have recently switched our energy supply to Calor Futuria Liquid Gas, a co-product of biodiesel production made from a blend of waste, residues and sustainably sourced materials, to improve the sustainability of our gas supply and reduce CO2 emissions. More than 14% of the total LPG supplied by Calor to Parkdean Resorts will be Futuria Liquid Gas by the end of 2022, rising to nearly 25% by the end of 2023, a big step on our path to net zero. 

We’re collaborating with a number of suppliers to drive innovation and are looking at trialling sustainable materials across a whole range of areas of our business, from uniforms to bedding, and we’re also looking at our supply chain, having conversations with suppliers about how they track their impact and whether we can share best practice. Sustainability will be higher up in our buying decisions in future, so we keep ahead in this respect and create value for customers and employees alike.

Everybody wins with ESG
Ultimately, our ESG strategy will enhance the value and performance of the Parkdean Resorts brand. We are continually enhancing our parks to create more natural spaces for customers to enjoy, as well as enhancing the working environment for our teams and demonstrating that we all care about the future.

All the while, we will also be improving performance by continuously driving innovation with new technologies and solutions to help us perform better as a business. Sustainability is so much more than an add-on. It’s helping us improve our business on a number of levels, and I’m proud that we’re leading the way for our sector.
Jane Bates is director of procurement and sustainability at Parkdean Resorts
 

Turning sunshine into sales by Jean-David Thumelaire

As a Belgian-born and bred, I have a deep appreciation for my country’s rich and complex beer culture. The sheer range of different varieties of liquid; the bartenders who execute the perfect pour of each into its own specially designed glass; the skill of matching bar snacks or even full meals to everything from a dark dubbel to a sharp fruited lambic. 

But, and with the risk of offending my fellow countrymen, I must admit that my favourite beer-drinking experience is, without a doubt, enjoying a cold pint with friends in a British pub garden. I’m not alone – last month, pubs saw a 64% uplift in beer sales on the Thursday of the Platinum Jubilee Bank Holiday, as Brits flocked to celebrate the 70-year reign of Queen Elizabeth in the sunshine. 

However, on my mind, and no doubt on the mind of the thousands of publicans who have suffered a tumultuous couple of years operating mid-pandemic, was the question of how pubs can sustain this momentum throughout the summer.

Maximising outdoor space
The good news, at least for pubs lucky enough to have outdoor space, is that the pandemic has deepened consumer preference for the pub garden, opening up huge opportunity in the summer months. According to Oxford Partnerships data, June 2021 saw a massive uplift of 25.8% for pubs with outdoor space, compared to the same period in 2019. Outlets with an outside area also enjoyed a 23 minute longer dwell time than those without last year, with outlets in suburban areas seeing an even greater increase of 27 minutes.

With many consumers over the last two summers required to sit outside at pubs due to pandemic rules, it is no surprise that this preference has deepened. However, with the Met Office forecasting a high possibility of heatwaves in July and August, we can expect the demand for pub gardens to continue this year and beyond.
 
The opportunity for publicans around beer here is huge. In June 2021, outlets with an outside area sold a third (33%) more draught beer and cider than those without. On average, this was the equivalent of an additional 1,148 pints for the month – worth an extra £4,053 per outlet. So, maximising beer range is a no-brainer for those pubs looking to recoup much-needed revenue, and with alfresco consumption impacting consumers’ drinking preferences, savvy landlords should take note and stock up on those beers that overperform for those taking advantage of outside seating. 
 
Getting your beer range right
However, even for those pubs without outdoor space, there is still the opportunity to drive sales and footfall through rationalising their range.
 
The trend for premiumisation is set to continue this summer, having grown stronger over the last few years. Volume mix for the premium category, including premium and world lager, premium 4% and craft beers, rose to 47.6% in 2021 from 30.7% in 2018. Now, for the first time ever, the premium and super-premium category is the biggest in absolute volume (41%) within the draft beer category, compared to just 27% in 2017, meaning it’s more important than ever for publicans to ensure they have premium and super-premium options on their taps.
 
The reality of continuing to live with covid, coupled with the cost-of-living crisis, will continue to place pressure on publicans. But I am encouraged by the patronage of our beloved pubs by UK punters, and am hopeful that with savvy stocking strategies and a bit of sunshine, summer might go some way to reversing their fortunes.
Jean-David Thumelaire is on-trade director at Budweiser Brewing Group UK&Ireland

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