Its Getting Hot In Here (but not for all...)

by Felicity Dudley on Friday 17 August 2018

The sun might be just about setting on the unprecedented British heatwave, but can we really complain? This year has bought us the driest summer on record since 1961, world cup hopes, beer gardens a plenty, street parties and spontaneous weekend seaside trips. It's fair to say that summer 2018 has been an absolute dream. But has it been a retailers dream? Sitting in the park on my blanket last week, I picked up my phone and started to browse online for some new furniture for my bedroom, when it dawned on me that I don't remember the last time I sat and actively purchased anything that wasn't Sainsburys prosecco or a disposable BBQ. But is this true of the rest of the nation? 

 

Taking a holistic view of the entire retail market, hot weather definitely provides a charge to overall retail sales. But which industries have had their time to shine, and which have been suffering from dehydration in the summer 2018?

 

Winners

 

UK Travel

Unsurprisingly, UK tourism has soured over the past 3 months, with travel bosses estimating that the unexpected weather has inspired a huge increase in consumers favouring holidaying at home in 2018 – with more than half of us making the decision to remain on UK soil. Initial figures estimated it has pumped around £31 billion into the nation’s finances.

More Britons than ever are exploring what makes Britain so great this year.
— Shakila Ahmed, Travelodge

In the same vein, rail companies have reported a year on year boost to revenue, thanks to families throwing caution to the wind and splurging on spontaneous weekends away to unexplored corners of the country.

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Food & Drink

The obvious fact that the food and drink industry has boomed is probably as glaring as the sun itself, but initial figures released last month have backed this up. Supermarkets in particular were affected positively by the sunshine and World Cup. According to research carried out by ‘The Grocer’ beers and ciders sales increased to 28.8% compared to the same month last year. Aperol, prosecco, matches, lighters, and insect repellent also saw a huge spike in sales when compared to the same month last year.

 

Pub spending also got a strong boost this summer, rising 16.8% year-on-year in July, and jumping 73% on the day of England’s semi-final against Croatia. Interestingly, UK pubs experienced a huge increase in online engagement, with England fans performing in-depth online research on where to go to watch matches and checking key business information such as opening hours, location and menu items. New research indicated that there has been a 320% increase in engagement around the World Cup, as Britons challenged the popular assumptions of the stereotypical England fan by co-ordinating and booking at least 24 hours in advance the pub where they wanted to watch the next match.

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Electronics

Perhaps an initially overlooked category when discussing, heatwave winners, but this year John Lewis have reported that their electrical and home technology sales have elevated, rising by 3.2%. Sales of small electricals were boosted by the continuing hot weather which sent sales of fans up 234% year-on-year. Fridges recorded double-digit sales growth while TV sales were up 20% due to England’s performance in the World Cup.


Losers

 

Indoor furniture

Big ticket furniture retailers have had a tough year, particularly indoor furniture retailers, as people prioritise the garden. DFS Furniture Plc now expects full-year earnings before interest, taxes, depreciation and amortization to be below last year. “Exceptionally hot weather, including over key trading weekends, has led to significantly lower-than-expected order intake,” the company stated on July 12. Peer Dunelm Group Plc also reported recent “disappointing footfall.”

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Fashion

Clothing (the largest non food sub-sector) is certainly weather-sensitive. However when it comes to fashion retailers, it's not a simple case of the weather being good, it’s a case of weather being right, at the right time.

 

The dream scenario is a spell of hot weather come February/March/April to coincide with the launch of Spring/Summer releases and then a sharp transition to colder weather in August/September/October for the Autumn/Winter ranges.

 

This year has not played out that way – the heatwave came too late. Yes, it helped with Summer sales, but would have been far better when retailers were trading at full price. The heatwave has therefore proved good for clothing sales, less so for margins. Q2 clothing sales were up 1.4% (although footwear sales curiously slumped 7.7%).

 

The British High Street

Facing the chaos that is Westfield is a daunting thought at the best of times, but throw in the allure of a cold beer on a gloriously hot Saturday afternoon and that is a recipe for a very quiet shopping centre, and the figures say the same. In July UK retailers suffered a major setback with footfall plunging 10.8%.

Following an improving high street performance over the last couple of months, July’s footfall figures will be very disappointing news for retailers.
— Dr Time Denison, Ipsos retail intelligence
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Weather is something that is hard to predict, especially when attempting to predict trends and factor them in to strategies that are created up to 12 months in advance. This unexpected heatwave may have left some retailers keeling over, whilst others are sipping a cool celebratory pear cider, but it can't be denied that the summer of 2018 will not be over shadowed quickly.