Talking Trade

“Too soon to predict the death of the city”

Humphrey Serjeantson, IWSR’s Research Director for Western Europe, recently commented on the fate of city-centre bars in a post-Covid-19 situation. “Undoubtedly, increased working from home will lead to a change in the on-trade in Western Europe,” he stated. Here, he elaborates to Pat Nolan on his view of how city-centre bars and others might fare in the shadow of Covid-19.
"People must be prepared for 'one step forward, two steps back'".

“People must be prepared for ‘one step forward, two steps back'”.

City-centre bars in capital cities such as London and Dublin tend to play more of a part in the after-work drinks culture than in most other European cities. Such bars have long played a central role in facilitating this social routine, frequently the setting for weekday business lunches and meetings too.

Such venues generate a significant portion of their sales from a city-based workforce – a workforce now greatly diminished in many city-centre markets in the wake of Covid-19.

“The fundamental change in terms of the city bars is that fewer people are going to be going there as more people work from home,” says Humphrey Serjeantson, IWSR’s Research Director for Western Europe, “It’s inevitable due to the combination of fewer people going for lunch and drinks after work.”

Recently he commented that increased working from home will undoubtedly lead to a change in the on-trade throughout Western Europe.

“Factor in the downturns in travel and tourism and city-centre bars are facing a tough time,” he believes, “That’s on top of already having had to close for some considerable period.”

He feels it unlikely that such outlets will recover that business in any kind of short time.

“‘Never’ is a very big word” he emphasises, “and I wouldn’t say there will ‘never’ be a return to previous levels of trade – I’d be very sad if that were to be the case – but any recovery is likely to be slow.”

Consumers are aware of how this virus is passed on; they’re aware of the government guidance on this and they’re staying away from bars and restaurants, he says.

“Government guidelines make the traditional visit to the bar or pub much more of a challenge than it once would have been and so people are staying away.

“But there’s one positive in that outdoor spaces are less likely to transmit the virus, so pubs with these should be making the most of them.

“The UK government, for example, is making it easier for bars and restaurants to serve people outside. Where this is possible it’s a clear advantage to have.”

 

Outdoors – make the most of it

Dublin city-centre bars have reported that footfall is “practically non-existent” where it was once a flowing torrent of humanity, locals and tourists alike. One wonders what these bars could do to better their chances now.

“They should be focussing on outdoor areas where they have them as it makes it easier for people who can be much more relaxed without being worried to such a degree about Covid transmission,” he suggests, alongside the obvious measures to give customer confidence: limiting customer numbers, protective screens, hand sanitiser and one-way systems where possible, as well as reducing the number of toilets in use.

“Another key point for all premises is to be prepared to change as it’s a very fluid situation and things can change with local flare-ups. As those flare-ups are contained, then recovery will return but people must be prepared for ‘one step forward two steps back’ and to be in it for the long haul.”

 

Suburban pubs

The situation seems somewhat more sanguine for suburban pubs.

“These face some of the same challenges as city-centre pubs but there are some positives for the more suburban venues where higher numbers of people work from home. These may see an increase in business with people going out to their local for lunch or a drink at the end of the day.

“Some people appreciate not having to commute to work but would want a change of scene at the end of the working day and that could easily be in a local bar or pub, so in a sense local venues could benefit from increased working from home.”

The other point he makes about ‘locals’ is that, given the difference in real estate values, it’s quite possible that suburban pubs are likely to have more outside space than those in the city centres.

“So they’d be more of a relaxing experience for customers in terms of eating and drinking out but how long that lasts is dependent on how long large numbers of people go on working from home.

“There has been a huge step-change in how many work from home – there may be a long-term benefit for pubs and bars here but it’s too early to say about that.”

 

e-commerce & alcohol

IWSR is producing several specific reports on the current situation such as Covid-19’s effect on key markets and its third e-commerce report.

“In terms of off-premise, people buying more at home has driven huge growth in e-commerce,” he says, “Clearly distributors and particularly brand owners are aware of the relevance of e-commerce of alcohol and we’re seeing a huge spike in e-commerce in the context of the pandemic.

“There were a lot of news reports in the UK early in the pandemic saying that alcohol consumption had risen dramatically, based on the growth of online sales. But these failed to take into account two key points: firstly that a lot of the purchasing was stockpiling (for fear of future shortages) and secondly that the on-premise was completely closed. The likelihood is – and this is backed by surveys – that overall consumption was actually down.

“e-commerce is the one thing that people cannot ignore as the huge number of people going online for shopping generally is as a result of being stuck at home for the pandemic. A lot of those people are going to stay with that and not go back to their old ways, so won’t be going back to the supermarket. Large numbers of shoppers new to online are going to continue online, so that’s one critical factor we’re seeing in alcohol sales.

“Online has lots of other advantages to it, for example the range online is vastly more than in the supermarket so it’s another way for big brands to reach consumers.

“We can see Amazon taking big steps in the sale of alcohol; it’s got a high level of consumer trust so – after books and CDs – you can now buy alcohol there and brands themselves have access to pages within Amazon to promote features and content which brings their brands to life for consumers – an attractive proposition for them.

“One other thing I’d say about e-commerce: there’s initial evidence present that the brands initially benefiting were those well-known ones whereas spirits have seen a move towards craft etc and so Irish distilleries, at 30-plus, are getting a presence.”

Experimentation is not dead then – and the on-trade might pay this more heed.

“People are going to want to treat themselves when they go out so, as well as online, bars and pubs should keep a wide range of products available so that they can meet the curiosity of customers looking for something a bit different.”

To quote IWSR on how Covid-19 is prompting city-centre bars to evolve, “Virtual socialising and online business meetings have dented on-trade sales temporarily – particularly for bars in urban locations – but IWSR analysts believe that online interaction is a forced by-product of the current environment and is not a replacement for face-to-face meetings.”

So does he imagine city centre bars will eventually recover?

“I think city centre bars are closely tied to cities as a whole and one has to hope that at some point there will be a vaccine for Covid – but again there’s no certainty about that. However human beings are social people and cities are a testament to that as people like to live together and work together.

“It’s too soon to predict the death of the city though and people are likely to continue needing to work and live together. Eventually, when this occurs, city-centre bars are likely to go back to something approaching the previous situation. But it may take a long time. People want to go out for a drink together and that’s not going to change.”

In the IWSR report he has stated, “My expectation is that drinking in city-centre bars will recover gradually. There is no doubt that bars will change. Many may not be able to re-open following their Covid-19 closure but, in the medium term, others are likely to take their place, especially if measures are in place to boost the local economy and help it weather a more serious economic downturn.”

A more serious economic downturn?

God forbid.

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