Ongoing carnage in consumer services sector as consumers reduce spending in restaurants and bars

consumer services struggle to surviveAs I outlined in my June sector blog, it is not only well-known shops in the consumer services sector that have been struggling.

The restaurant sector has also seen a plethora of big name closures, including Gourmet Burger Kitchen, Carluccios, Prezzo/Chimichanga, Byron, Cafe Rouge, Jamie Oliver’s restaurant group and most recently the Restaurant Group which has announced that it plans to close up to 100 of its Frankie & Benny’s and Chiquito branches.

A recent CBI poll has revealed that the whole of the consumer services sector, which includes hotels, bars, restaurants and leisure firms, has suffered its fourth consecutive fall in business activity with both profits and confidence plummeting.

Rain Newton-Smith, chief economist of the CBI, said: “The idea of a no-deal Brexit is clearly weighing down the economy and is affecting businesses both big and small.”

But, of course, there is much more to all this than Brexit uncertainty weighing on businesses and consumers, although the last week of febrile activity in Parliament on this seemingly now all-consuming issue will not help.

Is this a long-term change in consumer behaviour?

Clearly, worries about future job security after Brexit are playing into the declining numbers of people visiting restaurants, bars and hotels which will have contributed to the ongoing decline in the number of pubs and bars, down 2.4% to 116,880 over the past year.

Aside from the increasing numbers of people choosing to eat in, with ordering home-delivered food becoming more common as reported in my June blog, it seems that dining preferences and tastes are all factors.

A recent analysis in the Guardian newspaper revealed that restaurant numbers had fallen by 3.4% in the year to June. It also suggested that our tastes are changing, so that consumers are moving away from Indian, Italian and Chinese establishments in favour of Middle Eastern, Caribbean and specialist vegetarian rivals.

Perhaps, though, among the most significant long-term trends is the shift in demand towards vegan and vegetarian food, as highlighted by the Verdict analysis of restaurants in their 2019 food trends report.  It said: “The country is ever more aware of the amount of food that is wasted and the effect food and packaging has on the planet”.

The other big issue, plastic use and waste, has also grabbed consumers attention as reported in research by RG Group that highlights this as a significant influence on consumers going forward.

Sustainability, transparency and trust are likely to become ever more important in the choices that consumers make, says RG Group: “Consumers today expect brands to be much more accountable when it comes to whether or not they remain loyal. And frequently, perceived accountability comes in the form of commitment to transparency and more socially responsible values and processes.”

Clearly, it is not enough for the High Street and the consumer services sector as a whole to focus solely on providing a “destination experience” as many have promoted in their quest for relevance.

Businesses in this sector, but also in many others, are likely to have to pay a great deal of attention to consumers’ socially responsible values if they want to retain customer loyalty, to survive and grow.

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