As another retailer collapses into administration, this time 140-year-old department store business Beales, perhaps store chains can learn lessons from another industry that has been through the mill.

Pubs, like retailers with store estates, have faced pressures such as the punishing cost burden of business rates and changes in consumer behaviour during the recent past. But they are once again opening their doors, rather than closing. 

The past decade has seen many pubs call last orders for the final time. That is now changing and the reversal of fortune – while still at a fragile stage – shows it is possible for traditional consumer businesses to adapt and find new resonance.

New Office for National Statistics (ONS) data revealed the number of small pubs and bars in the UK rose for the first time in 15 years in 2019, albeit the increase was a marginal 0.4%. Including larger watering holes, the number edged up 0.8%, the first advance in more than a decade.

“The local, the particular and the different have helped draw footfall and spend, in a rebellion against clone towns”

The first point to make is that there are far fewer pubs than there were at the turn of the millennium. In 2001, there were more than 50,000. By last year that had declined to fewer than 40,000.

It’s a trend retailers will identify with. In 2019, large retailers – those with 10 or more branches – closed 5,901 shops, according to the Centre for Retail Research. It marked an increase of 79% on 2018 levels, as store groups such as Topshop owner Arcadia went through insolvency processes or resized their estates to reflect the rise of online shopping and the impact of increasingly onerous property costs.

But while the number of pubs has fallen steeply, the employment they generate has gone the other way, increasing every year since 2011’s low of just over 380,000 people, to nearly 460,000 today. The reasons why provide insights for retailers as they seek to reinvigorate shops with renewed purpose.

Conviction and authority

Crucial to the revival of pubs has not been booze, but food. What were traditionally drinking locations now employ more people to serve food than to work behind the bar, reflecting what the ONS described as “a long-term trend towards people spending more of their household income on eating out and less on drinking out”.

It’s a trend in evidence at pub chain Wetherspoon, which in its most recent full-year results reported like-for-like food sales growth of 8.3%. In 2001, it was just 0.1%. Last year, Wetherspoon’s food sales accounted for 36% of its overall revenue mix, versus 18% in 2000. Bar sales accounted for 60%, down from 76%.

As retailers wonder whether the consumer has, as some argue, reached ‘peak stuff’, they need to be as alert to new opportunities as Wetherspoon was. Other services cannot just be add-ons – they must be delivered with conviction and authority.

Again, Wetherspoon shows how that can be done. It topped organic food body the Soil Association’s Out to Lunch restaurant league table – which ranks the UK’s healthiest and most family-friendly places to eat – ahead of specialist eateries such as McDonald’s and Nando’s. Wetherspoon is actually the fourth most popular eating place in the UK, according to CGA Brand Track, behind McDonald’s, Costa Coffee and Greggs.

The long run

Equally telling is the fact that second place in the Out to Lunch rankings went to Ikea. The furniture giant has become as famous for its meatballs as for its Billy bookcases, showing that the right complementary offer can really bolster a retailer’s overall proposition. As other retailers hope to make more of in-store restaurants or similar services, are they doing it with the same focus and quality as Ikea?

Like Ikea, Wetherspoon and good pubs generally have benefited from what seems to be an increased value placed by consumers on a sense of place and the experience of being there.

It’s a common theme raised by those involved in town centre reinvention, where the local, the particular and the different have helped draw footfall and spend, in what is seen by some as a rebellion against clone towns. Perhaps similar dynamics are reflected in the rise of small pubs in the ONS data. In Altrincham, for instance, it was the opening of food stalls in the under-pressure market that sparked an improvement in the town’s fortunes and have also made it a destination for big retail names.

“When it comes to convincing the consumer to open their purse, shops need to appeal as social as well as retail spaces”

For retailers seeking to build nationwide chains, clone stores were, of course, the grail – whether in Penzance or Perth, the objective was consistency from product to in-store environment. That may still be the case if, for instance, you’re running a c-store group. But when it comes to convincing the consumer to open their purse and spend on a discretionary basis, shops need to appeal as social as well as retail spaces.

That, too, played a part in Wetherspoon’s original success. Founder and chief executive Tim Martin recalled last autumn in the company magazine: “One of my own ‘small truths’, in the early days of Wetherspoon, was that my pals and I went out mostly to talk; this was made far more difficult (and less enjoyable) by music blaring in pubs, restaurants and clubs, as it usually is still today. The music-free hunch was right and forms an important part of our business today.”

While Wetherspoon has been an entrepreneurial growth story, one of the most salient facts from the ONS findings is that the restructuring of the pubs and bars industry took a very long time.

The ongoing retail revolution is at one of its most intense moments and how far it has left to run is still unclear. But the apparent change in fortunes shown by the rise in pub numbers shows even if it takes more than a decade, a more fit for purpose industry can emerge.