Retailers – grocers particularly – can probably look forward to a golden few days as the platinum jubilee celebrations take place. 

But as soon as the bank holiday is over, they and other retailers will need to remain on top form to ensure the festivities are not consumers’ last hurrah of spending in a year in which their finances will be progressively eroded.

Consumers will embrace some welcome relief from the constant slew of bad news about everything from the cost of living to war – and instead enjoy parties, time off and a bit of retail therapy over the long weekend.

Retail spending over the weekend may total £3.47bn, according to a survey by VoucherCodes UK. London’s New West End Company expects an £80m sales boost from the festivities, while Majestic Wine estimates that 114 glasses of sparkling wine will be knocked back every minute across the UK during the four-day weekend.

Footfall is forecast to rise about 8% over the break, which also coincides with the school half-term holidays. On high streets, a 10% uplift is anticipated by traffic monitor Springboard. In shopping centres and retail parks, shopper numbers should increase by 7% and 4% respectively, as all types of locations benefit in their own ways from a mixed weather outlook. 

Such events usually bring good news for the big food groups. Kantar said earlier this month that the diamond jubilee in 2012 delivered a 10% boost in supermarket sales during the preceding week and observed: “We should never underestimate the appetite for a party, especially a royal one.”

After the party

champagne bottle and glasses

114 glasses of sparkling wine will be knocked back every minute during the four-day weekend

But once the celebrations are over, it will be hard graft for all retailers to maintain momentum. While the grocers are keeping a lid on prices as much they can – Sainsbury’s said this week, for instance, that it would plough in £500m to that end – there’s no getting away from rising food price inflation.

The essential nature of food spending means that, the more of the wallet it eats up, the less there is to spend on other things. That will make life more challenging for general merchandise retailers, especially as grocers also have value lines in categories such as clothing, which benefit from proximity to the food offer.

Value giant B&M, which owns Heron Foods and sells groceries as well as a wide variety of general merchandise in its eponymous shops, highlighted the dynamics when it updated this week – earnings are expected to be down next year, although still up on the pre-pandemic period. 

Departing chief executive and co-founder Simon Arora observed that “there may be an adverse impact from category mix as customers shift spending away from more discretionary higher-margin general merchandise categories in favour of food and FMCG products.” He added that “the elasticity between volume and price on general merchandise is difficult to predict, as is the demand at individual category level.”

While B&M appeals to value-conscious consumers, many retailers will be weighing up the same issues as they prepare for the coming months – and Christmas in particular.

An autumn of austerity

Some of the big cost burdens – in particular energy bills – are still to be fully felt by consumers. In October, for instance, when Christmas trading would typically be starting in earnest, they face another £800 increase in energy costs on average. Once the jubilee feelgood factor recedes, shoppers may start to hunker down for a long period of austerity.

Caramel corgi mousse cakes

Retailers responded to the jubilee with fun lines including corgi cakes

That means retailers will have to earn spend by demonstrating value, retaining and locking in spend through loyalty scheme benefits or subscription deals, and creating more reasons for consumers to part with cash by providing great products and experiences.

They have shown how well they can do that over the jubilee, with fun lines ranging from corgi cakes to party goods and souvenirs, or by using the occasion to promote summer clothing and occasionwear ranges online and in shop windows.

More of that creativity and inventiveness will be needed in the second half of the year. Amid ongoing supply chain disruption, as well as the cost of living crunch, it may be that shoppers seeking to budget do their Christmas shopping early, in which case the industry needs to be on the front foot.

While retailers should not lose sight of a longer-term strategy, in the coming months tactics will matter. 

As Dennis Millard, deputy chair of Pets at Home, observed at last week’s Retail Week Live: “If you don’t deal with the short-term, you can forget about the long-term.”

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