Why Do People Queue, and Retail Renaissance?

This blog post was prompted by pictures of people shopping on Oxford Street last night and a tweet from Emilios Shavila showing a queue for Primark at my local shopping centre in Bromley – it looks to be at least 100 yards long. Why does anyone queue to buy non-essential items? Have they not discovered internet shopping?

This is very puzzling as personally I can’t stand to queue for anything and I don’t think I have been in a shop for over 3 months, and very rarely also in the last year. Do people like the social interaction of shopping? Or is it because they can take a friend along and ask them “do I look good in this?”. Perhaps retail shops are not quite heading for extinction just yet, but I certainly would not be investing in them at present unless they had a very strong on-line business element. I feel that shopping habits really are changing and the epidemic has  hastened the move to on-line retail therapy.

The good news is that US retail sales bounced upwards by 18% in May which is a record since 1992 according to the FT and confounded forecasts of a rise of only 8%. That followed a decline of 15% in April. Will the UK follow a similar pattern? Let us hope so because retail spending can have a big impact on the overall economy.

One company that might be affected by High Street footfall is Greggs (GRG) who gave an update on their plans for outlet reopening this morning. Many of their shops are still on High Streets although they have been diversifying into other locations such as motorway service stations and train stations. Greggs has over 2,000 shops altogether and plan to reopen 800 on the 18th June. The rest will reopen in July.

The share price has jumped by 7% at the time of writing, but they do say that they “anticipate that sales may be lower than normal for some time”. Shore Capital reiterated its “Sell” rating on the share because they consider the High Street will take time to adjust to life in a post-coronavirus environment”. They also consider that Greggs will incur significant extra costs as a result of the measures they need to take.

My view (as a shareholder in Greggs) is that I still find it impossible to judge the likely profits (or losses) at Greggs in the short term despite quite a lot of detail in today’s announcement. It’s really a bet at present whether you see it as a valuable property in the long term or not while ignoring the short-term pain. That’s not the kind of investment bet I like to take so I will simply wait until the picture becomes clearer. Regrettably the same logic applies to many other companies at present.

On a personal note, one organisation that has solved the queuing problem is the NHS. Apart from converting my hospital appointments to telephone consultations, the latest manifestation was a new “drive-thru” blood testing service. You get a timed appointment so I drove up on the dot and immediately had it taken through the car window. No need to even get out of the vehicle. Absolutely brilliant. But I am not sure that will be quite so practical in mid-winter.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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