BRITAIN may have reached “peak coffee shops” after Costa revealed weakened sales figures, it is claimed.
Owner Whitbread blamed “well-publicised consumer trends” for the fact that its ubiquitous coffee chain saw comparable sales fall by two per cent.
It was one of two announcements that cast further doubt on the state of the high street, along with the news that the John Lewis Partnership was not expecting to turn a profit this year and was to close five Waitrose branches.
But Paul Kinvig, chief operating officer at Bournemouth Town Centre Business Improvement District (BID), said: “I don’t believe Costa saying ‘Our sales are down’ is an absolute death knell for the high street.
“What it does show is that anyone involved in retailing in whatever form is having to work two, three, four times as hard in terms of products and services to attract the spend that’s there.”
Bournemouth town centre currently sustains not only multiple branches of Costa, Starbucks and Caffe Nero, but also successful independents such as South Coast Roast, Real Eating Company, Del Marco and Espresso Kitchen.
Mr Kinvig pointed to figures showing footfall in the town centre was up two years in a row.
“The high street is a very challenging place. The model of what people use towns and cities for is changing,” he said.
“Increasingly, towns and cities are having to use the word ‘experience’ rather than just retail.”
Emma-Lou Montgomery, at Fidelity Personal Investing, said: “Another day, another warning about a lack of consumer spending. Now it seems that Brits have woken up and smelt the coffee. All those tips on how to stop frittering money away have hit home – and hit Whitbread’s bottom line.”
But Jeff Bray, senior lecturer in marketing and retail management at Bournemouth University, noted that despite Costa’s fall in comparable sales, total sales were still up 4.9 per cent thanks to its growing number of outlets.
“Their retail sales are still growing but clearly sales cannot keep up with the ever expanding network of coffee shops. We’ve simply reached peak coffee shops,” he said.
“It’s a plateau rather than a decline.”
The John Lewis Partnership’s announcement that it expected half-year profits to be “close to zero” has been taken as another sign of the high street’s declining fortunes.
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said: “It is very important that we feel the jeopardy of what is happening right now.
“This isn’t a blip, it is a major shift and it has a while to run.”
Waitrose expects to see profit growth and John Lewis a decline.
But Dr Bray said the news could in fact be positive for the high street.
“I think it’s a really positive story because it’s not that they’re making no money, it’s rather that they are investing all that money back into the business and not declaring a profit,” he said.
This contrasted with competitors such as House of Fraser, which he said had suffered a lack of investment.
“They could easily have declared a profit of £500million and not invested so much in their stores,” he added.
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