Stories that matter to you this week...
High streets + AI + tax + Jacinda Ardern + Netflix
Hello and welcome to the latest edition of Off to Lunch…
This video of Jeff Bezos talking about Amazon was unearthed on Twitter earlier this month after it emerged that his company was to shut three UK warehouses, putting 1,200 jobs at risk…
Bezos’s comments are a reminder that for all the analysis of changing shopping habits and how consumers want to buy products there was a simple financial logic behind the rise of Amazon and online shopping - renting warehouse space to sell products was cheaper than renting a high street shop.
In some areas, however, that imbalance is no longer there. This week I hosted Savills UK cross-sector outlook for 2023, where its experts from each property sector explained the factors driving the market and made forecasts for the next five years. Each expert picked their top investment opportunities too. Mat Oakley, head of UK and European commercial property research, picked out prime and green office development, prime logistics developments - ie high-quality warehouses - but also high street shops. Shops, he explained, look particularly attractive in London suburbs and affluent commuter towns where flexible working means more spending in local shops.
This week started with Marks & Spencer’s boss Stuart Machin announcing the retailer would open 20 new shops and create 3,400 jobs…
M&S has also been closing shops and reducing its square footage across the UK, so this shouldn’t be taken as a sign that the online revolution is over and the high street is back. But it is a sign that at the right price and in the right place, investing in the high street is logical for businesses…
It’s not just retailers investing in the high street. As rents and business rates come down, working patterns change and online sales continue to grow, high streets are evolving, many of them away from shopping. I was fascinated by BAE System’s announcement that it has bought the former Debenhams, WH Smith and Body Shop in Barrow town centre to build a training centre for engineers. BAE is the biggest employer in Barrow, Cumbria, where it builds the UK’s submarines…
Another example of changing high streets is property developer Hammerson unveiling plans to turn the closed John Lewis department store in the centre of Birmingham into offices, a food market and gym…
There has been much discussion this week about the government’s £2.1 billion levelling up fund, a key plank of Boris Johnson’s levelling up agenda. More than 100 projects around the UK were given funding but there has been criticism that the south-east got more than other regions - like the north-east of England - and that constituencies with Tory MPs also got disproportionate backing. Andy Street, the mayor of the West Midlands, criticised the entire “bidding and begging bowl culture”, adding:
“The centralised system for London civil servants making local decisions is flawed. I cannot understand why the levelling up funding money was not devolved for local decision makers to decide on what’s best for their areas.”
You can read more on Street’s comments here. We have touched on this issue multiple times in Off to Lunch before, such as Manchester telling the government that it did not want the HS2 station that was designed for it.
Despite the criticism of the levelling up fund, it has backed projects that will make a real difference to communities. Rishi Sunak, the prime minister, launched the initiative from Morecambe in Lancashire, just down the coast from Barrow. Morecambe has been awarded £50 million for Eden Project North, which should attract jobs, tourism and more investment to an area that has struggled. This £50 million makes up half of the estimated £100 million cost of the project…
Projects like this will provide a real and visual example to towns and cities across the UK that investment is coming in. Ultimately it is businesses that will be the most important source of this. The government can announce one-off projects, but businesses can do it every week with new offices, shops and restaurants. The Eden Project North will only be a success for Morecambe if other businesses follow it up with their own investment in the area. That is why investment in high streets is so important. High streets, the living and breathing heart of a community, are how many people judge the prosperity of where they live.
Online shopping is here to stay, but high streets can find a way to thrive alongside it in a way that has often not felt possible in recent times. Local authorities and developers must recognise the strengths of a high street and focus on attracting businesses who play to that. Convenience, for instance, may not be a strength anymore. This tweet from TV host and author Richard Osman neatly encapsulates why the convenience of online shopping over visiting a supermarket or shop will continue to be a powerful attraction for many…
Other stories that matter this week…
Manchester United went to Davos and claimed this had nothing to do with efforts to attract new investors. Hmmm…. (The Guardian)
The trading platform Robinhood is launching a media spin-off called Sherwood that will cover news relevant to traders across finance, geopolitics and technology. Robinhood’s daily newsletter Snacks will be part of Sherwood (Axios)
Revolution Bars is shutting some late-night venues on Mondays and Tuesdays to save money on its energy bills. This move comes amid growing pressure on the hospitality industry from rising costs. There was a net decline of 4,809 licensed premises in the UK last year according to new data from Alix Partners and CGA. Since the start of the Covid-19 crisis in March 2020, 13,037 have been lost, equivalent to 10 per cent (The Times)
Ryanair is to resume flights from London to Cornwall, Edinburgh and Belfast (The Times)
Artificial intelligence could change the role of the secretary back towards its origins as the “keeper of secrets” (Noahpinion)
The music writer Ted Gioia got the attention of Elon Musk after a piece looking at the eight best techniques to evaluate character - a useful skill for any business, or person. The techniques include looking at someone’s partner, how they treat waiters and other service staff, and how they spend their time and money (The Honest Broker)
The billionaire venture capitalist Peter Thiel has been in the news. Firstly, The Financial Times reported that Founders Fund, the firm he co-founded, sold almost all of its cryptocurrency holdings early last year, making a return of around $1.8 billion after holding it for eight years. Around the same time Thiel was publicly talking up the future of bitcoin (Financial Times) It has also emerged that on Monday in a Q&A at the University of Oxford’s Oxford Union he had referred to the UK’s affection for the NHS as “Stockholm syndrome” and “market mechanisms” were needed to improve it (Bloomberg)
A cat known as Mittens is causing chaos in the chess world. Mittens is an avatar for a new chess bot that not only plays the game effectively but taunts the opposition (WSJ)
Fascinating piece on the work and research that is going into improving the decision-making process for leaders of countries with nuclear weapons. “This is a weapon that favours the crazy,” said one expert (FT)
Jeremy Hunt, the chancellor, could extend a 5p cut in fuel duty - worth about £2.4 billion a year - for another year amid pressure from some Tory MPs and business leaders like Sir James Dyson to cut taxes. Hunt and Rishi Sunak have played down the prospect of tax cuts - “I wish I could do that tomorrow, quite frankly, but the reason we can’t is because of all the reasons you know. You’re not idiots, you know what’s happened,” Sunak said on Thursday. However, better-than-expected GDP figures last week and falling inflation this week prompted Andrew Bailey, the governor of the Bank of England, to say that “the corner has been turned on inflation”. Despite this optimism, households are still gloomy and economic data is still grim. The latest consumer confidence figures from GFK, which are closely watched, show a drop for January. Retail sales also fell 1 per cent in volume terms in December compared to November according to the Office for National Statistics. On a year-on-year basis sales fell 5.8 per cent. In value terms, which takes account of inflation, sales rose 3.8 per cent year-on-year and fell 1.2 per cent compared to November (The Times)
On a similar note, Tim Harford’s latest column looks at how the UK’s economic performance since the financial crisis has been unprecedentedly bad. The typical Brit would be 40 per cent richer than they are today if previous trends had continued. That is remarkable (FT)
The average age of a woman giving birth in England and Wales has risen to 30.9 - the highest since records began in 1938 - according to figures for 2021 just published by the Office for National Statistics. The average age of fathers is 33.7. The proportion of births within a marriage or civil partnership was 48.7 per cent, down from more than 70 per cent in the 1980s. Overall there were 624,828 births in 2021, up 1.8 per cent from 2020 but down on 2019. This data has been published in the same week that China revealed that its population is falling for the first time since the 1960s. It is a reminder that changing demographics are going to be a significant economic, political and social issue in the next few years (Office for National Statistics)
There are lots of interesting pieces around on burn-out following Jacinda Ardern’s decision to stand down as prime minister of New Zealand. I thought this piece by Harriet Walker in The Times was particularly relevant because it speaks to two important factors about Ardern - the fact she is a mother of young children, and her age - just 42, making her almost, but not quite, a millennial (The Times)
Preston-born Michael Platt once told a taxi driver he earned more money than anyone in finance. The hedge fund manager might now be right. According to this piece, if you had invested $1,000 with him at the start of 2016 you would have $28,000 today. But you can’t invest with him because Platt only uses his own money (Bloomberg)
Lastly, Netflix announced on Thursday night that co-founder Reed Hastings is to step aside as chief executive and become executive chairman. Ted Sarandos, Netflix’s chief content officer, and Greg Peters, chief operating officer, will be co-chief executives. Netflix also reported a 7.7 per cent rise in subscribers to 231 million - much better than expected - with Wednesday, Harry & Meghan and Glass Onion: A Knives Out Mystery all identified as big hits by the company. Hastings’ transformation of Netflix from an online DVD rental service into one of the most influential studios in Hollywood will be studied for decades (Netflix)
And finally…
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Best
Graham