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Enjoy Your Rosé and Beat the Heat ... While You Can

River levels running dangerously low, water rationing, wildfires, a winter of blackouts ... It’s enough to make you hit the local beach in a brand-new bikini.

Amid all the dire warnings, from climate change to the cost of living, Brits are making the most of the soaring temperatures — and spending accordingly. This summer isn’t turning out to be such a bummer for retailers, consumer goods companies and the hospitality industry.

Total retail sales in the UK rose 2.3% in July from the year earlier, a big improvement from the 1% decline in June, according to the British Retail Consortium and KPMG (although taking inflation into account could mean the volume of goods sold actually fell). Clothing and footwear were big contributors. Next Plc said last week that sunny weather in June and July drove demand for summer staples. That, combined with consumers’ desire to get dressed up again, meant sales were stronger than expected.

Perhaps people also took inspiration from their favorite TV series. Much of this season of Love Island coincided with the extreme heat. The hit show has long been a driver of fashion and makeup trends (thong bikini and lip filler, anyone?). Contestants’ skimpy outfits and sun-kissed beauty styles may be even more appealing if it feels like Mallorca outside.

Brits have also been stocking up on the things they need to cool off, such as fans, rosé wine, lightweight duvets and sheets, and paddling pools.   

The picture for the hospitality industry is more mixed. Drink sales at pubs, bars and restaurants rose in July as temperatures climbed, according to data provider CGA by NielsenIQ. On July 18, they were 9% higher than they were on the same day in 2019. But the following day, when temperatures in the country exceeded 40 degrees Celsius (104 degrees Fahrenheit) for the first time, sales fell as people avoided travel and ate at home.

Opting to stay indoors could partly explain why food retailers have also benefited from the heat. If Brits choose to dine in their back gardens, they may trade up to a more expensive bottle of wine or purchase more premium supermarket brands, even amid the broader switch to cheaper products. Barbecues also increase demand for fresh food, such as steaks, sausages and salad, which tend to be more profitable for grocers. (Waste also increases, especially if supermarket chillers malfunction.)

And let’s not forget other hot weather treats. Ice cream and fresh fruits — think of those strawberries, cherries and blueberries — are having a bumper season. That’s good news for grocers, but also ice-cream manufacturers such as Magnum maker Unilever Plc.  

Meanwhile, amid the travel chaos, more people may be holidaying in the UK. Spending on hotels and resorts in July was 1.9% higher than in June, according to data from Barclaycard. Google searches for “staycation” are up sharply.

While high petrol prices may have deterred some from visiting the beach or amusement parks, many others seem to have swapped queues at the airport for a cottage on the coast. Foot traffic to coastal towns was still up on 2021 in July, according to Springboard.

The latest heatwave will likely prolong the spending surge.

If temperatures don’t reach the levels seen in July, Brits won’t be too hot to hit the pub. Indeed, the two weeks to Aug. 6 saw pubs, bars and restaurants enjoy their best growth in drink sales since the Platinum Jubilee two months ago, according to CGA. The UEFA Women’s Euro 2022 football final and the return of the Premier League also helped.

Retailers should continue to prosper, but the effects may be more muted. We are now approaching the period when autumn fashion collections arrive in stores. Above-average temperatures in September and October would dent demand for heavy coats and sweaters — unless, of course, shoppers stock up to stay warm indoors amid the coming spike in energy prices. An end to the searing hot weather may also help furniture and other big-ticket items — especially if discounts make it them more affordable.  

Airlines and tour operators might not be so lucky. The combination of clement weather and the cost-of-living crisis could stop Brits from booking next year’s summer holiday. This is exactly what happened in 2019 following the heatwave of 2018, which contributed to the collapse of travel company Thomas Cook.

The real squeeze on wallets will come this autumn when credit card bills from the summer of spending arrive and the price cap on energy increases in October. Add in higher interest rates, and consumers are widely expected to retrench. Discount book and stationary retailer TheWorks.co.uk Plc became the first UK store chain to cut its forecast in anticipation of a difficult Christmas, ringing alarms bell for the whole sector.

This winter is going to be hard on both consumers and those selling to them. At least they’re making hay while the sun shines.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.

More stories like this are available on bloomberg.com/opinion

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