Wednesday 24 July 2019 6:59 pm

Retailers and bar chains set to cash in on heatwave

This week’s heat wave could prove a bonus for retailers and pub chains which have struggled this year in comparison with 2018’s glorious summer.

Temperatures tomorrow could smash the UK record for the hottest day ever with the Met Office predicting the mercury could rise to a maximum of 39℃.

Russ Mould, investment director at AJ Bell, said: “The supermarkets always get very excited about the hot weather and pub groups will probably get a bit of a tailwind as well.”

The hot weather will come as a relief for supermarkets which have struggled to match last summer’s performance when blazing sunshine and England’s run to the semi-finals of the men’s football world cup helped boost sales.

Read more: Beer sales slump dampens Marston’s share price

Figures from Kantar showed supermarket sales declined 0.5 per cent in the 12 weeks to 14 July in comparison with last year – the first drop since June 2016. 

Richard Lim, chief executive at Retail Economics, said: “The weather is a key factor in boosting short term demand. 

“That usually plays out with will also be helpful for the apparel retailers and its is also quite supportive for DIY, gardening and toys focused on the outside like slides and paddling pools.”

Asda predicts barbecue sales will increase 250 per cent this week, ice-cream sales by 90 per cent and outdoor furniture by 70 per cent. 

The supermarket said sales of picnic staples such as pork pies, sliced cheese and coleslaw are set to soar 500 per cent while sales of barbecue products such as sausages and burgers could hit 4.5m.

Read more: Fevertree shares go flat as poor weather hits sales growth

According to Argos paddling pool sales have rocketed 400 per cent week-on-week as shoppers rush to cool down. 

Other big sellers at the Sainsbury’s-owned chain during the heatwave include slushie-making machines with sales up 163 per cent week-on-week and outdoor toys with sales rising 75 per cent week-on-week.

The leisure sector has also struggled with the indifferent weather so far this summer with consumption of both alcohol and soft drinks falling compared to 2018.

Shares in pub chain Pub chain Marston’s fell more than 10 per cent today as it announced poor beer sales for May and June which it blamed on cooler weather.

Posh tonic company Fevertree earlier this week said “unseasonable” weather had led to a first-half sales slow down, while Irn Bru-maker AG Barr issued a profit warning last week blaming poor weather for an expected 10 per cent drop in sales and a 20 per cent drop in profit.

Read more: Three ways to survive the summer heatwave in the workplace

The hot weather should provide a fillip for drinks companies and bar chains with Swedish cider brand Rekorderlig anticipating an extra 1.5m pints of cider sales and an additional seven bottles of cider sold every second across the UK.

Paul Downes, managing director Iron Maiden’s Trooper Beer, said: “Prolonged bouts of warm summer weather are to brewers and beer gardens what Christmas is to retailers and toymakers.”

Coffee chain Costa was also predicting bumper sales for its iced coffee range with sales anticipated to peak at 3,750 an hour tomorrow.

Retailers and bar chains prepare carefully for heat waves, working with the Met Office to track weather conditions up to two weeks ahead to anticipate customer demand.

Kirsten Brauer, senior account manager at the Met Office, said: “We provide things like a 14-day regional day weather forecast based on observations from multiple locations in one region, we can provide highly granular forecasts for a specific store and we can provide hourly forecasts which helps retailers respond to demand.”

Despite the short-term boost provider by a spell of hot weather, Lim said other factors would have a more fundamental impact firms in the retail and leisure sectors . 

“The shift to online, the rising costs they are facing through business rates, the national living wage and rising utilities bills; the weather can be an important driver of short-term demand, but the other economic fundamentals are much more important in the long run,” he said.