Once more, perhaps this shift is due to demand changing. Now, if people arrange to meet somewhere away from home, the quality level expected is so much higher – otherwise there is no point in leaving the house. That would go some way to explaining the high rate of local pub closures still occurring in the country; if the business can’t go higher up the quality spectrum, the other option is to become cheaper than staying at home, which isn’t really an option at all – especially when the low-priced drinks at Aldi and Lidl come into play.
There are a lot of other examples of this kind of thinking out there. The key thing to watch is whether it is becoming more ingrained, more of a behavioural habit. If that is the case, then companies around the world will have to adapt, if they are able. It may not be prevalent everywhere yet – the personal technology sector, for instance, still seems to be focussed on producing the best quality, highest spec item, rather than worrying about the trade-off on the bottom end. These are the kind of trends that can, over time, make or break a company. No investor can spot all of them. Many can’t spot any. But managing to spot a few can make the difference between a good investment and a bad one.
Ben Kumar is investment manager at Seven Investment Management
