05 April 2019
Disaster, Mutiny and Betrayal After 7 hours of debate in yesterday’s Cabinet, the unsurprising conclusion is that we need more time to resolve Brexit. Hence, the PM will ask for another ‘short delay’. To achieve something meaningful in that time, May has accepted that convincing members of her own party to back her: (a) is not going to be possible; and (b) will not guarantee sufficient numbers in any event. And so she has offered an olive branch to Corbyn (‘a known Marxist’ says Jacob Rees-Mogg), to try to find a deal that Labour could support. Any such deal skews towards soft outcomes, and the backlash from the right of her party may be enough to finish her career. The rhetoric from the ERG is one of ‘betrayal’ (Johnson), ‘disaster’ (IDS) and prospective ‘’. Meanwhile for Corbyn, his moment has now arrived, as he inherits an authority almost equivalent to a coalition leader. However, he, like May, faces pressures from different sides of his party which, on the face of it, are irreconcilable. Whether he and May can now steer a course to an acceptable middle ground will define the shape of both our prospective deal (or not) with the EU and their own positions within their respective parties.
Automation analysis With the rise of technology come fears over the negative impacts of automation. It has always been this way. Turning down a knitting machine patent almost 500 years ago, Queen Elizabeth reasoned she had ‘too much regard for the poor women and unprotected maidens who obtain their daily bread by knitting, to forward an invention which, by depriving them of employment, would reduce them to starvation’. Turns out she was misguided. However, in the modern age where machines have the potential to be better and cheaper at doing most of the jobs occupied by a section of our society, our preoccupation grows once more. The latest in a series of reports on the subject comes from the ONS. As interesting as the outcomes, are the considerations which underpin them. A key distinction lies in the difference between the automation of occupations (a high bar) and the automation of tasks (much lower). A further difference in approach between the various reports lies in whether automation is 100% of job processes (again a high bar) or a more pragmatic 70%. Among the ONS findings are that women and the young are disproportionately affected. The former due to a high exposure to part time work; the latter due to inherently lower work complexity (though they usually transition to more complex roles). Education is a strong predictor of automation risk, as is occupation group and whether one is in a managerial position. Interestingly, key words in defensive job titles include: ‘plan’, ‘research’, ‘prepare’, (but sadly not Futures!).
Spending pennies Whereas several public services rose in cost this week as part of the annual indexation, one has been eliminated. Network Rail has removed the charge for using the public conveniences at its busiest stations; in doing so foregoing over £3m in annual revenue. The rail infrastructure operator essentially provides a bundle of services for rail passengers and rail franchisees, one of which is public toilets, and so the move here is one of displacement of the charging mechanism away from the point of consumption. However, in a commercial context, many commercial real estate investors offer similar services as part of their total value proposition to customers. For Network Rail, toilet inflows had been falling, perhaps as customers chose to carry out their outflows in the increasing number of F&B offerings in and around stations. However, private delivery of toilets, (typical annual budget of £6-10k each) and for that matter a host other quasi-public services (Wi-Fi, water fountains, prayer rooms, children’s play areas) are increasingly baked into the offering of large estate / campus owners and shopping centre landlords. And this might just be the start. Particularly in shopping centres, where a key factor of competition in the future will be on service delivery and experience, it will be investment in the wider offering beyond shops that will be a determinant of success, proxied by footfall. In that context a raft of new services is likely to join toilets in the category of ‘hygiene factors’.
Fries and chips As part of a wider category of leisure activities, F&B has a robust defence to digital substitution, in that people tend to prefer to carry out those activities in social spaces. However, that doesn’t mean that technology won’t play a central role in the operation of F&B estates. Many of the best recent innovations in physical real estate come from the online world, such as the ability to personalise customer service using live preference data. McDonald’s recent purchase of AI business, Dynamic Yield, allows it to start personalising the experience at its drive-throughs in a bid to boost sales. Ostensibly they are providing AI-driven menu options, which respond to environmental factors such as the time of day and weather. So, at midday in the middle of Summer the McFlurry becomes more visible on the menu and added to upsell options. Beyond that, however, this is an opportunity to collect and synthesise customer preference data and use that to improve future customer service and supply chain efficiency. Similar technology can be applied to other physical interactions with consumers. For instance, a desk that learns when you are most likely to be there (and changes environmental conditions to suit), a shop that throws up targeted ads based on your browser history, and sheds that know how full they are going to be, and sell down the spare capacity. The physical world potentially provides much richer sources of feedback than online, but operators and investors in real estate need to invest in data capture and analysis tools, or risk losing ground to the digital world which is doing so in spades.
Kin The term ‘co-living’ conjures up images of 20-something hipsters watching Netflix on a communal sofa, mug of Chai latte in hand. Probably not far from the truth? The sector is still in the early stages of its growth, and the market typically targeted by operators is affluent, urban youth (and some vicarious demand from divorcees, I understand…). However, the themes of creating community, a redressing of the public-private space ratio and added value service provision are not ones that are exclusively of interest to this segment; resulting in white space in other age and demographic brackets. Of note, the family housing market is oft-referred to as being underserved more widely by the development community. Tishman Speyer and Common are now looking to fill that gap in the form of family co-living product ‘Kin’, set to launch in Queens, NYC. Added value services include child care, shared play spaces and community coordination, designed to ‘address the difficulties of raising a family in and around cities’. The units themselves feature childproof furniture, in-unit cleaning, family kitchens and various tech additions. As the demand is proven in new niches for co-living concepts, the scope could stretch much beyond Millennials.
Summer or Winter? Welcome to British Summer Time! It’s that time of the year when drinking outside pubs becomes popular, and as a recent commuter I’ve found will be the half of the year when I have a shot at arriving home in daylight. The world has changed a lot since 1916 when the Summer Time Act came into force. However, with the UK at the forefront of industrialisation, even back then agricultural jobs as a percentage of all jobs had dwindled significantly from 40% the previous century. Most of us now work under artificial lights, don’t take much of a lunch break, and not all of us have the privilege of sitting next to a window. Not only does lack of sunlight subdue mood and cause rickets, the act of changing the clocks has also been shown to disrupt sleep and increase cardiac risk as the body adjusts. Last week the European Parliament voted to end daylight savings by 2021, with Jean-Claude Juncker asking member states to choose whether they live in permanent Winter or Summer time. Regardless of the outcome of Brexit, surely it’s time that we double down on evenings and choose Summer. Who likes mornings anyway?
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