Davos, Displacement and Dining Out

By Richard Pickering, Head of Futures Strategy Davos As Davos opened this week, Angela Merkel reportedly poked fun at Theresa May. She keeps saying ‘make me an offer’, said the German Chancellor; who knows it is not her place to do so. May had the opportunity to set the record straight by offering comfort to the world’s biggest influencers around the kind of environment the UK will offer post-Brexit. Instead, she curiously focused on the topic of Artificial Intelligence, promising to ‘make the UK a world leader in innovation-friendly regulation’. That’s not a bad aspiration; for most major innovations (e.g. AI, automated vehicles, big data, blockchain), it is the development of regulation and safety that drive the critical path rather than invention. However, what is not clear is whether May means regulation or deregulation (e.g. ‘our preparedness to bring Artificial Intelligence into public service delivery’ and ‘The answer isn’t to shut Uber down’). The address felt like a sales pitch to tech companies; but what they might have really wanted was assurances over the direction of the negotiations – an assurance which remains elusive. Digital displacement Various studies have considered the impact of automation on jobs. The latest report from Centre for Cities is broadly consistent with these, stating that c. 20% of roles are highly likely to shrink by 2030 (that’s around 300,000 per annum). The cities most vulnerable to this displacement are typically mid-sized with high exposures to sales, logistics and administrative roles. More positively, the report suggests that all cities will in fact benefit from a net addition of jobs over the same period, once newly created roles are factored in. In support of this, the report highlights the destruction of historic roles such as domestic servants, which were since replaced by new ones. To me this misses the bigger point. Reskilling is a part of every industrial change, and migration to more productive occupations is the desired outcome. However, what happens when there is no job below a certain skill level that cannot be performed more efficiently by a machine? Machines are getting smarter every year, whereas humans are not, and so this outcome feels like an inevitability sooner or (hopefully) later. Life after BHS Once a retail stalwart, the collapse of British Home Stores in 2016 has left large holes in the UK’s high streets. However, their re-letting and renewal acts as a good barometer of where the market is going. The ground floor of BHS’s flagship store on Oxford Street was last September let to Polish fashion chain, Reserved. However, perhaps of greater interest is last week’s announcement that its more challenging upper floors will be converted into the UK’s largest food hall. This is part of a much bigger renaissance in the food hall market, which has its origins in the rise of street food, and the popularity of food-driven markets. Large food agglomerations are quickly becoming one of the strongest footfall magnets, even serving as tourist destinations in their own right (e.g. Borough Market, Chelsea Market in NYC). Although BHS is gone, this new attraction to one of the UK’s best-known streets may prove to be a more potent driver of business than its predecessor and a precedent for other cities. Read our detailed report on the rise of food halls here. Garden shed Which is the UK’s best regarded restaurant? The Fat Duck? The Ledbury? For a brief moment, at the end of last year, ‘The Shed’ in Dulwich held the accolade of being the best rated restaurant in the UK according to TripAdvisor. That was until customers realised that it was, in fact, a garden shed. The ruse, orchestrated by a journalist for VICE, was achieved by leaving hundreds of false reviews, refusing to reveal its location (‘dining by appointment only’), and refusing all bookings due to being ‘fully booked’. Apparently these factors added to its exclusivity, which propelled it to the top of the list. In the past 5 years, we have seen the emergence of taxi firms that own no cars, property companies that own no real estate, retailers that have no inventory, and now restaurants that serve no food. Go figure. SUBSCRIBE TO READ THE NEXT ISSUE IN FULL Subscribe to New Europe a weekly email briefing from Richard Pickering, Head of Futures Strategy