I was lunching years ago with a City friend in a West End restaurant, when a young duchess leant over from a neighbouring table and, by way of greeting him, hit my friend over the back of the head with a furled magazine. He turned and greeted her and her companion, the Princess of Wales, with languid informality and, when the Princess had finished her rocket and mineral water, she stopped at our table to chat with our mutual friend. His bottom remained firmly on the chair and when she had gone he turned to me: “Do y’know who that was? Charming girl. Used to be our nanny.”
The story probably says more about the blue-bloodedness of my friend’s City firm than anything else, but it’s also true that Diana’s effect on all the craning rubber-necks in the restaurant that day would keep it fully booked for months to come.
Princess Diana had the power to bestow prosperity on a business – be it a restaurant or a fashion designer – by the simplest of endorsements: her presence. Amid all the rather more high-minded and altruistic tributes, I want to consider the commercial effect that the loss of such a national icon has on the industries that she touched.
There is a short-term and a long-term effect on the economy when a loved national figure dies. The short-term impact is felt at the retail level as consumer spending falls away during a period of mourning. This economic dip is ameliorated by the fact that some of this spending is merely deferred, or offset by special spending (never before can the British florist industry have known a period of such intense demand).
I gather that the first serious analysis of the short-term effect has been conducted by the Centre for Economics & Business Research (CEBR), which concludes that a dip in consumer sales, caused by the wretched events of last week, could mean a delay in a further rise in interest rates by at least a month.
According to the CEBR, the UK’s net gross domestic product for the third quarter is likely to be some 200m lower than it otherwise would have been. That’s 0.1 per cent lower than expectations and, it is said, equivalent to a month’s delay in a rise in interest rates. The CEBR’s thumb-nail calculations reckon that about half of all spending on luxury items, some 210m, was lost in the quarter, as well as about 80m in what it calls perishable leisure spending (theatre tickets and so on). The counter-balance in extra spending is estimated at 90m, without taking into account longer-term, special consumer sales, such as those of Elton John’s re-released song.
More specifically, retailers took a big hit by closing last Saturday – Dixons, for example, estimates that it would normally take some 7m during the hours it was closed. The bottom line is that retailers which were having a relatively tough time of it with the good weather in August will find the going even rougher as a result of Diana’s tragedy and may not see the market come back until pre-Christmas demand in the final quarter.
Then there are the longer-term economic effects that stretch beyond the initial consumer wake. There can be no doubt that the much-vaunted feelgood factor among consumers takes a pasting after the untimely death of national figures and idols. US consumer demand took a year to recover after the assassination of President JF Kennedy. The thriving economy of Tony Blair’s New Camelot has lost its Guinevere and spending, particularly at the luxury end of the markets, will be depressed as a consequence into 1998.
And some industries, I guess, will never recover the heights to which Diana took them. The British fashion industry, for which she was a conscious ambassador, is one of them. Like the British music industry, British couture is one of the unsung heroes of the balance of payments. I suspect marketing abroad will now prove tougher for the likes of Catherine Walker and Jasper Conran.
Again, there are compensating commercial factors – what the CEBR calls the “Graceland effect”, after the Elvis Presley industry. Diana joins the sad tradition of Monroe and Lennon in continuing to generate wealth in the memorabilia industries long after their demise.
It would be foolish to claim Diana as a brand name – she gave her name only to non-commercial causes and, thankfully, we never saw her endorsement of trainers or vitamin pills. But her effect on commercial life is broader than bald economic statistics imply. In the way-of-life department, I suspect that health clubs would not have enjoyed their levels of growth without her. Holmes Place, which runs a dozen fashionable centres, comes to the stock market soon at some 70m and owes a balance-sheet debt to her.
I imagine that Royal warrants have lost much of their marketing appeal, the power of “appointment to” having been diminished in the public mind by “disappointment in”. Elsewhere, Diana has brought a new professionalism and aggression to the voluntary sector.
Inevitably, it will be called vulgar and tasteless to consider the life and death of Diana in commercial terms. That we should, I have no doubt as it further reflects the enormous effect of the woman. That we can is, perhaps, just another of the sadnesses.