Black Friday retail sales drop despite rise in online shopping
Black Friday retail sales have dropped despite the rapid surge in online shopping as non-essential stores remain closed in England during the second lockdown. Sales made in physical stores and online fell by more than a 10th compared with Black Friday a year ago, according to figures from Barclaycard. John Lewis said Friday would break all of its previous records for online spending, with sales up by 35 per cent compared with its busiest day during the same period a year ago. However, the company will record zero sales at all 38 of its shops in England, and at its Glasgow store, where government restrictions have forced the closure of shops. Barclaycard said most Black Friday sales typically take place in physical shops, highlighting the impact on retailers that have had to close their doors during the pandemic. It warned that overall payments made to retailers between midnight and 4pm on Friday had dropped by 16.7 per cent compared with the same time a year ago. In a typical year, about two-thirds of the transactions processed by Barclaycard on Black Friday come from in-store sales, with the rest coming from online. Meanwhile, Springboard said visits to shopping destinations were down by 58 per cent across the UK by 3pm on Friday compared with last year. Footfall was down most on high streets and at shopping centres. The biggest fall was in central London, with a drop of 82.9 per cent. However, the decline in footfall was far lower in Wales and Scotland where Covid restrictions allow more shops to open. Footfall in Wales was down by a third across the country compared with Black Friday a year ago, while retail visits were down by 50 per cent in Scotland. BRC said that shops that were forced to close over the past month have lost a combined £8 billion in sales. The ONS said online sales accounted for about 28.5 per cent of all spending in October, compared with 19 per cent in January before the pandemic struck. Online food sales have nearly doubled while clothing stores have managed to drive up online sales by 17.1 per cent. However, these increases have been outweighed by a 22.1 per cent decline in spending in physical stores.
Gov't to relax trading laws to allow shops to trade24/7 over Christmas
Shops will be given permission to trade around the clock as the retail industry tries to recoup some of the losses it has suffered during the pandemic, a cabinet minister has said. Retailers normally have to go through a lengthy and time-consuming process to apply to local authorities under the Town and Country Planning Act if they wish to extend hours outside the window of 9am to 7pm. Communities secretary Robert Jenrick said he wanted to remove the bureaucracy to encourage greater trade – allowing shops to open for up to 24 hours a day in December and January. Writing in the Daily Telegraph, he said: “With these changes local shops can open longer, ensuring more pleasant and safer shopping with less pressure on public transport. “How long will be a matter of choice for the shopkeepers and at the discretion of the council, but I suggest we offer these hard pressed entrepreneurs and businesses the greatest possible flexibility this festive season. “As Local Government Secretary I am relaxing planning restrictions and issuing an unambiguous request to councils to allow businesses to welcome us into their glowing stores late into the evening and beyond.” It comes after Jenrick suggested some areas could be moved into a lower tier when the first 14-day review of the latest system of tiered local controls takes place in mid-December. A record number of shops closed during the first half of 2020 due to the coronavirus lockdown, according to research from the Local Data Company and accountancy firm PwC. A total of 11,000 chain operator outlets shut between January and August this year, while around 5000 shops opened, leaving a net decline of 6000 stores, almost double the drop during the same period last year.
Asda billionaire owners place bid for Caffe Nero
Asda owners Mohsin and Zuber Issa have reportedly placed a takeover bid for struggling British coffee shop chain Caffe Nero. The Issa brothers, who acquired Big 4 grocer Asda in a £6.8 billion deal in September, have written to Caffe Nero founder and owner Gerry Ford with a takeover proposal. The billionaire owners of the UK’s largest petrol forecourt operator EG Group, said Caffe Nero’s landlords would be paid in full for the rent arrears owed to them as a result of the Covid-19 crisis, Sky News reported. EG Group said the offer was a significant improvement on creditors’ plans to launch a CVA. It also represented an improvement for the chain’s store-owners over the company CVA proposal on which they are scheduled to vote later on Monday. It remains unclear as to whether Caffe Nero had responded to the EG Group offer yet, or what the precise terms of the offer are. EG Group currently employs more than 44,000 people across 6000 sites in Europe, the US and Australia. In September, the Issa brothers and their private equity backers, TDR Capital, secured an agreement with Walmart to buy Asda. The deal returned the Big 4 giant to British ownership for the first time in 21 years. Walmart has owned Asda since 1999, and the deal means it would still retain a minority stake in the Big 4 grocer as part of the agreement, as well as have a seat on the board. Under the CVA proposal, a number of its 650 Caffe Nero-branded sites could eventually close, although the focus of the plan is to switch to a turnover rent model. The company also operates 150 stores under brands such as Harris & Hoole, which are not part of the CVA. Lenders to Caffe Nero are expected to play a role in deciding the chain’s future. Debt providers Alcentra and Partners Group have hired FTI Consulting to advise them, while banks are being advised by Deloitte.
John Lewis shelves international expansion plan
John Lewis has decided to halt its international expansion strategy, with online orders abroad coming to an end from next week. The department store said it would no longer accept orders for international delivery from December 9 – just weeks before an expected surge in international orders for Christmas. According to The Times, John Lewis is understood to have decided that its international business was too costly. The decision has also reportedly angered some senior executives within the retailer. John Lewis first started selling abroad online about 10 years ago, and in 2016 it stepped up its global strategy on the back of international online sales skyrocketing 50 per cent. The department store currently delivers to 30 international markets, opened five concessions within Australian department store chain Myer and a store within Heathrow Airport to help with its brand awareness among tourists. However, the Heathrow store was one of eight John Lewis stores that did not reopen after the first lockdown and closed down permanently. In addition, last year John Lewis’ international sales dropped 16.9 per cent to £10.6 million, and its operating profits fell 10.3 per cent to £2.1 million. “As part of our Partnership Plan for the next two years, in John Lewis we have decided to focus on areas of the business that will deliver products and services for our local UK customers,” a John Lewis spokesman said. “As such, we are no longer pursuing international expansion and so from the 9th December we have decided to cease our online international delivery service.”
London's Regents Street to be pedestrianised in run up to Christmas
London’s Regent Street is set to be pedestrianised in the lead up to Christmas in an effort to allow visitors to “shop comfortably and view Christmas installations”. West End retailers and restaurant owners are coming together as part of ‘My West End’ to orchestrate a series of Traffic Free Saturdays. On December 5, 12, and 19, Regent Street will be pedestrianised from 10am to 9pm for visitors. The West End is seeking to encourage footfall once the lockdown is lifted in England on Wednesday. Non-essential services in England shut on November 5 for four weeks as part of a second lockdown to reduce Covid-19 cases. With retail opening back up, West End retailers are banking on the new pedestrianisation and Christmas lights to lure customers back into stores. “Visiting the West End at Christmas is a magical experience offering something for everyone, so I’m delighted that Londoners will be able to soak up the atmosphere in safety and comfort during these traffic-free days,” Mayor of London, Sadiq Khan said. “Businesses across London have worked incredibly hard to make their premises Covid-safe, and I am really pleased that they are able to open their doors again. “Supporting retailers and restauranteurs over the Christmas period will help them now and in the future, as they play a key role in London’s economic recovery. “I’m urging Londoners to enjoy the festive period in the capital safely. We have all made sacrifices over recent weeks and months, and it is crucial that the Christmas period doesn’t see a reversal of the progress made in getting on top of the virus – especially when a vaccine is in sight.”
Balenciaga to launch latest collection through a video game
Balenciaga is set to unveil its latest clothing collection through a bespoke original video game which customers can play through their browser.
“Afterworld: The Age of Tomorrow” will launch on December 6 allowing customers to explore the luxury brand’s autumn/winter 2021 collection through an interactive virtual world.
According to the brand the game is an “allegorical adventure” set in the year 2031, in which the player will navigate through the virtual realm completing tasks and talking with characters wearing the brand’s latest collection.
While details on the video game are thin, Balenciaga says the story will explore the collection’s theme of human destiny through “mythological pasts” and “projected futures.”
Luxury brands including Burberry, Louis Vuitton and Gucci have all tried their hand at releasing video games in the past year, but this will mark the first attempt to launch a full collection purely in a digital video game format.
It comes as luxury brands are increasingly turning to the video game industry to explore new marketing techniques and appeal to younger shoppers.
According to a report from investment banking giant Jefferies, luxury brands are set to drive this unlikely partnership forward over the coming years as they seek to capitalise on the increasingly lucrative market.
It argues that the current gaming demographic represent the next generation of luxury consumers, with 46 per cent of the world’s active gamers already spending money in-game.
“We’re seeing brands roll out innovative ways of showcasing and selling their products across the digital landscape,” marketing manager Anthony Blakemore told the BBC.
“The gamification of Balenciaga’s new collection is an excellent example of how innovative digital marketing methods can be used to not only sell clothes, but create an immersive and enjoyable digital experience.”
13000 jobs at risk as Sir Philip Green's Arcadia Group plunges into administration
Sir Philip Green’s Arcadia Group has officially entered administration, a move that has put 13,000 jobs at risk. Last night, the retail empire – which owns Topshop, Topman, Dorothy Perkins, Burton, Wallis, Evans, Miss Selfridge and Outfit – appointed administrators from auditing firm Deloitte after the Covid-19 pandemic “severely impacted” sales across its brands. No redundancies have been announced yet as a result of the appointment and stores will continue to trade, the administrators said, with many due to reopen on Wednesday when England’s lockdown is lifted. Arcadia Group, which runs 444 stores in the UK and 22 overseas, said 9294 employees are currently on furlough – with the majority of those being shop floor staff in England, Northern Ireland and parts of Scotland as they are currently under a second lockdown. In addition, many of Arcadia Group’s staff worked at its brands’ concessions in Debenhams, which is itself hoping for a rescue deal after sliding into administration earlier this year and is currently in the middle of a sales process. “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders,” Arcadia Group chief executive Ian Grabiner said. “The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands. “Throughout this immensely challenging time our priority has been to protect jobs and preserve the financial stability of the group in the hope that we could ride out the pandemic and come out fighting on the other side.
“Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.” The administrators said they would be “assessing all options available”, which could see Arcadia Group’s retail fascias sold off in separate rescue deals. Meanwhile, Arcadia Group said it would continue to honour all online orders made over the Black Friday weekend and will continue to operate all of its current sales channels. Matt Smith, joint administrator at Deloitte, said: “We will now work with the existing management team and broader stakeholders to assess all options available for the future of the group’s businesses. “It is our intention to continue to trade all of the brands, and we look forward to welcoming customers back into stores when many of them are allowed to reopen. “We will be rapidly seeking expressions of interest and expect to identify one or more buyers to ensure the future success of the businesses. “As administrators we’d like to thank all of the group’s employees, customers and business partners for their support, at what we appreciate is a difficult time.” Business Secretary Alok Sharma said he would be keeping a “very close eye” on the administrators’ report on director conduct, and pledged the government would support the affected workers. He tweeted: “Within three months, the administrators have a duty to file a report on director conduct with The Insolvency Service – who will then determine whether a full investigation is required. I will be keeping a very close eye on this process.” He also said: “This is a deeply challenging time for retailers and we remain fully committed to supporting them, including through an unprecedented package of business support worth £280 billion.” Retail trade union Usdaw has said it was seeking urgent meetings with Arcadia Group’s administrators in a bid to preserve jobs. Usdaw national officer Dave Gill said: “Now that Arcadia is in administration, it is crucial that the voice of staff is heard over the future of the business and that is best done through their trade union.
“We are seeking urgent meetings and need assurances on what efforts are being made to save jobs, the plan for stores to continue trading and the funding of the pension scheme. “In the meantime, we are providing our members with the support and advice they need at this very difficult time.” Earlier on Monday, Mike Ashley’s Frasers Group said an offer for a £50 million lifeline for Arcadia Group was rejected. It came as MPs called on Green to cover a shortfall in his company’s pension scheme and urged the pension watchdog to fight on behalf of Arcadia Group’s workers. A spokesman for The Pensions Regulator said: “We are aware of the challenges that the business is currently facing in these unprecedented times and we continue to work with the directors, the trustees and their respective advisers, as well as the [Pension Protection Fund], to protect the position of the Arcadia pension schemes’ members to the fullest extent possible.” Work and Pensions Committee chairman Stephen Timms urged Green to stump up funds to fill Arcadia Group’s pensions black hole, which is estimated to be as large as £350 million. Green’s retail empire is the latest industry casualty to have been hammered by store closures during the coronavirus pandemic. Rivals including Debenhams, Edinburgh Woollen Mill Group and Oasis Warehouse have all slid into insolvency since lockdown measures were first imposed in March. Earlier this year, Arcadia Group revealed plans to cut around 500 of its 2500 head office jobs amid a restructure in the face of the coronavirus crisis. Meanwhile in September the former London headquarter for Burton was put up for sale in a bid to seek fresh funds for the company. In addition, last year Arcadia Group launched seven CVAs which saw it close down a total of 48 stores in the UK and Ireland, as well as all 11 of its Topshop sites the US. However, Green was only able to secure that CVA after he pledged a package of assets worth more than £400 million to Arcadia Group’s pension scheme.
12000 jobs at risk as JD Sports pull out of Debenhams takeover talks
Debenhams will begin to wind down its UK properties after JD Sports said it would pull out of talks on a rescue takeover, a move that will place 12,000 jobs at risk. JD Sports was understood to be in pole position in a sale process initiated by Debenhams’ administrators following its insolvency announcement in April. It is understood that the collapse of rescue talks were partly linked to the administration of Sir Philip Green’s Arcadia Group, which is the biggest operator of concessions in Debenhams stores. Its update to the City read: “JD Sports Fashion, the leading retailer of sports, fashion and outdoor brands, confirms that discussions with the administrators of Debenhams regarding a potential acquisition of the UK business have now been terminated”. Meanwhile, Debenhams confirmed that its administrators, FRP Advisory, have concluded the initial sale process that was part of their assessment of options for the UK business in administration. The 242-year-old department store chain said its administrators have “regretfully” decided to start winding down operations while continuing to seek offers “for all or parts of the business”. Those options included a sale of all or part of the UK business, a further restructure of Debenhams’ operations to go forward on a standalone basis, or the orderly wind-down of the Debenhams business. Debenhams still employs 12,000 staff at 124 UK stores – with most of them currently closed due to lockdowns in England, Northern Ireland and parts of Scotland. For the time being, Debenhams will continue to trade through its stores – once they can reopen in their respective areas – and online to clear its current and contracted stocks. “Given the current trading environment and the likely prolonged effects of the Covid-19 pandemic, the outlook for a restructured operation is highly uncertain,” Debenhams said. “The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business.” JD Sports was thought to have been interested in acquiring all of Debenhams’ business, including its workforce and shops. It had been in exclusive talks with the department store’s adviser Lazard and administrators at FRP Advisory. Last month, it was reported that JD Sports was examining Debenhams’ finances in a secure data room, and had been granted increased access. Should Debenhams’ administrators fail to find a buyer, the historic retailer could still fall into liquidation. This does not impact Magasin du Nord in Denmark, which is owned by Debenhams and continues to operate independently. “All reasonable steps were taken to complete a transaction that would secure the future of Debenhams,” FRP Advisory joint administrator Geoff Rowley said. “However, the economic landscape is extremely challenging and, coupled with the uncertainty facing the UK retail industry, a viable deal could not be reached. “The decision to move forward with a closure programme has been carefully assessed and, while we remain hopeful that alternative proposals for the business may yet be received, we deeply regret that circumstances force us to commence this course of action. “We are very grateful for the efforts of the management team and staff who have worked so hard throughout the most difficult of circumstances to keep the business trading. “We would also like to thank the landlords, suppliers and partners who have continued to work with Debenhams through this turbulent period and can reassure them that all contractual obligations entered into in the administration period will be met in full.” JD Sports was the last remaining bidder for Debenhams, which has been in administration since April. Debenhams has already axed 6500 jobs across its operation due to heavy cost-cutting after it entered administration for the second time in 12 months.
Cyber Monday sales drop 10% following disappointing Black Friday
Cyber Monday sales in the UK fell nearly 10 per cent compared to last year, following a disappointing Black Friday for struggling retailers.
According to Barclaycard, which processes close to a third of all transactions in the UK, payment volumes dropped 9.9 per cent over Cyber Monday.
This followed an even greater drop in sales on Black Friday, when Barclaycard reported a 16.7 per cent year-on-year drop in spending.
“While transaction volumes are still down compared to last year, the gap has narrowed considerably since Black Friday, and this is likely the result of strong e-commerce sales,” Barclaycard’s chief executive Rob Cameron said.
“That being said, the drop overall was expected, given that many physical stores are still unable to open, and many retailers have been spreading out their online deals throughout the month to avoid a bottleneck.”
According to separate data from Mollie, this year saw a significant rise in the number of shoppers using ‘buy now, pay later’ schemes like Klarna and ClearPay, almost tripling since last year.
Across the pond it was a very different story, seeing Cyber Monday sales jump 15.1 per cent year-on-year to $10.8 billion, according to Adobe which analysed 1 trillion visits to US retail sites.
The total US season-to-date holiday spending including Cyber Monday has now topped $100 billion, a figure not usually reached until mid December.
Adobe’s director of digital insights Taylor Schreiner said: “Cyber Monday continued to dominate the holiday shopping season, becoming the biggest online shopping day in U.S. history despite early discounts from retailers.”
Shop prices tumble as retailers ramp up festive discounting
Shop prices continue to tumble in the run-up to Christmas amid the crisis on Britain’s high streets, which has left retailers in a precarious financial position, a report has said. Those selling fashion and DIY products are particularly likely to have discounted their goods, it found. Prices fell by 1.8 per cent in November compared with a year earlier, marking a sharper decline than a 1.2 per cent drop seen in October, according to the monthly BRC-Nielsen Shop Price Index. November’s decline was driven by non-food prices, which fell by 3.7 per cent, after a 2.7 per cent fall was recorded in October. By contrast, food prices were 1.3 per cent higher in November than a year earlier. Fears for the future of the high street and jobs have escalated this week amid announcements relating to Debenhams and Sir Philip Green’s Arcadia Group retail empire. “It has been an extremely challenging year with two prolonged periods of forced closures for parts of the industry,” BRC chief executive Helen Dickinson said. “Those shuttered during lockdown have lost billions in sales and many are now in a precarious financial position. “The government must not subject these businesses to a return to full business rates liability from April 2021, and they must urgently consider extending the moratorium on debt enforcement beyond January. “Without such interventions, we will see countless more store closures and job losses, deepening the crisis on our high streets.” Nielsen head of retailer insight Mike Watkins said: “Shop price inflation remains low in food, with supermarkets competing for the wallet of the Christmas shopper when sales of seasonal food and drink increased at the end of November.” A separate report from the British Independent Retailers Association and Starling Bank has found two-thirds (66 per cent) of people plan to buy gifts from independent shops in the run-up to Christmas. When asked why they would opt to buy locally this year, 43 per cent said they wanted to support independent businesses and the community due to the impact of the pandemic. A similar proportion (42 per cent) want an original gift selection, while 25 per cent feel local independent shops are more convenient. Of those choosing to shop with independent businesses, the average person will spend about £119 on gifts. Food and beverages are the most popular items to buy from independent shops, followed by homeware, clothing and jewellery, the survey found.
Tesco to pay gov't £585m it saved from business rates holiday
Tesco has said it will return to the government £585 million it saved from a business rates holiday introduced to help struggling retailers amidst the Covid-19 crisis. Chairman John Allan said the board “are conscious of our responsibilities to society” and that the Big 4 giant did not need the saving due to remaining open and trading strongly throughout the pandemic. The decision comes as supermarkets face growing calls to hand back the savings which were aimed at helping retailers that were unable to open and struggling to make ends meet. Data compiled last month by real estate adviser Altus Group projected that the UK’s four largest grocers – Tesco, Sainsbury’s, Asda and Morrisons – and German rivals Aldi and Lidl would save around £1.87 billion as a result of the rates holiday. This was set to represent more than a sixth of the total £10.1 billion rates bill which has been written off for all businesses during the current financial year. Bosses at Tesco said they would work with the UK Government on how best to hand over the money. “The board has agreed unanimously that we should repay the rates relief we have received,” Allan said. “We are financially strong enough to be able to return this to the public, and we are conscious of our responsibilities to society. “We firmly believe now that this is the right thing to do, and we hope this will enable additional support to those businesses and communities who need it.”
In October, Tesco revealed it made a pre-tax profit of £551 million in the six months to August 29 – an almost 29 per cent increase compared with the same period in 2019. Sales during that period were up 0.7 per cent to £28.7 billion, with sales in the UK and Ireland up more than eight per cent. “We have invested more than £725 million in supporting our colleagues, putting safety first, more than doubling our online capacity to support the most vulnerable customers in our communities, and hiring thousands of additional colleagues at a time of need,” Tesco chief executive Ken Murphy said. “While business rates relief was a critical support at a time of significant uncertainty, some of the potential risks we faced are now behind us. “Every decision we’ve taken through the crisis has been guided by our values and a commitment to playing our part. “In that same spirit, giving this money back to the public is absolutely the right thing to do by our customers, colleagues and all of our stakeholders.” Early in the pandemic Tesco and rival supermarkets faced criticism for taking the rates relief at the same time as handing out dividends to shareholders. It did not use the government’s furlough scheme. The one-year business rates relief was first announced by Chancellor Rishi Sunak earlier this year and applies to all retail, leisure and hospitality firms until March 2021. The data from Altus Group showed that Sainsbury’s is expected to save £498 million from its rates holiday for the year – although Sainsbury’s said it was closer to £450 million. Last month, Sainsbury’s said it had received a break worth £230 million for the half-year to September in an update which also saw it reveal plans to axe 3500 jobs. However, the grocery giant came under fierce criticism as it also declared an interim dividend of 3.2p plus a special dividend of 7.3p for shareholders. In November, the boss of value retailer B&M Bargains, which has stayed open through the lockdowns as it was classed as essential, paid his offshore family trust £44 million in dividends as it saved £38 million through the rates holiday. Richer Sounds chief executive Julian Richer, whose business was classed as non-essential, said previously that he was “really annoyed” that the grocery chains had benefited from the tax break as they also saw “queues around the block”. The figures from Altus Group show Asda is projected to save £297 million, Morrisons around £279 million, Aldi £109 million and Lidl £108 million, for the year. In Wales, the six major supermarkets still had to pay around £78 million for rates for some stores as a result of devolved business rates.
M&S to launch contact-free bra fit service at its biggest stores
Marks & Spencer has announced it will launch a contact-free bra fit service at 64 of its biggest stores in England and Wales from December 3. The contact-free offering will be run by M&S’s team of lingerie experts and the consultations will include contact-free measurement, advice on the different styles, shapes and options, and help selecting and purchasing a bra. M&S said it trialled the service at five large stores in Bluewater, Bromley, Kingston, Milton Keynes, and Westfield White City prior to the second lockdown, and found customer feedback to be positive.
The adapted service will include the implementation of strict hygiene and social distancing measures to ensure customers can use the service with confidence. These measures include:
• Hand washing: Hand sanitisation stations will be at the entrance to all lingerie fitting rooms and customers will be asked to sanitise their hands on arrival; colleagues will wash their hands between every appointment.
• Social distancing: Two metre distance to be maintained at all times between bra fitter and customer.
• Extensive cleaning: Fitting rooms to be cleaned after every customer including all surfaces & all tape measures, with a deep clean every evening.
• Quarantining product: All bras tried on and not purchased will be isolated.
• Face coverings: Colleagues will wear a face covering, visor and disposable gloves and customers will wear a face covering.
All appointments for M&S bra fit will now be booked online to ensure contact details are collected for track & trace. M&S said its online bra fit tool is used on average by over 20,000 customers a month. “Finding the perfect bra isn’t just about the garment itself, it’s about the perfect fit,” M&S lingerie director Laura Charles said. “We know our customers will continue to use online services and we’re working hard on improving those, but we also want to offer them the choice of an in-store experience, so we’re delighted to be starting our contact-free bra fit service. “Customers can expect the great service they know & love, but adapted for this time, with extensive safety measures in place to protect our customers and our colleagues.”
M&S refuses to return £83.7m business rates relief
Marks & Spencer has said it will not follow some of the biggest retailers’ footsteps in returning business rates relief it received to help support it through the Covid-19 pandemic. The retailer claimed business rates relief of £83.7 million from the government in its first half to September 26 and can also claim for its second half. However, M&S said on Wednesday that the “much-needed support” from the government has provided a backbone to businesses impacted by the pandemic – “including ours”. “It has enabled us to support our colleagues and our suppliers, whilst continuing to serve our customers in what have been incredibly challenging circumstances,” M&S said. Big 4 grocer Tesco said it would repay the £585 million it has claimed, putting pressure on rivals to do the same. Unlike Tesco, which has been able to keep all its stores open through the pandemic, M&S has seen most of its clothing & home store space closed for extended periods. In M&S’s food division, cafes and hospitality services, which prior to the crisis accounted for about four per cent of food revenue, have been closed, while its franchise business, particularly in travel hubs, has been severely impacted. Trading at M&S’s high street and town centre stores has also been hit by the major drop in customer footfall. M&S reported a loss for its first half and did not pay shareholders a final dividend for the 2019/20 year and has said it does not anticipate paying dividends for 2020/21. Tesco said in October it would pay its shareholders an interim dividend. Nonetheless, Sainsbury’s announced it would forgo around £450 million of business rates relief granted by the government, while responded by saying it had pledged to hand back the £274 million it had received. Aldi, the UK’s fifth-largest supermarket, said on Thursday that it will return the full value of the business rates relief it has received during the pandemic, which is over £100 million.
Arcadia gift cards now only cover half the price of purchases
Arcadia Group has reportedly said customers holding gift cards and vouchers for its brands will only be able to use them to cover half the price of their purchase. Shoppers who have gift cards for brands such as Topshop, Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton, said they were unable to use them to make purchases on Wednesday. Arcadia initially responded by saying it was a technical issue, but once the system was back up and running, it said customers would not be able to use them to cover their entire value but could only put them towards a purchase, The Guardian reported. Sir Philip Green’s retail empire appointed administrators from Deloitte on Monday, after talks with a number of lenders about an emergency £30 million loan hit a dead end. The administration has placed 13,000 jobs at risk. Mike Ashley’s plans for an emergency £50 million loan to Arcadia Group also fell through. Earlier this week, UK ministers said they were keeping “a close eye” on Arcadia Group’s administration due to the controversy surrounding the management of the company. Green’s family agreed on Wednesday to pay £50 million into their fashion empire’s pension scheme within the next 10 days – almost a year earlier than scheduled – as the business secretary, Alok Sharma, called on the insolvency watchdog to investigate the handling of the failed group. Sharma asked the insolvency watchdog to examine whether the conduct of directors at Green’s Arcadia led to problems for the group’s pension fund. Arcadia’s administration left a pension deficit estimated to be as much as £350 million. Despite the administration, Arcadia is still trading in shops and online. Administrators are not obliged to honour gift cards and vouchers, and holders are creditors who would be in the queue for a payment when the business is wound up. Holders of Arcadia’s cards and vouchers have been told they will still be honoured, but they cannot be used to cover more than 50 per cent of their purchase. Someone with a £20 voucher would have to spend £40 to use it up. Arcadia said gift cards remain valid and, once functionality resumes, customers will be able to use them in store and online for up to 50 per cent of the balance of the total purchase. BHS made a similar change to its cards when it went into administration in 2016.
Retail hiring drops 20%
Hiring across the retail sector fell 20 per cent in October, as the sector continues to struggle under the pressure of coronavirus. According to new research conducted by LinkedIn, retail hiring rates fell 20 per cent year-on-year in October, as employers cut back on staffing in the wake of uncertainty caused by coronavirus. Retail was the second-worst affected industry, only behind hires in recreation and travel, which fell 43 per cent year-on-year in October. “The pandemic has accelerated the shift to online shopping and in-store staff are paying the highest price,” LinkedIn UK Country Manager Josh Graff said. “We know that people in the retail sector are passionate about their work and have highly transferable skills, specifically in customer service and experience. Forward thinking companies will look past candidates’ current employment status and instead focus on their skill set, related previous experience and overall potential when making hiring decisions,” Graff added. “For many retailers, the immediate challenge is cutting costs, preserving working capital and trading through Christmas to strengthen balance sheets,” Retail Economics chief executive Richard Lim said. “With employee costs making up a significant proportion of overall operating costs, it’s understandable that retailers have cut back employment levels compared with last year, especially given the heightened levels of uncertainty. With a greater proportion of shopping moving online and vacancy rates on our high streets expected to rise further, it’s inevitable that there will be fewer retail jobs in the future, but those that remain are likely to be more skilled and higher paid,” Lim added. On Monday Sir Philip Green’s Arcadia Group entered administration, putting 13,000 retail jobs at risk. The retail empire – which owns Topshop, Topman, Dorothy Perkins, Burton, Wallis, Evans, Miss Selfridge and Outfit – appointed administrators from auditing firm Deloitte after the Covid-19 pandemic “severely impacted” sales across its brands. Administrators said no redundancies have been announced yet as a result of the appointment and stores will continue to trade. Meanwhile, Debenhams’ said it would begin to wind down its UK properties after JD Sports said it would pull out of talks on a rescue takeover, a move that will place 12,000 jobs at risk.
Debenhams claims over £40m furlough money following admin
Debenhams has reportedly claimed £40.5 million from the furlough scheme after collapsing into administration. The department store chain – which is now being liquidated after administrator FRP Advisory failed to find a buyer – legally claimed the sum from HMRC between April 9 and October 8, The Telegraph reported. Debenhams said it used the money “in exactly the way the scheme was intended, which was to preserve jobs while stores were closed in line with government regulations”. Last month, it emerged that JD Sports was the frontrunner to take over Debenhams, but talks turned sour on Monday after Sir Philip Green’s Arcadia Group – Debenhams’ biggest concession holder – fell into administration. Debenhams’ collapse has placed 12,000 jobs at risk, while Arcadia has put 13,000 jobs at risk. The 242-year-old retailer fell into administration in April for the second time in 12 months as the Covid-19 pandemic forced the temporary closure of its 142 stores. It has scrapped 6500 jobs since May. On Wednesday, Debenhams’ website and stores received an overwhelming response as shoppers tried to take advantage of discounts of up to 70 per cent as it sells off remaining stock. The company owes up to £229 million to trade creditors. Shoppers reported being in virtual queues with as many as 900,000 users on Wednesday morning after Debenhams launched the fire sale. By mid-morning, the website had crashed as it struggled to cope with demand.
Primark takes £430m hit from second wave lockdown closures
Primark’s parent company has revealed that lockdowns brought about from the second wave in the pandemic – especially in England – along with regional lockdowns and restrictions, has hit sales to the tune of £430 million. Associated British Foods (AB Foods) said this figure was higher than when bosses last month predicted sales would be hit by £375 million. However, the company said it has recovered some of the costs, with overheads falling 25 per cent during the autumn lockdowns, and early signs that reopened stores are seeing strong sales. Customers at Primark, which reopened in England on Wednesday, have been eager to buy clothes again and long queues have formed at some branches. To maximise sales and spread out customer numbers, some stores have continued trading through the night, while others have extended opening hours. Stores in the Ireland, France and Belgium also reopened in the past week. AB Foods said 34 stores remain temporarily closed, including all outlets in Northern Ireland and Austria, representing seven per cent of Primark’s total retail selling space. This compares with 62 per cent when the highest number of stores were closed in November. “Sales in the days since reopening in each of these markets have once again been very strong, reflecting the excitement and appeal of the Primark offering,” AB Foods chairman Michael McLintock said. “We have extended the opening hours during this festive season in most of our stores in the Republic of Ireland and England to cater for the anticipated higher customer demand and to help ensure a safer environment by spreading shopping hours over a longer period.” His comments, due to be made at the AB Food’s annual shareholder meeting, also included an update on post-Brexit transition plans, saying preparations are complete. “Following the UK’s exit from the EU, our businesses have completed all practical preparations for the end of the transition period this month and contingency plans are in place should our businesses experience some disruption at that time,” McLintock said. Since the start of this financial year, new Primark stores have opened in the US – in New Jersey and Florida – with “encouraging” performance from its remaining sites. Strong sales were also seen in Primark’s first store in Rome in Italy, and a fifth site opened in Barcelona, Spain. “Notwithstanding the currently announced periods of restriction, we continue to expect Primark sales and profit to be higher this financial year compared to last. We will continue to expand retail selling space,” McLintock said.
Cyber Monday was the largest digital shopping day on record in the US
Cyber Monday was the largest digital shopping day on record in the US seeing sales top $10.8 billion for the first time.
According to new data from Adobe, sales grew 15.1 per cent compared to last year, with a large portion of purchases occurring in the last few hours of the day.
Despite breaking records, the figures came slightly below Adobe’s own predictions, seeing online sales rise by 30 per cent year-on-year instead of the 33 per cent it had predicted.
This is understood to be due to the pandemic forcing baseline online and mobile sales far higher, meaning that a surge in holiday sales was much less pronounced.
“Consumers wanting to take advantage of time-sensitive deals drove massive growth in the final hours of Cyber Monday,” Adobe said.
“During the ‘golden hours of retail’ (7 – 11 pm Pacific), consumers spent $2.7 billion. These last four hours account for 25 per cent of the day’s revenue, with the peak hour between 8 – 9 pm Pacific reaching a purchasing rate of $12 million/minute.”
Figures from Shopify supported Adobe’s data, stating that Cyberweek sales had also risen 30 per cent to $270 billion this year.
This is in stark contrast to the UK, which saw Cyber Monday sales drop nearly 10 per cent this year, following an even greater 16.7 per cent drop on Black Friday.
Aldi's Long Way From Home Christmas ad voted best in retail
Aldi had the most successful Christmas advert this year according to a study which used artificial intelligence facial coding technology to track people’s emotions as they watched.
Kantar has unveiled its list of the most successful UK Christmas campaigns of 2020, evaluating more than 3000 consumers’ emotional reactions against key dimensions of effective advertising.
Aldi’s “Long Way From Home” Christmas advert, featuring its recurring favourite Kevin the Carrot, came third overall in Kantar’s list, after coming first last year.
It was ranked third overall in two categories including “long-term return potential” and “is the ad enjoyable” thanks to its incorporation of humour and its ability to “build warmth for the brand and to differentiate it from others”.
The next retailer on the list was M&S Food, coming in fifth place for its advert featuring Olivia Colemand.
Tesco also scored highly, being ranked first in the “how emotional do you feel” category ahead of Amazon which came in second.
“Some of these ads have played a real role in lifting our spirits and making us feel better,” Kantar UK’s head of creative excellence Lynne Deason told Marketing Week.
“Tesco does it by giving us a laugh and making us reflect on the humorous side of things, whereas Amazon gives us that hopefulness through its insight. From a creative effectiveness point of view, it’s weaving those things together that gives you the outcomes for the brand.”
Argos was rated third overall in two categories including “does it grab your attention” and “how emotional do you feel”.
Less successful were Amazon, Waitrose and Sainsbury’s adverts, according to Kantar.
Amazon’s “The Show Must Go On” advert scored poorly across three categories, including just four for whether people would remember the brand.
“It’s unfortunate for Amazon from an effectiveness point of view – although maybe they don’t need it this year given they’ll probably win out anyway – that the brand is very recessive [in the ad],” Deason added.