Shares in retailers tumble after lockdown 2 announcement
Shares in retailers took a battering on the London Stock Exchange this morning as investors reacted to the government’s weekend announcement for a month-long lockdown in England. JD Sports, Quiz, Next, Card Factory, Superdry, Games Workshop, French Connection, Ted Baker, Burberry, WHSmith and Mike Ashley’s retail empire Frasers Group were among those that saw a drop in their share price on Monday morning. However, there were also winners from the plans to shut all non-essential retailers until December, with Ocado, Tesco, Sainsbury’s and B&Q owner Kingfisher all seeing a boost in shares. Ocado announced profits would now be higher than previously thought – sending shares up nearly eight per cent within an hour of the stock market’s 8am opening. The heavy falls for retailers – as well as pubs and restaurant groups – who will be forced to close their doors come as business leaders warned of the economic damage from the second lockdown announcement. Many also complained that the one-month furlough extension did not do enough to provide longer-term support or guidance to allow for suitable planning. “There’s no getting around the fact that these new restrictions will be a devastating blow to business communities who have done everything in their power to adapt and operate safely,” British Chambers of Commerce director general Adam Marshall said. “Business and market confidence have been hit hard by the unclear, stop-start approach taken by governments across the UK over the past eight months, with little end in sight. “Many firms are in a much weaker position now than at the start of the pandemic, making it far more challenging to survive extended closures or demand restrictions. “The temporary extension of the furlough scheme will bring short-term relief to many firms, and responds to chambers’ call for business support to be commensurate with the scale of the restrictions imposed. “The full financial support package for businesses facing hardship, whether through loss of demand or closure, must immediately be clarified and communicated. “Sustained help must be available to employers, to the self-employed and to the many businesses and individuals that have not been able to access any of the Government’s schemes to date.” The new rules mean all non-essential retail must close, including clothing and electronic stores, car showrooms, travel agents, betting shops and car washes. Cinemas, hairdressers, bowling alleys, leisure centres, gyms, swimming pools, zoos and tattoo parlours – among others – must also close in England. Restaurants, bars and pubs must close, but can still provide takeaway and delivery services – although takeaway of alcohol will not be allowed. Hotels, hostels and other accommodation should only open for those who have to travel for work purposes and for a limited number of other exemptions which will be set out in law.
Mike Ashley lashes out after being excluded from Debenhams auction
Mike Ashley has reportedly lashed out after being excluded from the auction of Debenhams, as restructuring firm Hilco begins liquidating parts of the business. Frasers Group owner Ashley and his lawyers have spent the past week writing to investment bank Lazard and law firm Freshfields to describe the data provided to his fashion group as “woefully inadequate”, The Sunday Times reported. The billionaire said it was “almost unbelievable” that Frasers Group was expected to make a bid on the vague information. Hilco was planning to send its teams into Debenhams’ stores as early as this week, but this may prove difficult following the government’s consideration to impose a second national lockdown. The restructuring firm had made a bid with the intention of continuing to operate some stores. Frasers Group lawyers said that the company received less information than other bidders and that there has been a deliberate attempt to shut it out of the auction process. Online retailer The Hut Group made a bid for Debenhams’ online business, but is thought to be out of the running. JD Sports has also run the rule over the entire company, but did not table a firm offer. Ashley has also complained to the Financial Conduct Authority, the Pension Protection Fund and Labour MP Rachel Reeves. The tycoon raised his £100 million offer to £125 million on October 7 after being told his initial bid was not competitive enough. Frasers Group was given access to a “data room” last month, before Lazard sought confirmation it was willing to pay £305 million and would be able to complete a purchase agreement. Nevertheless, the group told Lazard that it had faced “frustration at every step” and that there had been a “deliberate attempt to exclude us from the process”. Debenhams responded by saying that it is conducting a “fair and thorough process”. Information has been provided to parties on “the basis of the status of their proposals and subject to the restrictions of competition law”. Debenhams has 124 stores in the UK and 12,000 workers. The department store chain told potential buyers it expected to report an underlying loss of up to £10 million in the year to August 2020. Debenhams collapsed into a “light touch” administration in April as the Covid-19 pandemic continued to impact trading. The department store chain also began the sales process of its Danish retail business Magasin du Nord earlier in September in a bid to generate between £150 million and £200 million.
Ocado raises FY expectations, announces nearly $300m of new acquisitions
Ocado has announced the proposed acquisitions of Kindred Systems and Haddington Dynamics in two deals worth $287 million.
Kindred Systems was described by Ocado as an “advanced piece-picking robotics company”, and set to be acquired by the online grocery platform for $262 million, subject to closing adjustments.
Founded in 2014 and based in Toronto and San Francisco, Kindred Systems designs, supplies and services piece-picking robots for ecommerce and order fulfilment.
Kindred Systems has around 90 employees, with approximately half set to join Ocado’s existing technology team.
Haddington Dynamics is a robotic-arm designer and manufacturer set to be acquired by Ocado for $25 million, subject to closing adjustments.
Based in Las Vegas, Haddington Dynamics specialises in the design and manufacturer of low-cost, lightweight robotic arms, and counts NASA as a current client.
Ocado noted that Haddington Dynamics’ arm design and technology allows for the arm to be manufactured at a relatively low cost via 3D printing, with a corresponding positive impact on the financial returns of robot deployment.
The online retail platform said it expected Kindred Systems and Haddington Dynamics to “accelerate the commercialisation of robotic picking and other automation tasks” for its clients.
“We consider the opportunities for robotic manipulation solutions to be significant, both for Ocado Smart Platform clients and across the fast-growing online retail and logistics sectors,” Ocado chief executive Tim Steiner said.
“Ocado has made meaningful progress in developing the machine learning, computer vision and engineering systems required for the robotic picking solutions that are currently in production at our Customer Fulfilment Centre in Erith. Given the market opportunity we want to accelerate the development of our systems, including improving their speed, accuracy, product range and economics.
“I am delighted to be welcoming Kindred Systems and Haddington Dynamics to the Ocado group, as we believe they have the capabilities to allow us to accelerate delivery, innovate more, and grow faster,” Steiner added.
“I am also excited by the opportunity to enter new markets for robotic solutions outside of grocery that is demonstrated by Kindred Systems’ robust growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors,” the chief executive said.
Ocado noted that the transaction will have no financial impact on the current financial year.
It said it expects 2021 revenues to increase as a result of the two accusations by approximately £30 million with a small negative impact on EBITDA.
The Kindred Systems acquisition is set to be financed by Ocado’s cash reserves.
Ocado said it would pay for Haddington Dynamics with a mix of $7 million in cash and 0.6 million new Ocado ordinary shares.
The business also announced that its joint venture with Marks & Spencer had remained strong through the fourth quarter of the current financial year.
Ocado said it continues to experience high demand for consumers migrating to online grocery.
As a result, Ocado on Monday said it expects its full year EBITDA for the group to come in at over £60 million, versus previous guidance of over £40 million.
Ocado’s financial year will end on November 30, with its full year results published on February 9, 2021.
The firm will update the market on its fourth quarter trading on December 10.
Primark owner to take £375m sales hit from lockdown 2
The parent company of Primark has said it expects to take a £375 million hit from the loss of sales amid the latest enforced closures amid the second wave of the Covid-19 pandemic. Associated British Foods said around 57 per cent of selling space in its Primark stores will be temporarily closed if Parliament approves plans to shut non-essential shops for a month from Thursday this week. On Saturday, Prime Minister Boris Johnson confirmed that fashion retailers would be among those required to close from November 5 until December 2 as part of the second lockdown in England aimed at curbing the spread of the virus. AB Foods said all Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia were already temporarily closed, representing 19 per cent of selling space. It also told investors that its trading hours have been restricted in a number of other key markets. “Uncertainty about further temporary store closures in the short term remains,” AB Foods added, in a statement to the London Stock Exchange. The retail giant said it was implementing operational plans which have been developed to “manage the consequences of closures” and was taking action to reduce its operating costs. It also told shareholders that all orders placed with suppliers will be honoured. AB Foods added that, as of the end of its financial year on September 12, it had £1.5 billion in cash reserves, with a total liquidity of around £3.1 billion including lending facilities. In September, AB Foods said a surge in summer sales had put it on track to top its profit targets for the year. On Tuesday the company, which also runs a raft of FMCG businesses, will reveal its annual results for the financial year.
Indie bookshops team up to take on Amazon
Independent bookshops have joined forces to back the launch of a new online retailer taking on Amazon in the run-up to Christmas. More than 150 UK bookshops have signed up to serve customers through Bookshop.org, an online platform billing itself as an alternative to Amazon for “socially conscious online shoppers”. The site, which launches in the UK today, first went live in the US in January and rapidly grew in the face of the pandemic, raising $7.5 million (£5.8 million) for independent US bookshops. The platform said it works as a marketplace for independent stores, ensuring they receive the full profit margin (30 per cent of the cover price) from each sale. Books are offered to consumers at a small discount and delivered within two to three days, it said. It comes as high street retailers face local restrictions – including the complete lockdown of bookshops in Ireland and Wales and an impending lockdown England – which could hamper trade ahead of Christmas. Nevertheless, demand for books has been strong throughout lockdown, with publisher Bloomsbury reporting its highest profits for 12 years last month as people sought reading material to keep them occupied during lockdown. “Bookshops are essential to a healthy culture, and online sales are vital to safeguarding their future,” Bookshop.org founder and chief executive Andy Hunter said. “Covid-19 has added further urgency to the need for bookshops to compete for online sales.” The UK operation has been launched by former Etsy international boss Nicole Vanderbilt. “At a time when Amazon has enjoyed even greater advantage over high street competitors as a result of the pandemic, Bookshop.org offers a socially conscious alternative to customers wishing to shop online, while supporting bookshops in competing in an ecommerce environment,” she said. “We’re delighted to be launching in the UK and look forward to working with bookshops, publishers, authors and beyond across the UK, while offering customers an entirely new online shopping experience.” The online platform said bookshop owners have been positive about its UK launch, and it expects to have 200 retail partners by the end of the year.
First UK lockdown saw 16000 ecommerce business created
The first lockdown in the UK brought a surge in online entrepreneurs, with nearly 16,000 ecommerce businesses created between March and July this year.
Research published by the Royal Mail said 315,000 companies were incorporated in the UK during lockdown, up 7 per cent from the same period in 2019.
In the second quarter of 2020, from April to June, 176,000 start-ups were recorded, the highest for any second quarter on record.
The Royal Mail’s data suggests that the backdrop of a pandemic and ensuing lockdowns prompted a spike in entrepreneurial activity.
The highest rate of new business creation was found to be within ecommerce, reflecting the fast-changing pace of consumer behaviour in the UK during 2020.
With a second lockdown for England now due to start on Thursday November 5, many ecommerce start-ups will be put to the test this peak trading period as the UK enters a Christmas shopping season with non-essential retailers forced to close.
“It is very promising to see this level of new business creation. The narrative for businesses during and post lockdown is not one purely of survival, but also of resilience, resurgence, and growth,” Royal Mail chief commercial officer Nick Landon said.
“The e-commerce sector has seen huge growth this year and at Royal Mail we understand the importance of our parcel services in keeping the UK connected – particularly during such unprecedented times,” Landon added.
M&S completes rollout of Sparks Book&Shop ahead of lockdown 2
Marks & Spencer has completed the national rollout of its Sparks “Book & Shop” online reservation service just as England prepares to enter a second lockdown for a month. The service allows customers to use M&S’s website to book a guaranteed slot to shop at their local M&S store that sells food and grocery – removing the need to queue when they arrive, should there be one. The Book & Shop service is available for use at 566 M&S food halls and larger M&S stores containing food halls. Start times are allocated in 30-minute intervals and on arrival, and customers – up to two people from one household – check-in with the hosts at the entrance of their local M&S store. M&S said the Book & Shop service was trialled in 80 stores across Scotland and Wales following increased restrictions in those regions. Sparks Book & Shop also allows M&S door hosts to manage the number of customers in store at any time – booking in customers with allocated slots and factoring in customers who have not reserved. M&S said it remained committed to limiting the number of customers in store and was still using a counting app to ensure social distancing can be maintained at each one of them. “With winter ahead, we know customers are increasingly concerned about queuing, so in response, we wanted to deliver a quick, digital solution to help them shop,” M&S stores director Helen Milford said. “Designed by our in-house tech teams – Book & Shop does just that, helping Sparks customers guarantee a slot at a time that suits them and removing the need to queue should there be one. “Of course customers will always be able to visit M&S without a slot but we hope this is a small way we can help make things a little easier for our customers.”
Boxpark to charge zero rent during second lockdown
Boxpark has said it will not be charging rent or service charges for tenants at three of its London sites as England heads for a second lockdown. It will also be placing the majority of staff on the Government Coronavirus Job Retention Scheme. The retail park firm said it has “carefully considered” the best way to deal with lockdown and protect its team and tenants, and has decided not to offer a kitchen only delivery service from food traders. From Thursday, all non-essential retailers in England will temporarily shut their doors for a month as a result of rising Covid-19 cases across the country. “The past few months have been one of the most difficult times for the hospitality and retail industries and it feels like we were just getting back on our feet,” Boxpark chief executive Roger Wade said. “This isn’t what anyone wanted, but we are optimistic about our return in December and Boxpark, along with our traders, will continue to remain flexible and agile. “Our people and our tenants are very important to us so we are grateful to be able to keep our staff with the furlough scheme.” Boxpark has been encouraging customers to visit its sites on Monday to Wednesday this week by offering 50 per cent off drinks and 20 per cent off food from selected street food traders. The company operates sites in Shoreditch, Croydon and Wembley.
John Lewis Partnership to slash 1500 head office jobs
John Lewis Partnership has announced plans to axe up to 1500 jobs at its head office as part of the latest phase in its five-year turnaround scheme. The retail giant, which owns Waitrose and John Lewis, said it would make the redundancies by April next year. It added that it would now be consulting with affected staff about the job cuts and will seek to find them new roles elsewhere in the company where possible. The move is expected to save the John Lewis Partnership another £50 million as it seeks to secure £300 million in annual savings by 2022, and sustainable profits by 2025. The partnership added that the latest job cuts were part of an efficiency plan designed to “create an agile and flexible head office” which is closer to customers and frontline staff. “Our partnership plan sets a course to create a thriving and sustainable business for the future,” John Lewis Partnership chair Dame Sharon White said. “To achieve this we must be agile and able to adapt quickly to the changing needs of our customers. “Losing partners is incredibly hard as an employee-owned business. “Wherever possible, we will seek to find new roles in the partnership and we’ll provide the best support and retraining opportunities for partners who leave us.” John Lewis Partnership also confirmed that finance executive director Patrick Lewis, who is also the great-grandson of founder John Lewis, is resigning. “I’ve felt very lucky to be part of a leadership team in such an extraordinary organisation,” Lewis said. “I’m immensely proud of the role the partnership plays in demonstrating a better way of doing business, and hugely grateful for the unstinting support I’ve had from colleagues over such a long period in furthering that goal.” Lewis is to be replaced by current customer service executive director Bérangère Michel, who will not be replaced as a result of the head office restructuring. Instead, the the customer service responsibilities will transfer to Waitrose executive director James Bailey and John Lewis executive director Pippa Wicks. The news comes after eight John Lewis stores never reopened following the first UK-wide lockdown, leading to the loss of 1300 jobs. Four Waitrose stores have also since closed down, leading to 124 job losses. Meanwhile in September, the John Lewis Partnership told staff they would not receive a bonus for the first time since 1953 after it dived to a £635 million pre-tax loss for the six months to July, following a £470 million write-down on its stores. Last month, the partnership published the Partnership Plan, which aims to see the business continuing to adapt to rapidly changing consumer behaviours while also expanding to new areas outside retail – such as real estate. The first two years of the Partnership Plan focuses on strengthening the partnership’s Waitrose and John Lewis retail businesses, backed by £1 billion in investments in customer service and experience in-store and online. This is where the partnership set out a target of £300 million in annual savings by 2022 through operational efficiencies throughout the business, and builds on the head office restructure that started in October last year. Just last week, John Lewis Partnership was given council permission to convert almost half of its flagship John Lewis store on Oxford Street in London – where it has had a presence since 1864 – into office space. John Lewis could now turn 45 per cent – which equates to floors three to eight of the flagship into dual use space.
Game, Smyths and Argos will remain open for Xbox & PS5 pre-order collection despite lockdown
Game, Argos and Smyths have confirmed that they will allow customers to collect their pre-ordered PlayStation 5 and Xbox Series consoles from stores during lockdown.
Both Sony’s PS5 and its rival Microsoft’s next-gen Xbox Series X and Series S are due to be launched later this month when the UK will be under a second national lockdown.
Despite non-essential retailers being forced to shut after November 5, Game, Smyths and Argos have all confirmed that they will be offering a collection service for the thousands of customers who have pre-ordered consoles.
Today Game warned customers that it was the “last chance” for customers who had secured an “in-store pre-order” for both the PS5 and Xbox Series X/S to make it into stores and pre-purchase their consoles.
According to the retailer, customers will then be able to collect their pre-orders from stores during their respective launch days between 8am and 2pm.
Customers who have pre-ordered their consoles online will also be able to collect their Xbox from stores on November 10 PS5 on November 19.
It is understood that Smyths will also be allowing customers to collect their consoles from stores, as per government click-and-collect guidelines, on their respective release dates.
Meanwhile Argos has assured customers that they will be able to collect their consoles from Argos outlets inside Sainsbury’s stores, which will remain open during lockdown, and that home deliveries will not be affected.
M&S clothing to remain fully open during second lockdown
Marks & Spencer has confirmed that its clothing and home division will remain open despite the second Covid-19 lockdown taking place in England on November 5. Despite reporting a half-year loss, M&S chief executive Steve Rowe is optimistic about peak trade. From Thursday, non-essential retail in England will have to close until at least December 2, in an effort to fight against the spread of Covid-19. “We are very clear that we will follow the government guidelines as laid out, but our stores will remain open,” Rowe said. “We’re classified as a store that is key because of our food business, and the guidelines say that, while standalone clothing and home stores will be temporarily closed, anywhere where there is food may remain open, and so we’ll continue to serve our customers in the right way, in a safe environment. “Our stores will remain fully open. The guidance is very clear that those stores that are within essential stores may remain open.” M&S has 260 UK stores that sell both clothing and food, out of a total of around 950, of which 615 sell only food. Rowe said he expects a successful peak trade, despite the retailer swinging to a loss before tax of £87.6 million for the 26 weeks to September 26. “The last six months represent a period like no other for the business,” he said. “During the first quarter, more than half of our clothing and home business was closed, and we faced extraordinary challenges. “Despite this, we have delivered a robust performance. While we made a statutory loss during the period, we made an operating profit, which is actually the best way to measure our real performance before ‘one-off’ factors.” M&S chief financial officer Eoin Tonge said the impact on clothing and home sales during peak will be dependent on in-store sales during the second lockdown. “The way to think about the next four weeks is obviously our clothing and home store sales will be impacted – the rest of our business should be trading quite well,” he said. In terms of estimating potential impacts you have to look at our store sales. It’ll obviously depend on how we trade in the store and how well online trades in that period. “Overall, we’re in a much better position going into this lockdown in a significant number of ways.” The retailer has also joined the likes of Primark after calling on the government to extend trading hours. Primark announced on Tuesday that it plans to ask the government to extend trading hours following England’s four-week lockdown. Rowe said M&S has already decided to extend operating hours, particularly in the food division. “In addition to that, we are lobbying quite hard with the rest of the industry for the extension of the regulation of Sunday hours, particularly as we get closer to Christmas,” he said.
Footfall plummets 31.5% across retail destinations in October
Footfall dropped by 31.5 per cent year-on-year across retail destinations according to the latest results from Springboard. High streets were the hit the hardest, dropping 39.8 per cent year-on-year, with shopping centres falling 33.1 per cent. From October 4 to October 31, foot traffic at retail parks fared the best as the nation was put into varying degrees of tiered lockdowns, down just 11.9 per cent. Springboard also reported back on the vacancy rate for shops in the UK, which rose to 11.3 per cent in October, the highest since April 2013. That’s up from January’s 9.8 per cent vacancy rate and October 2019’s 10 per cent. As England enters its first day under the second national lockdown, the research found vacancies rose in every area of the UK during October. In Greater London vacancies stood at 9.4 per cent, nearly double that of January 2020, when it stood at 5.3 per cent. The firebreak in Wales and the closure of hospitality in Northern Ireland led to high street footfall dropping in the final week of October by 78.5 per cent in Wales and 50.3 per cent in Northern Ireland. “November 2020 is a major month in the retail calendar, with footfall increasing week on week during this month for the last three consecutive years, so the loss of this trading opportunity will be irreversible for many businesses,” Springboard said. “We knew that before the lockdown was announced that it was going to be a tough Christmas for retail with 61 per cent of shoppers already planning to spend more online this year, 64 per cent planning on spending less and only 10 per cent planning to increase the number of gifts they buy.” “The spending lost from stores in these key trading weeks will simply not be recovered,” Springboard added. Looking ahead, Springboard said footfall was likely to drop by around 80 per cent during the second lockdown, compared to the same period in 2019. The research firm said it also expects vacancy rates to continue to rise in 2021.
New strategies for managing prices to maximise profitability
Setting the optimal price for products has been a challenge for retailers that lack formal, centralised software solutions for many years, but the current crisis has brought to the surface just how inadequate a mix of largely manual and departmentally disintegrated processes really are. With demand patterns significantly altered, as a result of an accelerated move to shopping online and the emergence of new behaviours from consumers battling to cope during the current crisis, our new report comes at the perfect time. The goal is for retailers to make their prices attractive and profitable by accurately predicting consumer demand. However, although retailers have more data available today than ever, the disruptions of 2020 have made that information more imperfect, confusing, and lacking in actionable insights. As a result, planning teams are now faced with a number of new outliers. As new channels, retail formats and competitors continue to emerge, it will become harder for teams to read and understand these dynamics as they change and fragment, let alone act on them. In short, it has never been harder for retailers to satisfy demand by category, product, price, customer type and channel at human speed. Artificial intelligence (AI) is the key to responding to these unusual market and consumer dynamics due to the complexity of the job in hand. Retailers are seeking the right competitive position across the product lifecycle, from everyday pricing through to promotions and into markdowns, that will balance competitive investments with profitability, whilst maintaining a positive price perception with their changing customers. AI-backed price management tools use customer behaviour in all its variations to determine the optimal price by category, product, retail format and region, and manage those prices dynamically as customer behaviour, market conditions and competitive activity changes. The retailers that take this approach generally set prices, manage promotions and leverage markdowns most profitably. Revionics’ application of AI and data science has enabled retailers to rebalance their price investments between more and less price sensitive articles in a way that pricing can be self-financing. Volume increases on those products with the highest price elasticity was so significant that it drove higher profit value in total.
Here are the core elements of a holistic pricing strategy
1. Understand your customers’ price perception to determine elasticity.
Pricing technologies, by evaluating large volumes of historical transaction data, can determine, very precisely, how price elastic is the demand for a particular product. And this can be applied for both every-day and promotional pricing. These technologies help retailers identify products for which they can increase the price, without consumers reacting. Or indeed, to reduce the price where that drives significantly higher volumes and improves price perception. The key thing is to identify the fine balance: when the price will go from being fair to being offensive that will start damaging the price image of the store or brand.
2. Clustering stores according to their demand elasticity and overlaying the geographic zones with the pricing clusters.
Advanced algorithms now enable retailers to dynamically enforce zone and sub-zone pricing based on local demand right down to store level and then allocate and assort accordingly. They can also create special pricing subsets built around, for instance, local products that merit a more sensitive pricing approach that will attract local demand. In addition, retailers can respond quickly to local competitors that start to promote or discount particular products.
3. Use AI to respond more quickly to competitor activity.
Once retailers are using data science to understand each item’s price elasticity and a wider range of demand signals, they can start to make price changes weekly, daily or for grocers operating in a very fierce competitive environment, in real or near-real time. Consumers are now used to seeing frequent price changes and price differences, particularly as the number of sales channels rises, as long as they result in a fair and non-arbitrary price for them in the moment of purchase. In fact, in a study with Forrester, Revionics found 78 per cent of shoppers believe changing prices with data science is fair.
4. Compete on sustainability.
Sustainable products tend to be less price elastic and hence can command a higher profit margin. By identifying your sustainable products, demand can be better gauged by monitoring current and past sales data. By increasing the number of sustainable brands compared with less sustainable brands, retailers are better positioned to compete on sustainability with other retailers because they have the tools to evaluate demand and ensure they are priced more competitively.
A similar approach can be taken with promotions. By tracking the affinity and the movements between a more organic, sustainable or locally produced product, as opposed to the more well-known national, but less sustainable product or brand, the financial impact can be assessed to see if a trade-off is worth making.
Chancellor Rishi Sunak extends furlough scheme until end of March
Chancellor Rishi Sunak has extended the government’s coronavirus job retention scheme until the end of March. Sunak said the extended support scheme will continue to cover up to 80 per cent of employees’ wages up to £2500 a month. A review of the policy is currently scheduled for January “to decide if economic circumstances have improved enough to ask employers to contribute more”. The scheme, which was previously set to expire at the end of November, will “protect millions of jobs” according to Sunak. The Chancellor also said it will “give people and businesses up and down our country immense comfort over what will be a difficult winter”. He added that the government still intended to lift the national lockdown, which came into place on December 2. Prime Minister Boris Johnson recently announced a second lockdown for England, starting on Thursday and lasting four weeks. This overlaps with the 17-day firebreak lockdown currently happening in Wales, while Scotland and Northern Ireland continue have their own restrictions in place. “The government’s intention is for the new health restrictions to remain only until the start of December, but as we saw from the first lockdown the economic effects are much longer lasting for businesses and areas than the duration of any restrictions,” Sunak said. The extension means Sunak has scrapped the job retention bonus, which incentivised businesses to keep employees on payroll through to the end of January next year, with a new employment incentive programme to be deployed at a later date.
Santa's Grotto to go virtual this year as retailers cancel Christmas events
Santa’s Grotto will go online this year as retail outlets across the country are forced to cancel traditional Christmas events.
Families across the UK are reportedly flocking to book virtual appointments with Santa as retailers like Selfridges, Harrods and Fortnum and Mason, which usually host St Nicholas, are forced to shut under the country’s second national lockdown.
Companies like Santa’s Grotto Live, which offer Zoom calls with Santa, have seen bookings jump more than 1000 per cent so far this festive season.
“We know how magical it is for children to meet Santa at Christmas time, so we are delighted to be able to offer a safe way to do it,” the company said.
“Since launching we’ve been flooded with demand from families keen to keep the Santa’s Grotto tradition going with their own private video call. Friends and family are able to join on some packages, allowing everyone to share the magical experience together.”
Other organisations, including toy retailer The Entertainer, are also offering virtual experiences to replace Santa’s Grotto.
Talktosanta.com and Santascallingyou.co.uk have also been set up by unemployed Santas, enabling families to virtually chat to Mrs Claus, Santa and elves via video call.
Santa’s Lapland, which usually books real tours to Finland, is also offering 10 minute video calls to Lapland, where they can look around Santa’s grotto and meet real reindeer.
Sainsbury's looks to cut 3500 jobs and close food counters
Sainsbury’s on Thursday announced that it could cut around 3,500 of its workforce as it looks to make a raft of changes across its stores. With newly installed chief executive Simon Roberts at the helm, Sainsbury’s said it would deliver a “step change in efficiency” though reductions in its operating cost base. The supermarket said it would create a new supply chain and logistics operating model, moving to a single integrated supply chain and logistics network across Sainsbury’s and Argos. The move is expected to reduce the grocer’s costs by £150 million by March 2024. Some 150 of Argos standalone stores will be moved in to Sainsbury’s, reducing the number of standalone Argos stores to 100 over the next three years. This is set to bring a further saving in operations costs of £105 million by March 2024. In total, the business said it will close around 420 Argos stores by March 2024. Sainsbury’s will also close its meat, fish and delicatessen counters to save at least £60 million in operating costs, as well as reducing food waste and energy consumption in stores. The retailer said this would “better reflect customer demand and the way customers shop in our stores now and in the future”. As part of the closures of its Argos stores and found counters, Sainsbury’s said it expects to cut around 3,500 people from its workforce. The business said it would “aim to find alternative roles for as many colleagues as possible”. Since March, Sainsbury’s has hired an additional 29,000 colleagues to support its efforts to feed the nation, and it expects to increase its number of staff by 6,000 by the end of the financial year. Sainsbury’s added that it expects to close 15 to 20 supermarkets and 50 to 60 convenience stores in the next three years, with separate plans to open 100 convenience stores over the next three years. “As we go into lockdown in England for the second time this year and restrictions are in place across the UK, we know our customers and colleagues are feeling anxious and we will do all we can to support them,” chief executive Simon Roberts said. “COVID-19 has accelerated a number of shifts in our industry. Investments over recent years in digital and technology have laid the foundations for us to flex and adapt quickly as customers needed to shop differently. Around 19 per cent of our sales were digital this time last year and nearly 40 per cent of our sales are digital today. “While we are working hard to help feed the nation through the pandemic, we have also spent time thinking about how we deliver for our customers and our shareholders over the longer term,” Roberts added.
Elsewhere, Sainsbury’s said it will be investing in Habitat, which will become its main home and furniture brand across the supermarket and Argos. It will expand Habitat’s product range and reduce prices, with the view of growing its market share in the homeware sector. “Over the next three years we will make Argos a simpler, more efficient and more profitable business while still offering customers great convenience and value and improving availability. We will also make Habitat more widely available in Sainsbury’s and Argos, giving customers access to stylish home and furniture products at more affordable prices,” Roberts explained. The news comes as Sainsbury’s reported back on its interim results for the half year to September 19. The Big Four retailer said loss before tax came in at £137 million for the period. Sainsbury’s said it had shouldered £438 million in one-off costs associated with the closure of its Argos stores, as well as what it described as other strategic and market changes. The grocer achieved underlying profit before tax of £301 million for the half year, although it was also forced to spend around £290 million to protect customers and colleagues from COVID-19. Sainsbury’s noted that these charges had been partially offset by £230 million business rates relief. Total retail sales rose 7.1 per cent in the 28 weeks to September 19, with like for like sales up 6.9 per cent. Grocery sales rose 8.2 per cent and general merchandise sales were up 7.4 per cent. The retailer said its full year underlying profit before tax is now expected to be at least five per cent higher than last year, reflecting stronger than expected sales. Stating an intent to “put food back at the heart of Sainsbury’s”, Roberts explained that the business is now focused on “accelerating our ambition to structurally reduce our cost base right across the business so we can invest faster back into our core food offer”. The chief executive added that he had informed the retailer’s board that if a bonus is payable, he would wave his entitlement for the financial year. “We are raising our ambitions. By delivering improvements in value and quality and simplifying this business, we will do a better job for our customers and deliver an improved financial performance and stronger shareholder returns,” Roberts added.
M&S unveils Christmas advertising campaign
Marks & Spencer has become the latest major retailer to launch its Christmas advertising campaign, featuring an all-star line up and a charity focus. With its Christmas marketing to be mainly focused around its food and grocery division this year, the retailer’s first of nine adverts for the festive season features the voiceover of award-winning actress Olivia Colman. The retailer said it would release the other adverts each week leading up to Christmas, and each with voiceovers from Chiwetel Ejiofor, Eddie Redmayne, Gillian Anderson, Dame Helen Mirren, Jeremy Irons, Dame Julie Walters, Naomie Harris and Tom Hardy. M&S added that it was putting charity at the heart of its food advertising campaign this year, pledging to donate £2 million to good causes. The iconic voiceover cast have all selected charities to which M&S Food would make a donation on their behalf. In addition, each time a customer on the retail giant’s Sparks loyalty scheme shops at M&S in-store or online, it would donate to their selected charity. As well as donations on behalf of the famous voiceovers, M&S Food has selected 10 staff from across the UK who are its most active charity volunteers, giving donations to their chosen charities. In total, the Christmas advertising campaign will donate £1 million to charities, and M&S said an additional £1 million would be donated to “a diverse range of charities” – including Shelter, Together for Short Lives and the 35 Sparks charities that M&S supports. “2020 has been a difficult year for all of us but at a time when charities are seeing their incomes fall significantly, we want to make sure that the M&S Food Christmas campaign builds on our existing charity partnerships and gives much-needed support to those that need it most,” M&S Food marketing director Sharry Cramond said. “This is not the year for advertising fairy tales – our customers want this Christmas to be as special as possible but have told us that they want to know about the M&S Food must-haves and how we are supporting others. “All charities featured in the TV ad will receive their donations ahead of Christmas so they can use the money immediately where it’s needed the most and we are indebted to the nine amazing actors who gave their time so willingly to support these great causes.” Olivia Colman said: “I am delighted to work with M&S Food and lend my voice to a campaign that supports UK charities at a time when they need it the most”. Alongside the advertising, M&S Food is also running festive editions of its popular What’s New at M&S tasting panel, now in its third year. This self-filmed content featuring celebrity tasters Amanda Holden, Emma Willis, Paddy McGuinness and Rochelle Humes, sees the tasters review new products, sharing them with their combined 9 million Instagram followers. This autumn M&S welcomed the addition of two new tasters: TV presenter Andi Peters and Olympic medallist Tom Daley.
Selfridges reveals Christmas window display despite lockdown
Selfridges has unveiled its latest Christmas window display despite being forced to shut the doors of its physical stores for the next four weeks of lockdown in England. The luxury department store, which operates four sites in London, Birmingham and Manchester, has revealed its window display as part of the launch of its Once Upon a Christmas campaign, which it said will be “uplifting” amid the uncertain backdrop. Selfridges said its campaign would launch physically at its world-famous Oxford Street flagship and digitally on its website and online platforms. Selfridges has said it was pushing forward with preparations to ensure it can offer an “unmistakable in-store Christmas experience” when its stores are able to reopen after lockdown and in line with government guidelines. The retailer has temporarily closed all of its stores as part of the second lockdown, apart from its Oxford Street food hall. It said Santa Claus and the Fairy Godmother were among recognisable figures in its window display. The display also includes artists’ windows featuring bespoke Christmas trees by Anthony Burrill, Hanna Hansdotter and Helen Bullock. Selfridges said the windows have been designed with more focus on sustainable and recycled materials, coming after it announced ambitious sustainability targets through its Project Earth commitments earlier this year. The luxury retailer said it has expended its range of sustainable gifts and has also developed larger ranges of personalised gifts as part of its Christmas proposition. It will also run virtual shopping appointments with its team of “Elfridges” experts to support online customers and will operate click-and-collect services at its stores in London, Manchester and Birmingham. It comes after a tough period for city centre retailers, with stores in central London particularly impacted by lower footfall following the pandemic as travel restrictions weigh on tourist numbers.
PS5 will no longer be available from physical stores on launch day
Sony’s upcoming PlayStation 5 will now no longer be available to collect in physical shops on launch day globally.
Following news that UK retailers including Game, Smyths and Argos would be allowing shoppers to collect their pre-ordered Xbox Series consoles from physical stores during lockdown, many had been hopeful the same would be true of the PS5, due for release just days later.
However, Sony announced in a blogpost yesterday that the launch would now be entirely online, urging shoppers to “be safe, stay home, and place your order online”.
“In the interest of keeping our gamers, retailers, and staff safe amidst COVID-19, today we are confirming that all day-of launch sales will be conducted through the online stores of our retail partners,” it said.
“Please don’t plan on camping out or lining up at your local retailer on launch day in hopes of finding a PS5 console for purchase.”
While there is nothing specific about the UK, where the PS5 is due to launch on November 19, Sony says the policy is worldwide.
It comes as the Japanese manufacturer scrambles to supply enough stock to meet demand after pre-orders sold out in a matter of hours.
Debenhams launches convenience store click-and-collect service
Debenhams has announced a new click-and-collect service that will allow customers to collect online orders from 4500 local convenience stores across the UK. The department store said customers can now to select a Hermes ParcelShop option when they shop online, which allows them to collect their order from 4500 convenience store locations nationwide. The news comes as Debenhams shops temporarily close down in England for the next four weeks, while its stores in Wales remain closed until next week, amid respective second lockdowns. Debenhams said normal home delivery is still in Wales and England, and its stores in Northern Ireland and Scotland continue to trade as normal. For its ParcelShop service, Debenhams said there was a standard charge of £1.99 for delivery within five working days, or for £3.99 next-day collection. It added that unwanted items can also be returned via the same service. Debenhams has also mobilised its Endless Aisle in-store picking service in over 60 stores that are temporarily closed, to improve availability of product for customer orders. “We have thought hard about what will make shopping easier and more convenient for our customers at this busy time of year,” Debenhams chief executive Steven Cook said. “While they may not be able to pick up orders in our stores for the time being, this gives them the opportunity to collect their Debenhams order as part of an essential shopping trip. “We are expecting a surge in online orders as customers are shopping early for Christmas, knowing they may not be able to visit their loved ones over the festive period.”