Welcome to our ‘weekly news in brief’, covering the latest from UK retailers and manufacturers.
RETAIL NEWS
Boots cutting thousands of jobs after taking major hit from pandemic
Boots has revealed plans to cut up to 4,000 jobs and close opticians practices across the UK as it accelerates its turnaround programme to mitigate the “significant impact” on its business from the coronavirus pandemic.
The announcement was made alongside the release of Walgreens Boots Alliance’s third-quarter results to 31 May. These showed that like-for-like retail sales at Boots UK had plummeted 48% year-on year, whilst Boots Opticians was down 72%.
While many Boots stores remained open throughout the lockdown to serve health essentials, the retailer highlighted that it had seen footfall reduce “dramatically”, with its revenue-driving beauty and fragrance counters also closed. The retailer said it had lost share as consumers switched most of their shopping to the grocers.
Meanwhile, like-for-like pharmacy sales fell 1%, reflecting lower prescription volume and reduced demand for services during the pandemic. Although restrictions are beginning to lift, Boots stated that with an uncertain economic outlook, it was expecting the high street to take “considerable time to recover”.
The company revealed it has now commenced a consultation process for a “significant restructuring” across its head office, and store and opticians teams. This is expected to result in a reduction of its headcount of more than 4,000 (7% of the workforce), and the closure of 48 Boots Opticians outlets.
“As the further effects of the pandemic become known and macroeconomic conditions evolve, Boots will continue to review and progress its Transformation Plan,” it said.
The group highlighted that the crisis had accelerated the shift by consumers towards digital channels and online shopping. Boots.com saw sales jump 78% during the period. The retailer plans to continue increasing investment in this channel as a key part of its growth strategy.
Boots was already in the process of closing around 200 underperforming stores to support its turnaround programme. It has also been revamping its stores and improving its beauty offering to win back shoppers from value-oriented chains and fast-growing online rivals.
Source: NamNews 9th July 2020
Next & Asos drop Boohoo from websites after slavery allegations
Next and Asos have dropped Boohoo from their websites amid allegations the fast fashion retailer was “forcing” Covid-19 positive workers to attend its factory in Leicester, and were still paid less than the minimum wage.
Boohoo has had more than £1 billion wiped from its share value in the past two days after an article in The Sunday Times alleged that workers in a Leicester factory making clothes for Boohoo were being paid as little as £3.50 an hour.
Meanwhile, Asos, Zalando and Very have also temporarily suspended the sale of Boohoo items. Next said it stopped selling items from Boohoo last week after campaign group Labour Behind The Label first raised concerns.
“Next concluded there is a case for Boohoo Group to answer,” Next said. “Next needs to prove to itself the two Boohoo Group labels that it was stocking are being sourced in a manner that is appropriate and acceptable to Next. Next therefore has its own investigation under way to ascertain whether they are being made in a way that Next does not approve of.”
Boohoo sells its products through a variety of third-party sites, although the company’s recent strategy focused on acquiring new online brands.
It also confirmed this morning that it would launch an immediate and independent review of its UK supply chain in light of the allegations of mistreatment of garment workers. The online retailer said on Monday that it would end relationships with any supplier it finds to have broken its code of conduct.
Boohoo Group owns brands such as Boohoo, PrettyLittleThing, Nasty Gal and Karen Millen.
Source: Retail Gazette 8th July 2020
Tesco asks suppliers to agree price cuts
In an interview in The Grocer, Chief Product Officer, Andrew Yaxley has set out the thinking behind Tesco's new drive for 'clear and consistent pricing' on its most popular lines.
Responding to changing customer demand: The Tesco viewpoint is that with the country entering an unprecedented recession, the retailer has a duty and responsibility to be on the side of customers, and that means listening to their needs and meeting them better than anyone else. Leading asks from customers, Yaxley says, are for simple ranges, choice and promotions that genuinely help them, and above all 'clear and consistent prices' on lines they buy every day.
Next stage in a long journey: Yaxley sees delivering against these demands as the next stage of the journey Tesco has been on since it launched its turnaround strategy in 2014. Over the last six years Tesco has streamlined its ranges through several waves of Project Reset, launched exclusively at Tesco as part of a complete overhaul of its private label offer, and introduced Clubcard Prices to re-engage shoppers in its long running loyalty scheme. In parallel, promotional participation has dropped from 45% in 2014 to 28% before the crisis and further to 14% in recent weeks as Tesco has prioritised the availability of core ranges.
'Not a price war’: Looking into the economic storm clouds ahead and no doubt mindful of how it lost out to discounters in the 2008 recession, Tesco wants to accelerate conversations with suppliers to redirect money that would have been spent on promotions into delivering consistently low prices. However Yaxley rejects suggestions that Tesco is laying the groundwork for a 'price war'. The view from Welwyn is that Tesco must lead on value and to achieve this, anything that disguises this (differing pack sizes, range complexity and promotional rotations) needs to be removed.
Not 'anti brand’: Yaxley goes on to refute suggestions that the strategy is 'anti-brand'. Tesco's aim he says is to challenge tactics that feed a promotional plan rather than a 'real customer need'. Tesco wants to move away from the high low mechanic which he says creates an inconsistent message on price and adds operational complexity. Suppliers, Yaxley argues, will benefit from the volume gains that Tesco can deliver as the UK's biggest retailer.
Change for suppliers: Acknowledging that a stronger focus on EDLP will require significant changes at some suppliers, Yaxley believes the COVID-19 crisis demonstrates the industry's ability to adapt. The unprecedented volume increases that have been achieved in recent months when promotions have been far fewer make now 'the right moment to address inefficient and expensive practices that are driven solely by the promotional calendar'.
Source: IGD Retail Analysis 9th July 2020
Aldi makes post-Brexit food standards commitment
Aldi UK’s Chief Executive has vowed that the supermarket will only ever sell fresh chicken and beef from British farmers. Giles Hurley also ruled out selling chlorinated chicken or hormone-treated beef, regardless of any future trade deals being struck for when the Brexit transition period comes to an end on 31 December.
Aldi’s fresh chicken and beef range is already 100% British and the company confirmed today that this will never change. The commitment sits alongside the chain’s existing policies to only sell British products across multiple categories, including its core range fresh meat, milk and eggs.
Hurley said: “Aldi is one of the biggest supporters of British suppliers and we want to make it clear that will always be the case. We are a signatory to the NFU Back British Farming Charter and our entire core range of fresh meat and milk is from Red Tractor-approved farms in the UK. We will never compromise on the standards or specifications of our products, and that includes a commitment to never selling chlorinated chicken or hormone-injected beef.”
He added: “Britain has some of the highest food quality standards in the world, and our commitment to only source chicken and beef from this country means our customers know they are always buying high-quality Aldi products at unbeatable value.”
At the end of last month, Waitrose’s new head James Bailey joined farmers and other industry representatives in appealing to the government to protect food standards in new trade deals currently
being negotiated. He said in an open letter that any regression from current high standards in the UK would be an unacceptable backwards step and pledged that Waitrose would not sell any products that
did not meet its own standards.
Dave Lewis, the boss of Tesco, has also ruled out selling chlorinated chicken from the US, saying the supermarket’s customer research had found shoppers did not want to bring back farming and food
processing techniques that Britain had phased out because of concerns about animal welfare and food safety.
Source: NamNews 7th July 2020
MANUFACTURING NEWS
Kerry Foods’ meat-free brand partners with Gousto
Kerry Foods-owned meat-free brand Naked Glory has announced a new collaboration with recipe box firm Gousto. The tie-up sees the new Naked Glory Deli Readybites Roast flavour feature as a core ingredient in two meat-free dishes offered by Gousto. The recipe box firm currently sends more than four million meals to 380,000 UK households every month, with a target of putting over 400
million meals on tables by 2025.
The Naked Glory Deli Readybites are made from rehydrated soya, and are claimed to offer a meat-like flavour and texture. The Roast flavour will be a core ingredient in two new recipes to feature on the Gousto menu – Meat-Free Chicken Pad See Ew and Meat-Free Chicken Teriyaki Tray Bake.
Alison Lees, Marketing Manager at Naked Glory, said: “We are hugely excited that Naked Glory is launching into the burgeoning direct-to-customer channel. Gousto recipe boxes provide the perfect opportunity for consumers to discover Naked Glory’s epic succulent taste in a convenient and inspiring way.”
Rhys Desborough, Category Buyer at Gousto, added: “We’re constantly looking for innovative partners to help expand our menu variety further, and Naked Glory do just that. Their delicious meat-free products allow us to serve up even greater choice to our customers, as so many look to introduce more meat-free dinner times.”
Source: NamNews 9th July 2020
Birds Eye to swap Captain Birds Eye for ‘Captain Charlotte’
Birds Eye is replacing its brand mascot Captain Birds Eye on its packs of fish fingers with a real shopper for the first time in its 50-year history.
Charlotte Carter-Dunn, also now known as ‘Captain Charlotte’, has been selected to replace Captain Birds Eye. She was picked as part of a nationwide competition, run with retailer Iceland, to find a frozen food hero – someone who uses their freezer to reduce food costs and food waste.
Carter-Dunn stood out from more than 500 competition entrants for looking after two foster children, her impersonation of the Captain and her frozen food tips. These include organising drawers so that they don’t forget what is in there, keeping easy frozen meal components in the freezer, and buying frozen BBQ food.
Birds Eye’s UK general manager, Steve Challouma, says: “We’re excited to be temporarily replacing our iconic Captain with Charlotte, who is a real champion of the benefits of using your freezer more. Frozen food has never been more relevant and important to the average household, as shown by the invaluable tips sent in by some of the UK’s savviest shoppers.
“Saving money and reducing food waste are just two of the many benefits to using frozen food, something we’ve long been passionate about. It was clear from Charlotte’s frozen food top tips that she was worthy winner, so we hope shoppers are equally inspired by her advice to make the best use of their freezers and to discover the real variety of exciting food options that sit in the freezer aisle.”
Source: Marketing Week 10th July 2020
Pladis adds ‘finest biscuit to date’ to McVitie’s range
Pladis has extended its McVitie’s range with the launch of Very Important Biscuits, or V.I.Bs.
The V.I.Bs are available in three flavours – Classic Caramel Bliss, Heavenly Chocolate Hazelnut and Luscious Blood Orange. Each biscuit has been golden baked, topped with a layer of chewy caramel, and finished off with a thick coating of McVitie’s’ smooth milk chocolate.
The range, which Emma Stowers, Brand Director for McVitie’s at Pladis UK&I claims is McVitie’s “finest biscuit to date”, aims to enable retailers to drive incremental sales, including from younger shoppers, by encouraging trade-up among those making their ‘everyday treat’ purchases.
“We’re seeing a huge opportunity to encourage shoppers looking to make snack-time a little bit special to trade-up,” said Stowers. “But at present, shoppers on the look-out for special biscuits are likely to have to spend up to 200% more than they do on everyday treats, so we’re setting the RRP for V.I.Bs very competitively, providing even more incentive to trade-up at the same time as making them affordable enough to enjoy on a regular basis, whilst still feeling premium.
“We’re confident that the V.I.Bs will be well received because, in trial, more than a third (35%) of testers said that they would definitely buy them – and the three flavours that rated highest during trialling were selected for release.
“We’re aiming high with this launch. Our vision is for it to become a bestselling range in the biscuit aisle within its first few years on shelves, and we will be supporting it with PR and social activity, OOH advertising, digital and radio, as well as shopper marketing.”
The launch of McVitie’s V.I.Bs will be supported its ‘Very Important Biscuits, Very Hard To Describe’ social media campaign, whereby shoppers will be encouraged to describe the biscuits on their social channels. McVitie’s V.I.Bs will be launching in Asda from 12 July at an RRP of £1.79. Further roll-out into other major retailers – as well as selected independent retailers – will follow from the end of August.
Source: NamNews 9th July 2020
Lidl apes the Body Shop with the Pure Olive collection
Lidl has announced the launch of a new olive oil-based beauty line that is a close copy of a similar range sold by The Body Shop, according to a report published by The Sun. The Pure Olive Collection by Cien is billed a vegan and contain organic olive oil.
“The intensive care moisturising formulas leave skin feeling super soft and are perfect for all skin types,” Lidl said in a statement, per The Sun.
Lidl has form for producing low cost versions of cult and popular beauty products and this latest launch is no different. With household budgets stretched thanks to the GVC, consumers will no doubt
be more price conscious than ever.
Source: Global Cosmetic News 8th July 2020
WIDER INDUSTRY NEWS
Junk food deals will be banned in Boris Johnson’s assault on obesity
Boris Johnson is expected to take the first steps of a promised anti-obesity drive with a ban this month on supermarket promotions of unhealthy food. The prime minister is likely to hold off on introducing a 9pm watershed on the advertising of unhealthy food, however, disappointing campaigners. Mr Johnson, who had declared himself “very libertarian” on food choices, has said that the coronavirus had convinced him that urgent action was needed.
In what allies insisted was only a first set of interventions, shops will be prevented from offering buy one, get one free deals on targeted products. A ban is also expected on sweets and chocolates promoted at the end of supermarket aisles and entrances. No 10 is also considering reviving plans for compulsory calorie counts on restaurant and takeaway menus.
Britain is the second fattest European nation, a fact that is likely to have worsened its death toll from the virus. Very obese people are twice as likely to die of the virus as others and those who are overweight are 26 per cent more likely to die of it. Two thirds of British adults are overweight, including more than a quarter who are obese. In Europe only Malta has a higher rate. Mr Johnson has acknowledged that his weight was probably a factor in him needing intensive care for Covid-19.
Caroline Dinenage, the culture minister, told Times Radio: “The virus has shown the importance of being healthy and staying healthy.” The action is expected to coincide with a campaign that aims to persuade people to maintain outdoor exercise habits forged in lockdown. With daily exercise one of the few reasons to leave the home there was an increase in activities such as walking and greater awareness of fitness.
The workout star Joe Wicks visited No 10 this week to discuss the fitness drive with Mr Johnson. Public Health England and commercial agencies are drawing up a campaign to capitalise on a “reset moment” as people take stock of their lifestyle after the first wave of the pandemic.
Mr Johnson faces a backlash from campaigners, however, after a 9pm watershed on junk food was left out of initial plans. Sources said the measure had not been dropped entirely but that the prime minister was uncertain about the policy, which is fiercely opposed by broadcasters, advertising agencies and their supporters in the Department for Digital, Culture, Media and Sport.
No 10 is understood to be unconvinced by evidence for the watershed based on studies showing that children who saw more advertising chose more junk food and that most of children’s viewing time was not covered by restrictions on marketing.
Evidence that 40 per cent of food spending is on products on promotion makes a ban on multibuy foods high in sugar, salt or fat likely, sources said.
Mr Johnson is the third successive Tory prime minister to U-turn on obesity. He entered office expressing scepticism about “sin stealth taxes” and shelving a child obesity plan drawn up under Theresa May. Child obesity rates double to one in five by the time pupils leave primary school, with a widening deprivation gap as wealthy children lose weight but poor ones get heavier.
Source: The Times 10th July 2020
Channel 4 launches ‘The Great High Street Comeback’
Channel 4 is calling on small, independent retailers to apply to feature free of charge in a prime television advertising campaign marking the return of high street shopping. The ads will also involve a number of household brands, yet to be revealed, that will be making donations towards the cost of the campaign, as well as taking part as partners for the lesser-known companies, many of which will be making their TV debuts.
The resulting ads will all feature in a celebratory ad break takeover on Friday 31 July, during Channel 4’s 8 out of 10 Cats Does Countdown.
The break will also air across E4, Film4, More4 and All4 as well as the broadcaster’s social platforms with hashtag #Back4Business.
Channel 4’s head of digital and partnership innovation Jonathan Lewis says: “This campaign is all about using the power of TV alongside the might of big brands to support the independent high street – encouraging the public to get back shopping and kickstart the local economy.
“With the help of some of our great advertiser friends and partners, we want to provide bold and dynamic adverts that show the high street is open for business and shops are welcoming in their beloved customers with open arms.”
Source: Marketing Week 7th July 2020
Government unveils £30bn plan to save jobs
In his summer statement the chancellor Rishi Sunak unveiled a £30bn package to save jobs in the wake of the Covid-19 crisis.
The government is offering employers a one-off £1,000 payment for every furloughed employee retained to the end of January 2021, amid calls from the Labour Party to extend the furlough scheme for certain industries. The chancellor outlined a £2bn Kickstart scheme to fund six-month work placements for 16 to 24-year-olds on universal credit, which covers the national minimum wage for 25 hours per week, plus national insurance and pension contributions.
The government is rolling out a £1,000 grant per trainee for companies which take on young people aged 16-24 in England. In addition, the chancellor has committed £2,000 in funding for every apprentice a business hires aged between 16 and 24, and £1,500 for every apprentice aged 25 and over. In a bid to stimulate the hospitality industry, Sunak announced the ‘Eat out to help out’ scheme offering a 50% discount for every diner up to £10 a head from Monday to Wednesday throughout August, at participating restaurants.
The government is also cutting VAT from 20% to 5% from 13 July to 12 January 2021 on food and non-alcoholic drinks in restaurants, pubs and cafes, as well as hot takeaway food. The VAT cut also applies to hotel and B&B accommodation, and admission to attractions such as theme parks and cinemas.
Despite the package of measures fears of mass unemployment remain. Director general of the Institute of Directors, Jonathan Geldart, said the chancellor had “missed a trick” and while his peers understood the desire to focus on the young and badly affected sectors, “coronavirus has crippled many parts of the economy.”
Elsewhere, Garry Young, deputy director of the National Institute for Economic and Social Research, called the measures “badly timed” and said the incentives looked “too small to be effective”. Others expressed concern over the cost of the coronavirus measures, with the Institute for Fiscal Studies estimating that in total the government has pledged £190bn in support since the start of the pandemic.
Source: Marketing Week 9th July 2020
WSTA ‘worried’ work not being done to secure Brexit deal
Since the Covid-19 pandemic broke out earlier this year, Brexit – a topic that dominated the headlines in 2019 – has been overshadowed in the media. The UK officially left the EU on 31 January 2020 and is now in a transition period until 1 January 2021. If the UK and the EU are unable to come to an agreement before this date, the UK will effectively leave the EU without a deal.
Speaking to The Spirits Business last month, Miles Beale, chief executive of the WSTA, said it was “entirely understandable” that Brexit has not been given the due attention it needs by the UK government, and the media, but that the trade body was “extremely worried that more work is not being done”.
“It was already an extremely short period of time we feel to get a deal done in a short transition period,” Beale said. “I do have huge concerns that what was already very difficult to get done is now even harder to get done because attention has, quite rightly and sensibly and fairly, been elsewhere. So yes, we’re extremely worried about it.”
In May this year, the WSTA launched its Trade 21 campaign to highlight the key priorities to create the best possible outcome for the alcohol industry at the end of the Brexit transition period.
The launch was accompanied by a letter from the WSTA to Cabinet Office minister Michael Gove MP, which outlined a number of priorities, including the introduction of a two-year implementation period for
labelling changes from 1 January 2021.
“We’ve sort of relaunched our campaign around the next phase of what happens with Europe but also internationally under a Trade 21 banner, and we have a Trade 21 hub on our website,” Beale explained. "But the idea is to start thinking about the new trading environment and what we need by the 1st January next year and I’m extremely worried we aren’t going to get it.”
One of the key concerns, Beale explained, is that if the UK ends the transition period without a deal, the nation would be ejected from the electronic system for moving goods around the EU, the New Computerised Transit System (NCTS).
Source: The Spirits Business 6th July 2020
MERGERS & ACQUISITIONS
Coty Acquires 20% interest in KKW Beauty
Coty and Kim Kardashian West have announced that they have entered into a strategic transaction to further develop Kardashian West’s beauty business, KKW Beauty, globally. To that end, Coty has purchased a 20 percent stake in the brand for US$200 million.
Source: Global Cosmetics News 1st July 2020
Uber to acquire food delivery service Postmates for $2.65bn
The acquisition is an an all-stock transaction valued at approximately $2.65 billion. Postmates offers a food delivery and collection service via a website and app.
According to Uber, Postmates will operate as a complementary service to the company’s existing Uber Eats delivery service.
Source: Foodbev Media 26th July 2020
UK Deal making is down
Coronavirus has brought an end to one of the longest waves in mergers and acquisitions history.
Source: Financial Times 1st July 2020
