Welcome to our ‘weekly news in brief’, covering the latest from UK retailers and manufacturers.
RETAIL NEWS
Tesco to continue expansion of discounter Jack’s estate
Tesco has revealed plans to launch its 13th Jack’s store, as the supermarket continues with its plan to take on the discounters, despite widespread speculation it would be wound up. The retailer’s latest Jack’s incarnation is set to take over a vacant Mothercare store in Kingston Retail Park, after plans were submitted to Hull City Council.
The move is a further sign that reports of the death of the Jack’s enterprise may have been exaggerated, with The Grocer reporting in March the retailer was continuing to look for new locations for its discounter format that minimise cannibalisation of its existing estate, with the search concentrated in the Midlands and the north of England.
Doubts about the success of the format were raised in September last year when Tesco announced that Jack’s in Rawtenstall was to close and turn back into a Tesco.
The first Jack’s store, named after Tesco founder Jack Cohen, opened in Chatteris, Cambridgeshire, in September 2018, with other sites in locations such as Sheffield, Barnsley and Wakefield.
“We are always looking for potential sites for new Jack’s stores and these applications are part of this process. We will keep the community updated as our plans develop,” said a Tesco spokeswoman.
Source: The Grocer 3rd June 2020
Morrisons faces shareholder revolt over executive salaries
Morrisons has seen over a third of its investors vote against its pay policy at the retailer’s annual shareholder meeting on Thursday. Investors expressed concern after Morrisons chief executive David Potts and chief operating officer Trevor Strain received generous pension deals.
The UK corporate governance code says executive pension contributions should be in line with those of the workforce, and while Potts and Strain bank payments worth 24% of their basic salaries, the
majority of shop floor staff receive 5%.
Ahead of the meeting the Investment Association, which represents UK asset managers, raised a red flag over the pensions issue while ISS, an investor advisory group, also opposed the policy.
“Although the policy vote passed, and we received considerable positive feedback during consultation, the board acknowledges a number of shareholders decided to vote against the policy,” Morrisons said. Potts received a £4.2 million pay package last year, including a £2.3 million long-term share bonus.
The payout was slightly down on the £4.5 million of the previous year, but raised concerns as it was not far behind the £6.4 million received by Tesco chief executive Dave Lewis, who runs the leader of the Big 4. Morrisons also issued a message of support for Belinda Richards, after a fifth of shareholders voted against her re-election as a non-executive director.
The company said the result was driven by the votes from a small number of institutions who applied a more stringent voting policy on directors’ external commitments.
“The board strongly supports Belinda’s re-appointment to the board, and throughout her tenure she has demonstrated her commitment to the company and ability to dedicate sufficient time to her duties,” Morrisons said.
Source: Retail Gazette 12th June 2020
Ocado launches £1bn funding drive to capitalise on online shopping boom
Ocado is seeking to raise more than £1bn to capitalise on the boom in online grocery shopping brought about by coronavirus.
The company last night laid out plans to raise £657m through placing of £650m ordinary shares and a £7m retail offer. It also announced it is launching an offering of £350m through a convertible bond issue. The intended £1bn capital raise will give the Ocado Group the “financial flexibility to capitalise on opportunities arising from the significant acceleration in online adoption and grow faster over the medium term” it said.
The capital raise comes in the context of huge growth in online grocery. Online’s share of sales has similarly been boosted around the world. According to Ocado there is now a “new baseline for online
penetration” and “expectations for a sustainable step up in growth from this new baseline”. This rapid growth will expand Ocado’s addressable market with “a fee opportunity for Ocado Group of £3.5bn to £26.3bn” it said. Ocado Group CEO Tim Steiner said the channel was at an “inflection point”.
“The current crisis is proving a catalyst for permanent and significant acceleration in channel shift globally which we believe will redraw the landscape for the grocery industry worldwide. The significant acceleration in online grocery provides us with greater opportunities than ever before,” he said.
“This capital raise gives Ocado Group the opportunity to accelerate our role in creating sustainable change in the industry, allowing us the flexibility to move at increased pace and capitalise on the full opportunity set over the medium term,” Steiner added.
The money raised will support Ocado’s existing Ocado Solutions partners manage the surge in demand and fund the automation efforts of new partners worldwide. The group currently has nine partners – including its Ocado Retail arm, a joint venture with Marks & Spencer. This year has marked delivery of Ocado’s first international CFCs to Groupe Casino in France and Sobeys in Canada with scores more planned.
The cash injection will also be invested in “innovation and at a faster pace” and put the business in a “powerful position to fulfil its medium‐term growth aspirations”.
Source: The Grocer 11th June 2020
Iceland founder takes full ownership of retailer in £115m deal
Iceland Foods founder Sir Malcolm Walker CBE and chief executive Tarsem Dhaliwal have taken full ownership of the frozen foods chain, having bought out the remaining £115 million stake.
They bought out the company’s sole external investor, South African conglomerate Brait SE’s 63% shareholding, making Iceland Foods 100% owned by Walker, Dhaliwal and their related parties.
The sale will be made in three instalments, with an initial payment of £60 million being paid today. The remaining investments of £26.9 million and £28.1 million will be paid in July 2021 and 2022
respectively.
“It is particularly satisfying to turn this new page in Iceland’s history just before the 50th anniversary of the opening of our first shop on 18 November 1970,” Walker said. "Having started the business in partnership with a friend, I am delighted to have come full circle and own what are now more than 1,000 stores with another good friend in 2020. Over the last half-century we have had a series of external investors in our business but I have no hesitation in saying that Brait has been the best”.
They have been consistently understanding and supportive and were friends as well as business partners. I am sure that friendship will endure, and Tarsem and I wish them every success in the future.”
Tarsem Dhaliwal said: “We are grateful to Brait for giving us this opportunity to take full ownership of Iceland. We have always been a genuine family business and it is not just Sir Malcolm and I but many of our colleagues who have children working for the company”.
We are totally committed to running and growing this business for the long term benefit of all our stakeholders and their families.”
Sir Malcolm and I will always have the wellbeing of our 25,000 Iceland colleagues and five million customers close to our hearts and we very much look forward to Doing It Right for another 50 years as we begin this next exciting chapter in the Iceland story.”
Source: FoodBev Media 10th June 2020
MANUFACTURING NEWS
Weetabix Protein goes digital with new ad campaign
Weetabix Protein is launching two new digital-only adverts to increase awareness of its Protein portfolio and tap into the growing number of people going online for fitness activities.
The two adverts will run on YouTube and Facebook for four weeks, with the brand hoping to reach over nine million adults in the UK. Part of Weetabix’s £11m multi-channel marketing push, the adverts are targeting consumers who are looking to get more protein into their diet.
The brand highlighted that 20 million shoppers are actively hunting out protein on pack, yet currently only 10% of total UK shoppers are buying protein cereals. The 15-second adverts use the iconic ‘Have You Had Your Weetabix’ sign-off and have been created specifically for digital platforms.
Anna Cheatley, Brand Manager for Weetabix Protein, said: “This new digital advert campaign aims to reach protein seekers and make them aware of our entire portfolio, including cereals and drinks, to encourage them to start their active day with Weetabix Protein at breakfast. We are the number one product in the protein cereal market, but there is still scope to increase awareness levels amongst shoppers and drive sales across the protein category for retailers.”
Last month, Weetabix Protein and the ASICS London 10K launched the virtual Weetabix Protein Youth Challenge, helping 4,000 children aged 16 or under get moving by running their very own 10-kilometre race across a 10-week period.
Cheatley said: “We know that due to current circumstances more people are taking part and looking for online fitness sessions than ever before. Therefore, launching this campaign online is a natural fit with the Weetabix Protein brand, supporting our goal to help people of all ages get off to a strong start and keep active.”
The brand’s protein portfolio includes Weetabix Protein, Weetabix On The Go Protein, and Weetabix Protein Crunch.
Source: NamNews 9th June 2020
Coty caters to consumers in lockdown with new delivery service
Coty has responded to UK consumers in lockdown with a new delivery service for its high street brands. Dubbed The Home Beauty Edit, the new direct-to-consumer platform will allow shoppers to buy beauty ‘bundles’ that will be received within two working days.
Retailing from £17.97, the bundles will initially include products from hair colour brand Clairol, as well as nail and colour products from Sally Hansen in ‘at home salon’ and ‘manicure essential’ sets.
“We are always looking at ways to make the lives of our shoppers easier,” said Coty’s Direct to Consumer Director, Charles Oades.
“Given the current terms of lockdown in the UK and the challenges our consumers face in getting online deliveries or to the shops safely, it presented a perfect opportunity to try to help. Consumers still want to feel and look their best and we hope this initiative can enable them for the safety of their home.”
Since the stay-at-home order was put in place on 23 March, due to the coronavirus pandemic, more customers have been purchasing DIY products including at-home hair dyes and nail care products.
Source: Cosmetics Business 11th June 2020
Heinz gets personal with customisable labels on new DTC channel
Heinz is offering personalised versions of six products through its recently launched direct-to-consumer channel Heinz to Home.
Customers can add names to 460g top-down plastic-bottled and 342g glass-bottled Heinz Tomato Ketchup, 395g plastic-bottled Heinz [Seriously] Good Mayonnaise, and 415g cans of Heinz Beanz, Hoops and Cream of Tomato Soup.
The personalised items are on sale for £5.49 each plus a £3.50 delivery charge. Customers can add a gift box with a custom message to their order for £1.
The initiative has been launched in time for Father’s Day but will run throughout the year “meaning it’ll also make a great birthday or Christmas present. Or even a simple thank you to someone who has been kind to you” the company said.
Heinz To Home was built in three weeks and launched in April, becoming Heinz’s first consumer-facing e-commerce site. As well as the personalised items, the site sells an ‘Essentials’ 16-can mix bundle, as well as sauces and baby food packages.
“This platform in the future is probably not a sales channel but a data and insight channel,” Kraft Heinz head of e-commerce Jean Philippe Nier told The Grocer last month.
Heinz has offered personalised products before. In 2017, the company allowed customers to order cans of beans with their name after ‘Beanz Meanz’ on the label.
“Whilst lockdown may gradually be easing, there will still be some families in the country who can’t see each other or won’t be able to celebrate in the usual ways, which we know will be hard on Father’s Day,” said Heinz Meals marketing lead Matthew Mill.
“So, we hope this new personalised gift service will help sons and daughters across the UK show their love to their Heinz-loving dads in a safe, thoughtful and fun way. Dads are notoriously hard to buy for, but what dad wouldn’t love his very own personalised bottle of Heinz Tomato Ketchup or can of Beanz?”
Source: The Grocer 11th June 2020
Yorkshire Tea and PG Tips hit back at Black Lives Matter critics
Yorkshire Tea and PG Tips have hit back at Black Lives Matter (BLM) critics. One Twitter user praised Yorkshire Tea for not having voiced support for the movement but the brand quickly replied it had not yet commented on the BLM protests as it had been “taking time to educate” itself. Adding: “Please don’t buy our tea again.”
In recent days, brands across the world have shown their support for Black Lives Matter following the death of George Floyd, the black man who died while being restrained by a Minnesota police officer.
Yorkshire Tea, which is owned by Taylors of Harrogate, wrote: “We stand against racism.”
PG Tips, which is owned by Unilever, soon lent its support to its rival as right-wing commentators urged a boycott on Twitter.
“If you are boycotting teas that stand against racism, you’re going to have to find two new brands now #blacklivesmatter #solidaritea,” the brand tweeted.
It prompted a flurry of support online but there were also others who argue that given the colonial history of tea these brands need to do more.
Source: Marketing Week 10th June 2020
WIDER INDUSTRY NEWS
UK economy heads towards recession with 20.4% GDP drop
The UK economy has suffered a record slump with GDP plunging by 20.4% during April’s coronavirus lockdown, when high street stores endured their first full month of being temporarily closed.
The fall is the biggest the UK has ever seen – worse than anything during the financial crash, highlighting the impact of the Covid-19 pandemic.
The economy was around 25% smaller in April than it was in February and puts the nation on course for an anticipated recession, the ONS said.
Although during the three months to April, accommodation and food services plummeted by 40.1%, retail was one of the worst-affected sectors during the lockdown, with businesses claiming £3.3 billion to fund their furloughed staff salaries. The ONS will not reveal what happened to the economy in May until next month, but it is likely to show another dramatic drop, coming before restrictions started to ease in some parts of the economy.
“In line with many other economies around the world, coronavirus is having a severe impact on our economy,” Chancellor Rishi Sunak said. “The lifelines we’ve provided with our furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs – giving us the best chance of recovering quickly as the economy reopens.
“We’ve set out our plan to gradually and safely reopen the economy. Next week, more shops on the high street will be able to open again as we start to get our lives a little bit more back to normal.”
The ONS said: “April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall.”
Source: Retail Gazette 12th June 2020
Just Eat Takeaway to buy Grubhub in £5.75bn deal
European food delivery app Just Eat Takeaway has agreed to buy US rival Grubhub in a $7.3bn (£5.75bn) deal. If the takeover is completed it will create the world's biggest food delivery company outside China. The combined firm will have more than 70 million active customers who place close to 600 million orders a year.
The announcement comes after talks between Grubhub and Uber failed as their potential merger faced competition scrutiny. Just Eat Takeaway's chief executive Jitse Groen highlighted the importance to the deal's success of his long-standing relationship with his counterpart at Grubhub Matt Maloney.
"Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents," he said. "Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector."
The deal comes amid a surge in demand for deliveries of takeaway food as people stay home because of the coronavirus pandemic. Even before Covid-19, taken together Just Eat Takeaway and Grubhub last year reported revenues that totalled $3bn and a profit of $447m.
Analysts have said consolidation in the food delivery industry is long overdue as companies have to spend huge amounts of money to gain and retain their customers. The deal, which still needs shareholder and regulatory approval, is expected to be completed in the first quarter of 2021. Chicago-based Grubhub has had on-off takeover talks for some time with larger rival Uber. But Uber signalled on Wednesday that it was no longer pursuing a potential tie up with Grubhub.
"Like ridesharing, the food delivery industry will need consolidation in order to reach its full potential for consumers and restaurants. That doesn't mean we are interested in doing any deal, at any price, with any player," said Uber spokesperson Noah Edwardsen.
Source: BBC News 11th June 2020
Government to relax Sunday trading laws to boost economy
The government is drawing up legislation to enable larger supermarkets to open for more than six hours on Sundays, in a bid to boost the economy. The Sunday trading laws could be suspended for a year in a move that the government hopes will stimulate the economy. As concerns around unemployment grow, Downing Street is under pressure to secure jobs and boost business as the UK emerges from lockdown.
Boris Johnson, his chief adviser Dominic Cummings, chancellor, Rishi Sunak, and business secretary Alok Sharma, are said to support the measure.
Sunday trading laws were introduced under the Sunday Trading Act 1994, which limits shops with retail space over 280 square metres to a maximum of six hours of trading.
New legislation would enable larger supermarkets to open for more than six hours on Sundays. However, Labour and Co-operative party councillor in Lewisham, south London, Joe Dromey tweeted:
“Scrapping Sunday trading laws will do little to boost the economy but it will cause a lot of disruption to the lives of low paid retail workers who have kept the country going through the crisis.
And you can bet that it will not be temporary.”
David Cameron’s attempt to abolish Sunday trading laws in 2016 failed after 27 Tory MPs rebelled. Some supermarkets that have local convenience stores unaffected by Sunday trading laws are opposed to reform but others, including Asda and Morrisons, are said to be in favour.
Source: Retail Gazette 6th June 2020
Business fears erosion of trust over ‘Test, Track and Trace’ scheme
Businesses in the UK, already struggling financially as a result of lockdown, also fear that the progress they have made in gaining consumer trust about how their personal data is handled could be undermined by the government’s Test, Track and Trace project.
Businesses overall estimate their revenues have been halved during the lockdown (52.8% in May), with a growing number expecting to (or have already done so) make redundancies (27%) or furlough staff, new research from the Data and Marketing Association’s (DMA) reveals.
And even though the lockdown is being eased in the UK as the virus infection rate begins to fall, businesses say they are fearful over the long-term impact of the pandemic. Of those questioned at the end of May, 33% said they were “very concerned”, up from 24% in April. And 42% of businesses fear that the government’s Test, Track and Trace project aimed at containing a second wave of COVID–19 could impact consumers’ willingness in the future to share personal data.
Many are concerned about the impact government strategy could have on longer-term consumer trust – especially trust in how institutions (59%) and brands (43%) use personal data. But a third (32%) believe this could have a positive outcome, if handled correctly.
The findings are in contrast to the DMA’s earlier report, Data Privacy: An Industry Perspective, in which half of professionals surveyed said they thought consumer confidence in how brands handled their data had improved since the introduction of the General Data Protection Regulations (GDPR).
“Data exchange is essential to the smooth running of the modern digital economy, which contributes around £150 billion to the UK economy, according to DCMS estimates,” said Chris Combemale, CEO of the DMA. Businesses rely on consumer trust and a willingness to share data in order to build sustainable and rewarding relationships with their customers,” he added.
“The long-term effects of the UK Government’s “Test, Track and Trace” programme on customer trust and public perception could have lasting damage on the data and marketing industry if it is mismanaged. Our latest survey has found that this is a big concern for a large number of businesses,” Combemale said.
Source: WARC 10th June 2020
MERGERS & ACQUISITIONS
Unilever unifies group under single parent company
Unilever is merging its Unilever PLC and Unilever NV businesses to form single parent company Unilever PLC in a bid to create a “simpler company with greater strategic flexibility”. Unilever
confirmed there will be no change to operations, locations, activities or staffing levels, nor will there be changes to the manufacture and supply of products.
Source: Marketing Week 11 June 2020
Hovis put up for sale by private equity owner
Hovis owners Gores Group - which has a 51% stake - has hired RW Baird to oversee a sales process of its stake. Premier Foods, which owns the remaining 49%, is expected to use the opportunity to offload its ownership. The sale could fetch between £100m and £150m.
Source: The Grocer 10 June 2020
‘All clear’ given to Danone acquisition of Harrogate Water
The Competition and Markets Authority (CMA) has today confirmed it will not be referring the intended acquisition by Danone SA of Harrogate Water Brands Limited to a phase two investigation. Harrogate Water which owns the British water brand “Harrogate Spring Water”, and the charitable brand “Thirsty Planet”, turned over £21.6m last year.
Source: The Business Desk 8 June 2020
