Debenhams, China, Colman’s: Everything that matters this morning

Good morning and welcome to Marketing Week’s round-up of the news that matters in the marketing world today.

Job cuts and store closures likely at Debenhams

Debenhams is facing the prospect of job cuts and store closures following yesterday’s profit warning, issued off the back of poor festive trading.

Sales fell by 2.6% at Debenhams’ established UK stores in the 17 weeks to 30 December, with seasonal gifts and clothing failing to catch consumers’ attention despite heavy discounting.

Meanwhile profits dropped 30% lower than expected as the department store blamed a “volatile and highly competitive” trading environment. Profits for the full year are now expected to be between £55m and £65m, far below the £83m estimate set by the City.

After revealing the results of its poor festive trading Debenhams’ shares plummeted by 15% to 30p, the lowest level since the 2008 financial crisis.

Debenhams is already expected to close two stores and review eight more as part of a recovery plan announced by chief executive Sergio Bucher in April last year. Speaking to the Guardian, Bucher said Debenhams was accelerating plans to cut jobs by simplifying its management structures. He acknowledged that the department store had increased sales of beauty and food, but failed to make its seasonal gifts innovative or premium enough to fend off heavy competition.

READ MORE: Debenhams job cuts and store closures likely after disappointing sales

China targets top talent with 10-year visa offer

China is hoping to lure ‘high end talent’ to work in the country with the offer of long-term visas.

Valid for between five to 10 years, the multi-entry visas will be open to highly skilled workers such as technology leaders, entrepreneurs and scientists from in-demand sectors. This ‘high end talent’ could also include Nobel Prize winners, successful Olympic athletes and directors of “world famous” music or fine art colleges, as well as heads of major financial institutions.

Visa holders will be allowed to remain in China for up to 180 days at a time and can bring partners and children with them.

In 2016 China introduced a ranking system for expatriates, aimed at identifying the skills it wanted to attract to achieve its social development and economic goals, while reducing the number of lower-skilled foreign workers entering the country.

READ MORE: China offers 10-year visas to ‘high end talent’

Unilever pulls Colman’s out of Norwich

Colmans

Unilever-owned mustard brand Colman’s is to leave its base in Norwich after 160 years manufacturing in the city, potentially affecting 113 jobs.

Colman’s plans to move production to Burton-on-Trent and Germany, with 43 jobs being transferred to the Burton site and 20 moving to a new facility in Norwich for milling mustard seeds. Colman’s Norwich factory will close at the end of next year.

Britvic, which shared the site with Colman’s, had already announced in October plans to transfer its production of Robinsons and Fruit Shoot to elsewhere in the UK.

Unilever confirmed that the mustard maker, which first began production in Norwich in 1858, will retain its “Colman’s of Norwich” branding.

READ MORE: Colman’s to leave Norwich base after 160 years

UK car sales drop for first time in six years

New car sales fell for the first time in six years in 2017, down 5.6% on 2016 to 2.5 million.

Figures from the Society of Motor Manufacturers and Traders (SMMT) found sales of diesel cars slumped by 17% as higher taxes and pollution fears hit demand. Despite two years of record sales in 2015 and 2016, SMMT chief executive Mike Hawes blamed poor consumer confidence for the falling demand for new cars in 2017.

In light of the current consumer climate, Hawes expects car sales to continue to fall in 2018 by around 5-7%.

READ MORE: UK car sales see first drop for six years

Amazon patents smart mirror tech

Amazon has reportedly filed a patent for a smart mirror that will mix the experience of a normal mirror with augmented reality.

Equipped with cameras, projectors and reflective and transmissive display panels, the smart mirror will allow the user to see what an outfit would look like on them by using a projection laid over their body. The mirror could then recreate different real world environments, for example letting you know how your outfit would look on a beach.

If produced, the new smart mirror would complement the Amazon Echo Look, launched in April 2017. The AI device enables users to take full-length photos and short videos of their daily look using a voice controlled hands-free camera. The images are then collected in a virtual lookbook, allowing the user to see themselves from every angle, select their favourite outfit and share images with friends.

READ MORE: Amazon’s smart mirror patent idea will dress you in virtual clothes

Thursday, 4 January 

Man City training groundManchester City has most growth potential in football

It perhaps comes as no surprise, given that the club already leads the Premier League table by 15 points with little more than half the season played, that Manchester City is also the football club with most potential for economic growth in the world. According to the Soccerex Football Finance 100, the club leads Arsenal, Paris Saint-Germain, Guangzhou Evergrande and Tottenham Hotspur in the top five.

The analysis is based on five factors: potential investment, player value, assets, money in the bank and net debt. Man City’s Dubai owners have regularly broken transfer spending records as they pump money into building a dominant team, but the club also has a forward-thinking business structure, being part of a four-club global group focused on building the fan base and merchandising worldwide.

Arsenal is also deemed to have a business model with high growth potential, although it is far more cautious about splashing its cash, suggesting it would need to loosen the financial reins in order to realise it.

READ MORE: Manchester City tops football financial firepower list

Co-op Christmas sales jump as corner shops suffer

Co-op’s like-for-like sales growth over the last two weeks of December hit 6.2%, compared with 3.5% in the previous year, as rival convenience stores saw their supplies hurt by the collapse of a major wholesaler. It saw particularly strong growth in sales of seasonal foods such as turkey and mince pies. The results provided a second positive sign of retailers’ Christmas performance, after Next yesterday reported better-than-expected results.

Wholesaler Palmer & Harvey, which went into administration on 28 November, was unable to supply 90,000 stores across the country, as corner shops scrambled to stock their shelves via other sources.

Co-op is looking to grow its own wholesale business this year, as well as investing in opening 100 new stores, and last November confirmed the takeover of convenience chain Nisa.

READ MORE: Co-op festive sales boosted by Palmer & Harvey demise

Strike threats and cancellations hit Ryanair passenger growth

ryanair

After what could be called an annus horribilis for budget airline Ryanair’s reputation in 2017, any growth in customer numbers is perhaps a good sign, but its 3% increase in passengers during December represented a sharp decline in the growth rate from 20% in the previous year.

The brand had to cancel over 2,000 flights in the autumn after making errors in pilots’ holiday entitlements, and also scheduled fewer flights between November and March to avoid more cancellations. In December, it was threatened with strike action by pilots across Europe, which was averted after it agreed to talks.

Ryanair still managed to record 10% passenger growth over the year, but that was down from 15% in 2016 and much of it would have occurred before the scheduling problems hit. Its ability to get more customers on board in 2018 will therefore depend heavily on avoiding any further disruption, as well as maintaining its strategy of low pricing.

READ MORE: Ryanair’s passenger growth rate cools as it moves to put 2017 behind it

Sir Martin Sorrell has earned more in 2018 than you will all year

Only three working days into the new year, we have already reached one of its most depressing milestones: the day by which a typical FTSE 100 CEO will have earned more than the average UK worker will in the whole of 2018. By lunchtime today, CEOs will have eclipsed the median full-time national salary of £28,758, on their way to earning an average of £3.45m over the year – 120 times as much – according to an analysis by the Chartered Institute of Personnel and Development and the High Pay Centre.

Marketers and advertising professionals have even more reason to grumble than most, as WPP boss Sir Martin Sorrell is the UK’s top-paid CEO. He received almost 14 times more than even his fellow FTSE 100 chief executives in 2016, the year the analysis is based on, which means he probably beat your annual total on his first day back in the office.

READ MORE: ‘Fat Cat Thursday’: top bosses earn workers’ annual salary by lunchtime

Wednesday, 3 January

Virgin Trains apologises for ‘sexist’ response to customer complaint

Virgin Trains has “apologised unreservedly” for its response to a female Twitter user who objected to being called “honey”.

After complaining about a member of staff using the term in a “patronising” way, rather than simply apologise the official Twitter account for Virgin Trains East Coast asked her if she’d prefer to be called “pet” or “love” in future.

The 27-year-old passenger said she was “stunned” by the response, which accused of being “part of a wider systemic issue of women being patronised and belittled”.

A spokesperson for Virgin Trains on the east coast route said: “We apologise unreservedly for this tweet and for the offence caused. To avoid causing more offence we have deleted the original post.”

READ MORE: Virgin Trains apologises for ‘sexist’ tweet

Ad for eHarmony banned over ‘scientific’ matching claims

An ad for dating site eHarmony claiming to use a “scientifically proven matching system” has been banned by the ad watchdog over fears it could be misleading.

The ad, which appeared on the London Underground in July, said: “Step aside fate. It’s time science had a go”. But the Advertising Standards Authority did not believe there was sufficient evidence to substantiate the claim.

The dating site uses an algorithm was based on data collected from more than 50,000 married couples in 23 different countries, which looks at their core personality traits and key values. It argued that the ad did not make any specific claims except that its system was scientific so offered an advantage in finding a compatible partner over a chance-based system or meeting. It argued that consumers would not interpret this as a guarantee they will find lasting love or make connections.

However, the ASA concluded that because the evidence provided by eHarmony “did not demonstrate that their matching system offered users a significantly greater chance of finding lasting love than what could be achieved if they didn’t use the service” the claim ‘scientifically proven matching system’ was misleading.

READ MORE: Dating website eHarmony’s ‘scientific’ match ad banned

M&S to sell off Hong Kong stores as part of turnaround plan

Marks & Spencer is selling off its store in Hong Kong as part of an international shake-up.

The retailer will sell 27 shops in Hong Kong and Macau allowing it to focus more closely on the UK arm of its business.

The stores are being bought by Dubai-based conglomerate Al Futtaim, its largest franchise partner. The move means the company will operate 72 M&S shops across 11 markets in Asia and the Middle East.

READ MORE: Marks & Spencer sells Hong Kong stores in overseas shake-up

Apple on track to become the world’s first trillion-dollar company

apple store

If technology share prices continue to rise at the same rate as in 2017, financial experts believe 2018 will see the arrival of the first firm with a stock market valuation of $1tn (£738bn) or more.

Apple is leading the race to become the world’s first trillion dollar-company, with Amazon, Facebook and Google owner Alphabet also in the running.

With a market valuation of $869bn on Tuesday (2 January), Apple is currently leading way. The figure was arrived at by multiplying the company’s share price by the number of shares in circulation.

Apple’s share price needs to see a 15% increase to take it over the $1tn threshold, which is not out of the question given its shares rose by 47% last year.

READ MORE: Apple leads race to become world’s first $1tn company

Music streaming reached an all-time high in 2017

More than 68.1 billion songs were streamed by UK music fans on sites like Apple Music and Spotify in 2017. That’s equivalent to everyone in the country playing 1,036 tracks, or almost three continuous days of music, and a record high.

Streaming now accounts for 50.4% of all music consumption in the UK, according to trade body the BPI, up from 36.4% last year. People in the UK now stream more songs in a single week than during the first six months of 2012.

However, as BPI uses data from the Official Charts Company, which does not count music played on YouTube, it is estimated this figure is actually even higher. If YouTube was included it is thought the number of streams by UK consumers would double.

READ MORE: Each of us streamed 1,036 songs last year (and most of them were by Ed Sheeran)

Tuesday, 2 January

The Telegraph

Snapchat looks to attract new users by hosting brand content outside the app

Snapchat’s user growth has been steadily declining, and so the company has been thinking of new ways to lure people back to the platform.

Parent company Snap is reportedly developing a programme called ‘Stories Everywhere’, which will allow third-party publishers to embed Snapchat content on their websites.

The move could improve discoverability of the app’s heavy users, namely influencers. Stories Everywhere could provide the possibility for Snapchat influencers to have their content seen beyond the app’s 178 million daily users. The company is already courting influencers with its major app redesign after its CEO Evan Spiegel admitted it was difficult to use.

It might also create more ad revenue opportunities for the company. Snapchat could charge brands for increased distribution of Stories on third party websites, for example. Generating additional ad revenue is crucial for Snap as it missed revenue expectations in every quarter since going public, according to Business Insider.

READ MORE: Snapchat is reportedly looking to publish its content outside its app for the first time with ‘Stories Everywhere’

UK government suggests taxing Google and Facebook to fight extremism

Digital giants such as Google and Facebook have repeatedly faced criticism from the British government for their efforts (or lack of) in fighting extremism. And so it is now considering a move which will likely catch their attention – hitting them with a tax.

In an interview with The Sunday Times, security minister Ben Wallace said the country should use taxes to either incentivise stronger anti-extremist efforts or compensate for “inaction.”

While he didn’t go into detail as to what the new rules would encompass, The Times suggested it would be a tax that targeted companies’ large profits.

The security minister doesn’t seem to think very highly of internet companies, calling them “ruthless profiteers” who put “profit before public safety.” They’ll sell info to loan sharks and “soft-porn companies,” he claimed, but won’t give it to the UK government.

The companies in question object to the claims. Facebook responded by saying Wallace is “wrong” that the social network didn’t prioritise safety, pointing out “millions of pounds” of investment in people and tech to find and pull terrorist material. YouTube, meanwhile, said it had made “significant progress” thanks to a mix of machine learning, human reviewers and partnerships.

READ MORE: UK may tax internet giants to get more help fighting online extremism

Apple apologises after criticism for slowing older iPhones down

Apple has apologised after facing criticism for admitting it deliberately slows down some ageing iPhone models.

The company now says it will replace batteries for less and will issue software in 2018 so customers can monitor their phone’s battery health.

Some customers have long argued the company slows down older iPhones to encourage customers to upgrade. Apple admitted slowing some phones with ageing batteries but said it was to “prolong the life” of the devices.

In a statement posted on its website, the firm said it would reduce the price of an out-of-warranty battery replacement from $79 to $29 in the US for anyone with an iPhone 6 or later. In the UK the prices will drop from £79 to £25.

It said it had made changes to the iOS operating system to manage ageing lithium-ion batteries in some devices, because the batteries’ performance diminishes over time.

READ MORE: Apple apologises for slowing older iPhones down

Co-op goes after discounters with 100 new stores

Coop

The Co-op is spending more than £160m on new stores as part of an expansion drive, thereby defying its rivals.

It will open more than 20 in London, 10 in Wales and 18 in Scotland. Meanwhile, it will also invest in renovations for around 150 existing outlets.

Co-op’s rapid growth campaign comes as rival retailers, including Tesco, Asda and Sainsbury’s, have scaled back plans to open new stores amid worries about shifting consumer habits, with customers increasingly preferring to shop online.

Jo Whitfield, chief executive of Co-op Food, said the chain was “positively responding” to the changes occurring within the dynamic retail sector, with the food business going “from strength to strength in what is clearly a challenging retail market”.

Discount supermarkets Aldi and Lidl are also rapidly expanding their networks, having filed at least 90 planning ­applications for new supermarkets in 2017, according to figures compiled by Barbour ABI. In comparison, Tesco, Sainsbury’s, Asda and Morrisons had together filed a total of just 11 by October of last year.

READ MORE: Co-op to open 100 new stores in 2018 as it continues expansion drive

Uber copies Deliveroo with subscription trial

Uber is considering rolling out a subscription model for its food delivery service UberEats, according to one of the company’s UK executives.

The Uber subsidiary, which is on course to do $3bn (£2.2bn) in sales this year according to The Financial Times, has already been experimenting with subscriptions.

“We are constantly testing,” said UberEats UK country manager Toussaint Wattinne during an interview with Business Insider in December. “We’ve actually run a few tests within specific cohorts in a few cities.”

It’s likely that an UberEats subscription would allow users to bypass delivery fees, while also giving them access to promotions and exclusive menus.

Rival firm Deliveroo rolled out its own subscription service across the UK in November. It’s priced at £7.99 a month and those that sign up don’t have to pay Deliveroo’s £2.50 delivery fee each time they place an order.

READ MORE: Uber is testing subscriptions for its food delivery business

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