Ocado, Dettol, Pret: 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.

Pret a Manger launches coffee subscription service

Pret a Manger is launching the UK’s first in-shop coffee subscription as it shifts its strategic plan.

YourPret Barista will launch next Tuesday (8 September) and is the chain’s first step in its digitally led, multichannel strategy.

Subscribers can order up to five barista-prepared drinks per day for a fixed monthly price of £20, with the first month free for all subscribers as part of a national launch.

It covers all drink options prepared by Pret’s barista team, including coffee products, teas, hot chocolates, smoothies and frappes. It can be accessed directly via a subscriber’s email, phone or digital wallet, and customers are allowed one drink per transaction, up to five times a day.

Pret CEO Pano Christou says: “This is just the first step in our plan to bring Pret to more people. We now have the building blocks to establish Pret as a multichannel, digitally led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.”

The subscription is part of new digital infrastructure that Pret hopes will help it launch tailored customer propositions faster and at scale. This newly developed digital ecosystem will enable Pret to develop insight and data-led products and services.

It is also part of the brand’s post-lockdown recovery programme, with YourPret Barista expected to accelerate sales that are already growing 7% week on week.

Christou adds: “Since reopening back in May, our coffee sales have been rising faster than food – evidence that coffee has become an integral part of both our customers’ everyday routines and the Pret experience.”

Dettol’s back to work ad goes viral

Dettol’s new advert has gone viral as commuters mock the out-of-home campaign.

Keep Protecting, created by McCann London, is designed to remind people that “the little things we do help protect the little things we love”.

However, its ads about returning to the office has not hit the right note with many social media users.

The ad lists things commuters may have missed about work over the last six months in lockdown, such as “seeing your second family”, “taking a lift”, “’hearing buzzwords” and “proper bants.”

Some have accused the brand of missing the mark, with one user arguing that “receptionist” is also a commuting worker and shouldn’t be listed alongside “plastic plants”.

Costa Coffee to cut 1,650 jobs

Costa Coffee is cutting 1,650 jobs as it struggles to recover after the UK’s lockdown.

The coffee brand is planning to get rid of the role of assistant store manager across its UK business leading to mass redundancies.

Costa Coffee’s managing director for UK and Ireland, Neil Lake, says: “We have had to make these difficult decisions to protect the business and ensure we safeguard as many jobs as possible for our 16,000 team members, while emerging stronger, ready for future growth.”

Costa says its coffee shops have been reopening “as safely and as quickly as possible” since May with 2,400 now trading, after nearly all of its 2,700 sites were closed for six weeks during lockdown.

However, there remains “high levels of uncertainty as to when trade will recover to pre-Covid levels, it says.

In July, owner Coca-Cola said sales of tea and coffee had fallen by nearly a third in the three months to June, largely due to the temporary closures of nearly all its Costa cafes in western Europe.

Ocado suspends delivery to staff as demand surges

Ocado is suspending delivery to staff as demand surges after the launch of its tie-up with Marks & Spencer.

Ocado says the move will free up space for customer orders, after apparent teething problems in the newly launched partnership caused it to cancel some customer deliveries on its first day on Tuesday.

A spokesperson says: “The M&S launch has been incredibly popular. To help minimise the impact of the surge in demand on our customers, the deliveries for Ocado colleagues were paused for the first few days.”

Employees of the company usually receive a 15% discount on grocery orders, among other benefits.

Ocado ended a 18-year partnership with Waitrose this month with the two brands battling it out to win over Ocado shoppers.

Adobe unveils first UK TV ad for Photoshop

Adobe is advertising Photoshop on TV for the first time in the UK as part of Adobe’s largest product campaign in the UK.

The campaign shows how Photoshop unleashes the power of imagination by celebrating the ways users can “transform their world using only Photoshop and their imagination”.

‘Fantastic Voyage’ shows a woman on her daily commute who uses Photoshop to reimagine the world around her. She ultimately ends up transforming her every day, mundane ride into a fantastic voyage to the furthest corners of her imagination.

Adobe Europe’s senior director of marketing, Simon Morris, says: “Creativity can affect the way we see the world, expand our capabilities and bring us together even in the most challenging of times. The power of the imagination is very much the theme of our biggest ever advertising campaign for Photoshop in the UK.

“From a train journey to a ‘fantastic voyage’, with the magic of Photoshop there are no limits placed on how the world can be reimagined and stories can be told.”

It will run from 5 September through to November across TV, social and digital.

Thursday, 3 September

Starbucks introduces revamped rewards programme

Coffee chain Starbucks has relaunched its Rewards loyalty programme, aiming to meet consumers’ needs for a more personalised and contactless retail experience.

The key features include customers being rewarded with three stars for every pound spent in-store (rather than the current one star for every transaction), members with 150 stars being treated to a free barista-prepared drink and those who collect 450 stars over a year being granted Gold level status and an improved digital experience.

The programme will be hosted on an updated Starbucks UK app, where members can customise and adapt drinks and enjoy exclusive benefits.

Gold level members will continue to enjoy pre-existing exclusive benefits, such as free extra espresso shots, syrups and whipped cream, plus they will now also receive a free drink of their choice during their birthday month.

Starbucks UK general manager Alex Rayner says: “The new programme is part of a wider transformation we have underway to integrate the physical instore experience with digital innovation.

“With Starbucks Rewards being hosted via our App, members can earn Rewards while also customising their beverage exactly to their taste, ordering ahead to skip the queue and paying contactlessly.”

Lego plans to open 120 new stores this year

Lego plans to open 120 shops this year, despite the ongoing problems faced by the retail sector.

With more adults getting involved in using Lego with their family while under lockdown, the company posted a 7% increase in sales for the first half of this year, while operating profits grew by 11%. Visits to the Lego website doubled to 100 million during the same period.

Eighty of the new stores will be based in China.

“When our stores have reopened after lockdown, there have been queues,” says Lego Group CEO Niels Christiansen.

“We saw a very positive development during the coronavirus lockdown when families began playing and building Lego sets together.”

Channel 4 brings in chief revenue officer

Channel 4 has appointed PHD UK CEO Veriça Djurdjevic to the newly created role of chief revenue officer, reporting directly to CEO Alex Mahon.

Starting in November, Djurdjevic will be part of the Channel 4 executive team with overall responsibility for the broadcaster’s key commercial revenue streams.

Djurdjevic started her career at MediaVest before moving to MEC in 2002. She worked in both the account management and strategy teams across a wide spectrum of clients during her time at MEC, before moving to PHD UK in 2009 to run the Sainsbury’s business. She became managing director in 2013, before being promoted to CEO in April 2017.

“Veriça has an incredibly impressive track record within the agency world but more than that, she is a passionate and creative leader of people,” says Mahon.

“I’m delighted to have secured someone of her calibre to join our executive team at such a crucial time.”

Djurdjevic adds: “I am incredibly excited to be joining Channel 4 at such a pivotal moment. The market and consumers are changing, and Channel 4 is extremely well positioned to capitalise on the new opportunities presented by the changing landscape.

“I look forward to working with the team, and with advertisers and partners to create new and different ways of engaging audiences.”

UK retail footfall continues to decline, while vacancy rates rise

Retail footfall in the UK is still way below levels from last year, according to the latest monthly data from retail intelligence expert Springboard covering the four weeks from 2 to 29 August.

High street footfall was down 38.3% year on year, while it was down 33.9% in shopping centres and 11.1% in retail parks.

Smaller high streets continued to benefit from home working and local shopping, with footfall in market towns down 26.6% on August 2019. Coastal towns enjoyed strong performances with footfall down 24.4% from August 2019, making the most of summer ‘staycations’ during a season of limited holiday options.

The UK vacancy rate rose in July 2020 to 10.8% from 9.8% in January 2020, which means it is now at the highest level since January 2014, reflecting recent widespread store closures.

“The importance of large cities in the ongoing evolution of bricks and mortar retailing needs to be emphasised; in 2019 regional cities across the UK attracted three times the volume of footfall compared to UK high streets, and these greater volumes of footfall are required to support new store formats and environments now demanded by shoppers,” says Springboard marketing and insights director Diane Wehrle.

“But with footfall in regional cities still 50.3% lower than in 2019 versus an annual decline of just 11.1% in retail parks it suggests that out of town locations may become even more attractive to retailers.”

Heathrow may cut 25% of staff after pay talks collapse

Up to a quarter of frontline staff at Heathrow Airport could lose their jobs after a 45-day consultation period was reportedly triggered following the issuing of a formal Section 188 notice.

Union sources told Sky News that as many as 4,700 of the airport’s engineers, airside operations and security staff would be included in the consultation process.

The news comes as talks with trade unions about employee pay and conditions failed to progress.

A deal remains possible during the consultation period, but if one does not materialise, approximately a fifth of Heathrow’s total workforce of about 5,700 people could be put at risk, the insider said.

Workers are also being offered voluntary redundancy packages on terms which the airport insists are “generous”.

A Heathrow spokesperson says: “Discussions with our unions have taken place over four months and our final offer is informed by feedback we have received from them.

“But with air travel showing little sign of recovery, these discussions cannot go on indefinitely and we must act now to prevent our situation from worsening.

“We have now started a period of formal consultation with our unions on our offer, which still guarantees a job at the airport for anyone who wishes to stay with our business.”

Wednesday, 2 September

Unilever pledges €1bn to cut fossil fuels from cleaning brands

Unilever will invest €1bn (£890m) to cut fossil fuels from its cleaning products by 2030 in a bid to reduce carbon emissions.

The petrochemicals used in brands including Cif and Domestos will be replaced with plant-based ingredients, such as algae. The switch to sustainable ingredients is expected to cut Unilever’s carbon footprint by 20%, given that petrochemicals currently make up 46% of the company’s overall carbon footprint.

The €1bn investment is part of Unilever’s Clean Future pledge to reach net zero emissions from its products by 2039. The €1bn will be used to finance biotechnology research, CO2 and waste utilisation, and low carbon chemistry, as well as to create biodegradable and water-efficient product formulations to halve Unilever’s use of virgin plastic by 2025.

Money will also be pumped into the “development of brand communications that make these technologies appealing to consumers”.

Unilever’s president of home care, Peter ter Kulve, describes Clean Future as a vision to “radically overhaul” the business and encourage the wider industry to break its “dependence on fossil fuels”.

“We’ve seen unprecedented demand for our cleaning products in recent months and we are incredibly proud to play our part, helping to keep people safe in the fight against Covid-19,” he adds.

“But that should not be a reason for complacency. We cannot let ourselves become distracted from the environmental crises that our world – our home – is facing. Pollution. Destruction of natural habitats. The climate emergency. This is the home we share, and we have a responsibility to protect it.”

Yesterday, Unilever also acquired Californian personal nutrition brand Liquid I.V., which sells electrolyte drink mixes designed for the rapid absorption of water and other nutrients into the bloodstream to prevent dehydration. President of Unilever North America, Fabian Garcia, described Liquid I.V. as sharing Unilever’s ambition to create “sustainable products that have a positive social impact”.

Google to pass on £120m in digital tax costs to advertisers

Google plans to pass on the £120m annual cost of the digital services tax to advertisers from November.

Brands have been told they will be charged an additional fee for ads served on Google and YouTube to help the search giant recoup the losses imposed by a 2% tax on its revenues introduced by the UK government in April to punish companies that pay “very little tax” in Britain.

Google UK reported revenues of £1.6bn in 2019 and paid £44m in UK corporation tax. However, The Guardian cites eMarketer research that estimates Google UK made £5.7bn in ad revenue last year, meaning on that basis the 2% tax equates to around £122m.

A Google spokeswoman describes the digital tax as an increase to the cost of digital advertising, telling the publication: “Typically, these kinds of cost increases are borne by customers and like other companies affected by this tax, we will be adding a fee to our invoices, from November.

“We will continue to pay all the taxes due in the UK, and to encourage governments globally to focus on international tax reform rather than implementing new, unilateral levies.”

Amazon has already said it will pass on the 2% tax to sellers on its platform and expectations are Facebook may follow suit.

While ISBA director general Phil Smith said the news is “disappointing”, he describes it as an “inevitable outcome of the UK’s unilateral approach to digital taxation”.

“We have been consistent in warning government of the potential consequences of this approach, including the risk of an increase in costs to advertisers in the UK market,” Smith adds. “With further headwinds from government hitting the advertising sector in the coming years, it’s time government proved that they recognise the importance of the sector to the economic recovery.”

Pernod Ricard sales down 9.5% as Covid crisis erodes growth

Pernod Ricard full-year sales fell by 9.5% to €8.4bn (£7.5bn), as growth during the first six months was eroded by the impact of Covid-19.

During the fourth quarter, sales fell by 36% to €1.2bn (£1.1bn) due to the “significant impact” of coronavirus on travel retail and the on-trade market. Pernod Ricard did, however, experience “better than expected resilience” in off-trade sales, notably in the US and Europe.

Full-year sales dipped by 6% in the Americas, with sharp declines in Latin America, 6% in Europe and 14% across Asia and the rest of the world.

Sales of Pernod Ricard’s international brands, such as Chivas Regal, Absolut and Ballantine’s, fell by 10%, while sales of local brands declined by 9% and wine sales dipped by 4%. The company’s speciality brands, including aperitif wine Lillet and super-premium tequila Altos, grew by 7% during the period.

CEO Alexandre Ricard expects there to be continued “uncertainty and volatility” during the 2021 financial year and anticipates a “prolonged downturn” in travel retail, although resilience in the off-trade market across the US and Europe, and improved sales in China and India, are predicted.

“We will stay the strategic course and accelerate our digital transformation while maintaining strict discipline, with clear, purpose-based investment decisions,” he adds.

“We will harness our agility to adjust fast to capture new opportunities. Thanks to our solid fundamentals, our teams and our brand portfolio, I am confident that Pernod Ricard will emerge from this crisis stronger.”

Ocado cancels orders on first day of M&S delivery

Ocado has blamed a “surge in demand” for its decision to cancel a number of orders on the first day of its tie-up with Marks & Spencer.

Consumers complained of having booked slots days or even weeks in advance only to have their order cancelled, with some threatening to end their Ocado membership as a result.

Ocado has thanked shoppers for giving M&S “such a big welcome” and says while the “vast majority of customers are unaffected” it apologised to those who were forced to wait “a bit longer”.

M&S bought a 50% stake in the retail business, ending Ocado’s 18-year relationship with rival supermarket Waitrose. Shoppers can now choose from 6,000 M&S food items, alongside Ocado own-label goods and branded items, taking the total to more than 50,000 products.

Netflix to offer original shows for free to entice new subscribers

Netflix is offering a free sample feature that allows non-members to watch some of its original shows and films.

Using the Netflix Watch Free feature anyone can view the first episode of shows including Stranger Things and reality dating programme Love is Blind, as well as films such as Bird Box and The Two Popes. After watching the first episode of a show users must then create an account to watch the rest via a free trial. The free-to-view shows are reportedly available on computer and Android, but not Apple iOS devices.

The promotion comes after the streaming giant added 10.1 million new subscribers during the second quarter of 2020, smashing the forecast of 7.5 million. That took its total of paid subscribers during the second quarter to 193 million worldwide.

Last month, Netflix also welcomed its new CMO Bozoma Saint John, who became the streaming giant’s third CMO in less than a year.

Monday, 1 September

M&S food goes fully online with Ocado

Marks & Spencer is launching its food offering online in full for the first time as its deal with Ocado goes live.

Previously, only a limited range of party and celebration food has been available online through M&S, and only in certain locations. However, M&S bought a 50% stake in Ocado’s retail business, at the same time taking over from Waitrose as its main supplier after 18 years.

Waitrose will instead be available on its own website. And it is trialling a service with Deliveroo to offer 30-minute delivery.

M&S food managing director Stuart Machin says: “Taking our full food range online for the first time is transformative for M&S food and brings to life our strategy to protect the magic, the delicious, quality food and trusted sourcing standards customers love – whilst modernising the rest.

“This is a long-term partnership and in preparation for go-live we have listened intently to customers to deliver an even bigger, better range – with more family pack sizes, more scratch cooking ingredients, household staples and organic options. As more families shop for M&S products online, they will see the breadth that M&S food has to offer and we’re confident they will find we remain serious on quality whilst also being serious about value.”

Major grocers join task force to end child poverty

Major supermarkets including Aldi, Asda, the Co-op, Tesco and Sainsbury’s, as well as brands such as Deliveroo and Kellogg’s have joined an alliance set up by the footballer Marcus Rashford aimed at tackling child food poverty.

In a letter to MPs, Rashford says the businesses are “standing side by side to shed light on the issue of child food poverty in the UK”. Over the next six weeks he and the companies involved will share stories of those most affected by child food insecurity.

The group is also calling for the expansion of free school meals to every child from a household on universal credit or equivalent; the expansion of holiday provision to support children on free school meals; and increasing the value of Healthy Start vouchers to £4.25 per week.

Rashford has already successfully lobbied the government to offer free meals for underprivileged children during the summer holidays, after it introduced a £15 weekly benefit during the coronavirus lockdown.

Zoom revenues soar as lockdown boosts usage

Video conferencing app Zoom’s revenues soared in the second quarter as the coronavirus pandemic led to a boost in usage.

Revenues were up 355% to $663.5m (£496m) for the three months to the end of July. Profits more than doubled to $186m, while customer usage was up 458% year on year.

Zoom has experienced success in attracting corporate clients that pay to use its service. It has doubled large customers (those with revenues in excess of $100,000) to 988 during the quarter.

Zoom has now raised its annual revenue forecast by more than 30% to between $2.37bn and $2.39bn.

Retailers to charge 10p for plastic bags

The fee retailers charge for plastic bags in England will double to 10p next year and be extended to all shops as the government makes a further push to reduce plastic waste.

Previously, smaller retailers that employ fewer than 250 people have been exempt from the charge. But from April 2021 this will no longer be the case.

Environment secretary George Eustice says the introduction of the current 5p charge has been a “tremendous success”. The increase in the fee comes alongside a ban on plastic straws, drinks stirrers and cotton buds.

Since the fee was introduced, 15 billion bags have been taken out of circulation. In 2014, 7.6 billion bags were given away to customers at the seven largest UK supermarkets, while in 2018 a little over 1 billion were sold.

UK economic recovery could take until 2023, says KPMG

The UK economy could take until 2023 to reach pre-Covid levels, according to a new forecast by KPMG.

The company forecasts UK GDP will fall 10.3% this year, down from its previous outlook of a 7.2% contraction in June. If a vaccine is rolled out by April next year, it expects growth of 8.4%, with the economy reaching pre-Covid levels by early 2023.

However, if a vaccine is not found until July, that could lead to growth dropping to 7.1%.

KPMG’s chief economist Yael Selfin says: “While it feels like the worst of the Covid-induced economic crisis is behind us, there are still many challenges.”

“There could be a second wave of infection this year, although we expect any future lockdown to be less severe – and the timing and speed of the economic recovery will be impacted both by vaccine developments and Brexit outcomes.”