Burger King, P&G, Airbnb: 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.

Burger King draws fire over hot air

Burger King has attracted fire over its new US ad, which encourages farmers to change the diet of their cows to reduce flatulence, and thus greenhouse gas emissions. The ad features children dressed as cowboys singing about bovine flatulence and the impact it has on the environment.

The BBC reports that more than 2 million people have watched the ad online, but says farming groups in the US have described the ad as condescending and hypocritical.

Scientists have been quick to support the farmers, the BBC reports.”It’s not the cow farts,” says Prof Frank Mitloehner of the University of California Davis Department of Animal Science. “Nearly all enteric methane from cattle is from belching. Suggesting otherwise turns this serious climate topic into a joke.”

READ MORE: US farmers’ beef with Burger King over cow fart ad

P&G extends carbon neutral commitment

Procter & Gamble has announced new commitments to make its operations carbon neutral over this decade, through a series of initiatives that “protect, improve and restore nature”.

The FMCG giant plans to go beyond its existing science based target of reducing its greenhouse gas emissions by 50%, with a further portfolio of natural climate solutions. It will seek to balance any remaining emissions, with these changes to become carbon neutral over the decade.

Initiatives include the protection of mangrove swamps in the Philippines, restoring rainforests in Brazil, and replanting trees lost to wildfires in California.

“Our role as leaders is to make a lower emission economy and lifestyle possible, affordable and desirable for everyone,” says P&G chief sustainability officer Virginie Helias.

“It is our responsibility to protect critical carbon reserves and invest in solutions that regenerate our planet. Consumers also want to do more to address climate change. As a company, we touch five billion people with our brands; we are striving to make a difference every day by encouraging responsible consumption with products that are effective and intuitive to enable adoption of new lower emission habits.”

Netflix warns investors subscriber surge will end

NetflixNetflix has warned investors that the surge of new subscribers it has seen during the Covid-19 lockdown will have to slow at some point.

The entertainment streaming brand signed up more than 10 million new subscribers in the three months to July – compared to the 28 million it added during all of 2019. The brand’s revenue jumped by a quarter to $6.1bn (£4.9bn), while profits for the quarter hit $720m (£573m), up from $271m (£216m) in the same period last year.

The BBC reports Netflix as announcing that “growth is slowing as consumers get through the initial shock of coronavirus and social restrictions.”

READ MORE: Netflix warns of slowdown after subscriber surge

Airbnb to host online athletics festival with IOC

Airbnb will be seeking to entertain its customers with a summer festival of online experiences, hosted by Olympic and Paralympic athletes and created in association with the International Olympic Committee (IOC).

Launching next Friday (24 July) – which would have seen the opening ceremony of the postponed 2020 Games – the festival will give fans the chance to hear from some of the world’s best athletes in more than 100 bookable, interactive online sessions. Hosts will include Colin Jackson, Jonny Brownlee, Naomi Osaka and Yusra Mardini.

“At a time when it is difficult for people to gather and celebrate the exceptional performance of athletes, Airbnb is proud to host the summer festival which is a new way to experience the Olympic and Paralympic spirit online,” says Airbnb co-founder Joe Gebbia.

“Guests will be able to connect and interact with some of the most elite competitors within the Olympic and Paralympic Movement, giving them even more reasons to cheer them on next year.”

Meanwhile, Formula 1 has been working with Zoom to run virtual paddock club events in lieu of traditional face-to-face hospitality.

Jobs to go at Pizza Express

More than 1,000 jobs are at risk at Pizza Express due to restructuring plans. The restaurant chain is to close up to 75 branches as increased competition and the Covid-19 lockdown take a heavy toll.

The pizza chain is reported to be lining up a company voluntary arrangement (CVA) that will enable it to leave restaurants and negotiate lower rents. Pizza Express declined to comment on the claims.

The casual dining sector has been hit by a raft of closures and job losses this year.

Elsewhere, Malaysian casino group Genting is planning to cut more than 1,600 jobs across its UK operations, according to The Guardian. Casinos remain among attractions that are still closed to the public and Genting is set to permanently close its sites in Margate, Torquay and Bristol.

READ MORE: Pizza Express to close up to 75 restaurants, risking 1,000 jobs

Thursday 16 July

Twitter

Twitter hit by major hack

Prominent US businesses and billionaires are among those impacted by a major hack on Twitter.

The official accounts of people including Jeff Bezos, Kanye West, Barack Obama and Bill Gatest were targeted in an apparent Bitcoin scam. The accounts tweeted requests for donations in cryptocurrency, asking users to send $1,000 to receive $2,000.

Twitter has described the hack as a “co-ordinated attack” targeted employees at the firm with access to internal systems and tools. In a series of tweets, the company says the hackers used this access to take control of many high-profile accounts and tweet on their behalf.

Twitter CEO Jack Dorsey tweeted: “Tough day for us at Twitter. We all feel terrible this happened.”

Twitter says it has limited access to internal systems and tools while it investigates the hack. At the height of the hack, it disabled tweeting for verified accounts, as well as denying password reset requests.

John Lewis launches virtual personal shopping service

John Lewis has launched a virtual person shopping service that will enable users to receive product advice they would get in a department store without leaving home.

The service is initially being tested by customers in two stores – one in Southampton and Peter Jones in London. Customers can book the service for free online, where they will be asked a few questions about what they are shopping for so the personal shopper can prepare.

The 30-minute appointments will be held via Zoom, with the personal shopper able to show the customer products they think might be suitable and answer questions about them. Advice will be available on a range of items from bedding to mobile phones and toys.

John Lewis’s head of customer experience, Steven Hand, says: “What our partners offer in our shops is impartial expertise and advice from our Partners and this pilot means we can offer that again to customers all over the UK who cannot get to our shops. The lockdown has changed customer habits but customer service remains as important as ever. ”

The trial comes after what John Lewis describes as the “successful launch” during lockdown of other virtual services for home interiors, personal styling and advice for expectant parents. More than 3,500 online appointments have been booked since mid-April, while masterclasses on skincare, makeup, and food and wine pairing have “proved very popular”.

The Guardian plans job cuts as revenue takes a coronavirus hit

The Guardian is planning to cut up to 180 jobs across editorial and commercial roles as its revenues take a hit from the coronavirus pandemic.

Around 70 of the job losses are expected to come from editorial, while 110 will come from departments such as marketing, advertising, Guardian Jobs and Guardian Live events. The decision comes as the publisher faces an “unsustainable financial outlook” with revenues expected to be down by more than £25m this year due to Covid-19.

Guardian Media Group, which owns The Guardian, says it remains committed to keeping the publication free online. The focus will be on its digital growth and reader revenue model; The Guardian now has more than 790,000 recurring monthly supporters and received a further 340,000 one-off contributions for its year to 29 March.

Reader revenues now account for 58% of The Guardian’s income but the growth has not been enough to offset declines in advertising and newsstand sales. GMG had revenues of £223.5m for the year, down slightly on the £224.5m it generated in 2019 despite both unique browsers and page views both increasing by more than a fifth year on year.

GMG CEO Annette Thomas says: “GMG is well positioned for the future, after a second year of achieving its financial targets, with 56% digital revenues, and over 1 million paying supporters of the Guardian and the Observer’s journalism. However, we live in a time of great economic uncertainty, and there are many challenges ahead for the global news media sector.

“Today we have announced measures to align our operating model with our forward strategy, reduce costs and focus on the long term growth opportunity in our core business – impactful journalism and reader relationships – in order to promote a more sustainable future for The Guardian.”

Premier League football clubs consider joining Facebook ad boycott

Premier League clubs are reportedly in discussions about joining the advertising boycott of companies that fail to promote inclusion and diversity.

According to The Guardian, the clubs are talking with pressure group Stop Funding Hate about signing up the Conscious Advertising Network (CAN), which aims to stop advertisers funding companies that “fuel hatred”. It comes amid growing calls for a more ethical approach to where organisations spend their ad money, with more than 100 US companies joining a boycott of Facebook in the US over its failure to deal with hate speech. Facebook says it is “focused on the important work of removing hate speech”.

The move is understood to be part of plans for top football clubs to address racism. A number of current and past players have been subjected to abuse on social media, with a 12-year-old boy arrested this week for sending racist messages to Crystal Palace player Wilfried Zaha on Instagram.

Alex Murray of Stop Funding Hate says. “I believe that there’s the ability for football to come together to demand action. I think that the influence clubs have, as well as their massive spending power, means there’s a real opportunity to get behind a campaign like this and add to the impact it’s already having.”

READ MORE: Premier League clubs move to boycott advertising with firms that ‘fuel hatred’

UK payroll shrinks by almost 650,000

The number of workers on UK payrolls fell by 649,000 between March and June, fewer than many had feared as the government-backed furlough scheme helped to prop up employment.

The figures from the Office for National Statistics also show the number of people claiming work-related benefits – including the unemployed – rose to 2.6 million. And there was a rise in the number of ‘economically inactive’, those who are not in work and not looking for work who are not classed as unemployed.

There are signs elsewhere of the job issues to come. Total weekly hours worked fell by a record 175.3 million, on 16.7%, to 877.1 million, while the number of vacancies in the UK fell to just 333,000 – 23% lower than the previous record low during this period in 2009.

Wednesday 15 July

HuaweiMove to strip Huawei from 5G network could cost UK £7bn

Removing Huawei from the UK’s mobile network by 2027 could delay the rollout of 5G by three years and cost the British economy £7bn, The Guardian reports.

Research from Mobile, the organisation supporting mobile network operators, suggests the rollout of 5G to small towns and rural areas across the UK could be hit by delays of up to three years by the removal of Huawei tech from the network.

Yesterday, culture secretary Oliver Dowden announced the Chinese mobile company will be stripped from the UK 5G network over the next seven years, a move which China’s ambassador to the UK, Liu Xiaoming, described as “disappointing and wrong”.

Xiaoming added: “It has become questionable whether the UK can provide an open, fair and non-discriminatory business environment for companies from other countries.”

In his comments, Dowden confirmed that stripping Huawei tech from the network could cause a cumulative delay to the 5G rollout of “two to three years” and said it would cost mobile phone companies an extra £2bn.

In response to the government’s decision, BT said that despite the “logistical and cost implications” it would continue with the 5G rollout “without a significant impact” on the timescales already set out.

READ MORE: Huawei decision ‘may delay 5G by three years and cost UK £7bn’

Tesco pilots online refillable scheme

TescoTesco is rolling out a scheme offering UK online shoppers products in reusable packaging in a bid to tackle food waste.

The supermarket has teamed up with ‘zero-waste’ platform Loop on the trial, which covers 150 products including Heinz Tomato Ketchup, Persil washing liquid, Coca-Cola and Danone yoghurt.

Customers apply to join the service by clicking a link on the Tesco website and are then sent the items in reusable containers via courier firm DPD, for which they pay a deposit. Once the products are finished, customers ask for DPD to pick up the empty containers, which are then cleaned by hygiene and food safety firm Ecolab in DHL warehouses and ready for reuse.

Consumers can return the Loop packaging through Tesco, or through other retailers, to get their deposit back. If successful, the plan is to run the service in-store in Tesco and potentially branch out to other supermarkets.

Speaking to the BBC, Loop chief executive Tom Szaky explained his business will partner with Tesco for a year, as well as collaborating with other companies including “an undisclosed fast food chain”. Szaky says that the scheme has registered double-digit growth during the coronavirus crisis in France and the US, where trials are already underway.

READ MORE: Tesco launches online refillable container trial

Asos sales rise 10% as customer base grows

Asos sales rose by 10% to £1bn in the four months to 30 June, as the retailer noted “steady improvement” despite the Covid-19 crisis. UK sales fell by 1% on the same period in 2019 to £329.2m, while international sales rose by 17% to £654.1m

The online retailer grew its active customer base by 16% to 23 million during the period, noting strong growth in new international customers. The company credited its agility in refocusing the product mix in response to customer demand.

Asos, which intends to repay the furlough support it has received from the UK government, said that against the backdrop of “continued social distancing, ongoing restrictions of events and an uncertain economic outlook for our 20-something customers” it remains cautious on the short- to medium-term outlook.

CEO Nick Beighton acknowledged that while it has been a “tough time for all businesses”, Asos is keen to emerge from the crisis a “stronger and better organisation”.

“I am particularly proud of the resilience, flexibility and creativity the Asos team and our business partners have shown. Our performance in P3 [the four months to 30 June] shows that we are delivering against this aim despite the tough economic and social backdrop,” he added.

“We have learned a lot and adapted quickly, and Asos finishes the period with improved underlying profitability. While we remain cautious about the consumer impact of Covid-19 looking forward, we are on track to deliver strong year-on-year profit growth and to return to positive free cash flow for the full-year.”

Burberry sales slump 45% as Covid-19 crisis takes its toll

BurberrySales at Burberry fell by 45% in the first quarter of 2020 to £257m due to the “severe” fall in demand for luxury goods caused by Covid-19.

CEO Marco Gobbetti says he expects it will take time to return to pre-crisis levels with the resumption of overseas travel, although he did point to the fact the sales decline eased to 20% in June as demand returned in China and Korea.

“As we enter the second phase of our strategy, we are sharpening our focus on product and making other organisational changes to increase our agility and generate structural savings that we will be able to reinvest into consumer-facing activities to further strengthen our luxury positioning,” Gobbetti added.

Job cuts are expected as part of a move to “streamline” its office-based functions in a bid to save £35m in 2021. The company is also pressing ahead with its decision to create three new business units covering ready-to-wear, accessories and shoes, in order to “pool expertise”.

Burberry claims that despite the onset of the pandemic it has made “good progress” during the first quarter in strengthening its brand, localising its plans by market and leveraging its digital platforms. The leather goods arm of the business attracted “new, younger customers” across China and Korea, while online full price sales grew by double digits during the quarter.

The luxury giant also highlighted the campaign for its summer monogram collection, which was supported by a video set in CGI geometric world, a curated Spotify playlist and a new multi-player digital game called B-Surf.

Burberry says the campaign has generated an “exceptional response from press, influencers and consumers”, with an average reach more than 60% higher than its previous monogram capsule and has become the brand’s most watched video to date on Instagram TV.

Starbucks and McDonald’s to slash prices as VAT cut comes into force

Starbucks and McDonald’s are planning price cuts to tempt consumers back into their outlets as the government’s temporary VAT cut from 20% to 5% comes into force.

Starbucks plans to offer a 15% discount on coffee served in company-operated stores, although licensees will be left to decide what level of reduction to pass on. UK general manager Alex Rayner says the price cuts are intended to support local business and boost customer confidence.

Elsewhere, McDonald’s wants its franchisees to cut prices on core products such as the Big Mac and Quarter Pounder, as well as coffee. The fast-food chain’s UK and Ireland chief executive, Paul Pomroy, hopes the price cuts will strike a “sensible balance” between boosting consumer demand and supporting franchisees in getting staff back to work.

Most of McDonald’s 1,350 UK outlets are operated by franchisees, only four of which are currently operating a dine-in service.

It is thought the VAT cut, which ends on 12 January, could save UK households £160 a year on average, although not all firms are likely to pass on the saving.

READ MORE: Firms start price cuts as £4bn VAT boost begins

Tess Alps steps down as Thinkbox chair

Thinkbox founding CEO and current non-executive chair Tess Alps is to retire at the end of 2020.

Alps became Thinkbox’s first CEO in 2006 and prior to joining the organisation was chair of PHD Group in the UK. In her 13 years with PHD, she served in numerous roles, including six years running the content division Drum. Before she joining PHD, Alps worked at several ITV companies and was one of the few women to reach the level of sales director.

In 2018 she received the Mackintosh Medal from the Advertising Association for her outstanding contribution to the advertising industry. Alps will continue to serve as a council member of the Advertising Standards Authority.

“I don’t want to come over all Theresa May, but it truly has been the honour of my life to be part of Thinkbox for the last 14 years. I only meant to stay for three, but TV has been in such an exciting and dynamic phase for all that time that it’s been hard to drag myself away,” says Alps.

“I’m proud that Thinkbox has been part of helping the marketing community fully appreciate its pre-eminent contribution to our cultural and commercial life, not just in the UK but globally. TV will continue to evolve and thrive and Thinkbox will be there to guide advertisers through.”

Thinkbox CEO, Lindsey Clay, adds: “No one has done more to champion TV, and advertising more widely. And no one has done so with more passion, integrity, conscience, wit, and success.

“I know I speak on behalf of everyone who has worked at Thinkbox, all our shareholders and pretty much the whole industry and anyone who has ever met her, when I wish her the best in her well-earned and hard-won retirement. Tess is a one-off, a wonder and we’ve been incredibly lucky to keep hold of her for so long. I feel blessed to have had her as my mentor.”

Tuesday 14 July

Diageo

Diageo to sell Johnnie Walker in paper bottles

Diageo will begin selling Johnnie Walker whisky in paper bottles.

The drinks company plans to run a trial of the new environmentally friendly packaging from next year. While most Johnnie Walker is sold in glass bottles, the firm is looking for ways of using less plastic across its brands.

The paper whisky bottle, which will be trialled in spring 2021, is made from wood pulp and fully recyclable. The idea is that customers would be able to drop them straight into the recycling.

To make the bottles, Diageo will co-launch a firm called Pulpex, which will also produce packaging for the likes of Unilever and PepsiCo.

The bottles will be made by pressurising pulp in moulds, which will then be cured in microwave ovens. The bottles will be sprayed internally with coatings that are designed not to interact with the drinks they will contain.

Diageo’s chief sustainability officer, Ewan Andrew, says: “We’re proud to have created this world first. We are constantly striving to push the boundaries within sustainable packaging and this bottle has the potential to be truly ground-breaking. It feels fitting that we should launch it with Johnnie Walker, a brand that has often led the way in innovation throughout its 200 years existence.”

UK retailers see  biggest monthly sales jump in more than two years

UK retailers saw the biggest monthly sales jump in more than two years in June after many high street stores reopened.

The British Retail Consortium-KPMG monitor revealed a 3.4% increase – the highest increase since May 2018.

The sharp monthly rise was helped by sales in computing, furniture and home improvement. Online sales jumped, and the re-opening of shops released pent-up demand, but the BRC said the sector is still in trouble.

The report said June’s growth was the first since lockdown and far outstrips the average decline of 6.4% over the previous three months.

BRC chief executive, Helen Dickinson, says: “Despite footfall still being well below pre-coronavirus levels, average spend was up as consumers made the most of their occasional shopping trips.”

Over the three months to June, food sales increased 7.3% on a like-for-like basis as supermarket sales remained strong. Meanwhile, non-food sales in stores for items such as clothing were 46.8% lower for the quarter.

UK head of retail at KPMG, Paul Martin, adds: “Fashion sales haven’t rebounded quite as impressively though, despite reports of increased interest from those prepared to queue to enter stores.”

Shoppers must wear masks or risk fines

Face masks will become mandatory in shops and supermarkets with fines of up to £100 for anyone who fails to adhere to the new rules.

Enforcement will be carried out by police – not retail staff – in a bid to limit the spread of coronavirus as the high street opens back up.

The rules to tackle coronavirus will be the same as those on public transport in England, which means children under 11 and people with certain disabilities will be exempt.

A Number 10 spokesperson says: “There is growing evidence that wearing a face covering in an enclosed space helps protect individuals and those around them from coronavirus.”

£ READ MORE: Shoppers without face masks risk £100 fine as Government moves to make them mandatory 

UK economy shrinks by a fifth under lockdown

The UK’s economy shrank by a fifth under lockdown, highlighting the devastating impact of Covid-19.

The economy shrank by 19.1% in the three months to May, as the full impact of lockdown was felt, according to the Office for National Statistics.

The economy actually grew by 1.8% in May, but this was not enough to make up for the fall of 6.9% in March and the record 20.4% decline in April.

Manufacturing and house building showed signs of recovery in May as some businesses saw staff return to work.

Despite this, most of the economy was “in the doldrums” according to the ONS.

Deputy national statistician for economic statistics at the ONS, Jonathan Athow, says: “In the important services sector, we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”

READ MORE: UK economy shrinks by one-fifth under lockdown

Halfords to close 60 stores

Halfords is closing 60 stores despite seeing “better than expected” sales results during lockdown.

The car and cycle brand had originally planned to close six stores in 2020 but has increased that tenfold, with the closures coming from both its garages and retail shops. Employees are expected to move to other sites.

The company is also reportedly in the middle of renegotiating a number of its leases that are up for renewal.

The news comes despite the car service and bike retailer reporting a surge in sales for cycling related products and services during the lockdown.

The retailer’s cycling business was up 57.1% on a life-for-like basis, with Halfords “significantly boosted” by the avoidance of public transport, favourable weather conditions and increased adoption of cycling as a health and leisure activity. However, total sales for the 13 weeks to 3 July were 2.8% below last year.

READ MORE: Halfords to close up to 60 sites despite rise in bike sales in lockdown

Monday 13 July

WeWorkWeWork boss says company on course for profitability

WeWork’s executive chairman Marcelo Claure insists the office-sharing company is a year ahead of schedule and looks set to enjoy a positive cashflow in 2021.

And Claure claimed in an interview with the Financial Times that there has been a strong demand for its office spaces since the beginning of the coronavirus outbreak.

WeWork is undergoing a five-year plan to turn the company around, reducing its workforce by more than 8,000 and enforcing changes within its top tier of management.

An abandoned initial public offering last September and the ousting of co-founder Adam Neumann by new owners Soft Bank suggested troubled times at the New York-based company.

“Everybody thought WeWork was mission impossible,” Claure said.

“A year from now, you are going to see WeWork basically be a profitable venture with an incredible diversity of assets.”

READ MORE: WeWork expects to have positive cash flow in 2021, Financial Times reports

Shoppers petition to save John Lewis store

A petition set up to try and save a John Lewis store in Watford has attracted more than 8,500 signatures in 24 hours.

The company announced last week that the store would be one of eight that will close.

Caroline Simpson, a former John Lewis and Partnership employee who organised the petition, says the store is “desperately needed” in the town, which has seen the closure of its BHS and Debenhams stores in recent years.

“There are a lot of very upset and very angry people who won’t take this decision lying down, I don’t think we should let it go without a fight,” she said.

“I’m absolutely devastated by the news and I do wonder what is going to happen to Watford shopping centre… we have no department stores left.

“A friend phoned me yesterday in tears saying ‘John Lewis is Watford’.”

READ MORE: John Lewis: ‘Devastated’ shopper sets up petition to save Watford store

Frontrunner emerges to buy Casual Dining Group

Cafe RougeTroubled restaurant operator the Casual Dining Group (CDG) is reportedly the subject of a buyout from Epiris, the private equity firm and former backer of TGI Friday’s.

CDG, which runs the Café Rouge, Las Iguanas and Bella Italia chains, fell into administration earlier this month after struggling to stay afloat during the coronavirus pandemic.

A Sky News report says that Epiris, one of several interested parties in the stricken restaurant group, is in “detailed talks” and that a deal could be announced this week.

READ MORE: Coronavirus: Former TGI Friday’s owner puts Cafe Rouge on menu

‘KlarnaSense’ aims to encourage smarter shopping

KlarnaThe Swedish online financial service Klarna has launched the ‘KlarnaSense’ initiative to help shoppers avoid impulse buying.

The campaign has been developed with retail psychologist Kate Nightingale to ensure that consumers use the part of their brain that controls whether they make a considered decision, rather than an impulsive one.

The concept uses retail psychology to promote more mindful shopping, via the Klarna website and app.

“Now, more than ever, people need convenience and flexibility in how they shop, whether that’s spreading the cost of an item or giving them the option to try before they buy,” says UK general manager for Klarna Luke Griffiths.

“Nevertheless, we recognise that it’s sometimes easy to get over-excited and carried away with impulse purchases and that Klarna also has an important role to play in helping our customers to purchase the right things, at the right time.

“That’s what KlarnaSense is all about.”

Retail demand falls despite rise in post-lockdown footfall

The latest data from retail intelligence providers Springboard reveals that footfall across the UK saw a decline of 56.6% in June.

There had been a significant rise following the reopening of stores in England and Northern Ireland earlier last month, but that slowed down considerably within just two weeks.

The Springboard report suggests that long queues, coupled with a restricted shopping experience due to social distancing, could be the contributing factors to this sudden drop off in footfall.

Retail parks have proved resilient, due in part to food and homeware stores that opened ahead of non-essential retailers.

High street stores and shopping centres have continued to struggle, hit by the continuing number of people working from home and the absence of tourists.

That’s highlighted most clearly in the results for Central London, where footfall remains 80% lower than this time last year.

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