Tesco maintains outlook for the year despite ‘changing customer behaviour’
Tesco says it is beginning to see “indications of changing customer behaviour” due to inflation and the cost of living crisis.
The supermarket’s first quarter 2022/2023 like-for-like sales in the UK were down 1.5% compared to the same period last year. It largely attributes this to strong comparisons last year as lockdowns were still boosting sales.
Tesco notes that, in particular, sales in general merchandise, clothing and online were down compared to lockdown comparators. It says the drop in sales was partly offset by inflation.
Tesco’s sales remain up compared to pre-pandemic levels; in Q1 it saw its UK sales rise 8.1% compared to 2019/20 levels.
The retailer’s outlook for the year remains unchanged, despite chief executive Ken Murphy striking a cautious note about the future.
“Although difficult to separate from the significant impact of lapping last year’s lockdowns, we are seeing some early indications of changing customer behaviour as a result of the inflationary environment,” he says.
“Customers are facing unprecedented increases in the cost of living and it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible.”
Murphy points to Tesco’s Aldi Price Match and Low Everyday Prices value propositions as ways in which the supermarket is retaining customers during the cost of living crisis. Overall distribution of these ranges is up 19% year-on-year.
Tesco also pointed to Kantar figures showing that it has seen market share growth of 37 basis points as evidence that consumers are sticking with the supermarket despite cost of living challenges.
Proposed changes to data protection legislation welcomed
The Data and Marketing Association (DMA) has welcomed the government’s response to a consultation on proposed data protection legislation, which it says “will establish a better balance between data-driven innovation, economic growth, and privacy protections across the UK”.
The UK had committed to the reform of the data protection regime, which has been in line with the European Union’s General Data Protection Regulation (GDPR) since its introduction in May 2018. The government reiterated this commitment in May during the Queen’s speech. At the time, the DMA welcomed the commitment to reform but expressed concern “the data, marketing and creative industries remain in limbo” over a lack of detail.
Today, the Department for Digital, Culture, Media and Sport (DCMS) published the results of a consultation it had launched on the proposed reform. The DMA, which represents 1,000 businesses, welcomed the majority of the key reforms proposed in the consultation response.
The proposals welcomed by the DMA include removal of the consent requirement for audience measurement cookies, and extension of the soft-opt in for email to charities and other not-for-profit organisations. The organisation also welcomed proposals to protect consumers from cold-callers, and maintaining the opportunity for customers to seek a human review of an automated decision that creates a ‘legal’ effect.
However, the DMA was not entirely uncritical of the DCMS’s response to the consultation.
“Not every recommendation made by our member organisations has been adopted, so we will continue to seek greater clarity in the final legislative texts around the use of legitimate interests, particularly by giving legal certainty to Recital 47,” DMA CEO Chris Combemale says.
Recital 47 is an article enshrined in EU legislation that states the “legitimate interest” of the controller may constitute a legal basis for processing the data of a data subject, so long as it does not outweigh that individual’s rights and interests.
Revlon files for bankruptcy
Beauty business Revlon has filed for Chapter 11 bankruptcy in the US. Revlon is a 90-year-old business, and owns brands including Elizabeth Arden, Cutex and Mitchum.
Revlon’s business has been hit by mounting debts, supply chain issues and increasing competition from newer brands. As of the end of March this year, the business had long-term debt of $3.31bn (£2.43bn).
“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” says Revlon CEO Debra Perelman.
The company says it expects to receive $575m (£466.6m) from its existing lenders to support day-to-day operations.
Perelman also says that the business’s “challenging capital structure” had curtailed its ability to deal with ongoing macro-economic issues.
The company has experienced shortage issues that have affected its sales. By contrast, competitor Coty, which owns brands like Rimmel and Max Factor, has gained market share recently through investment to keep products in-stock.
Revlon’s market share fell 22% in 2021 from its 2017 levels. The pandemic had a detrimental effect on its business, as consumers wore less makeup at home and forewent lipstick while wearing masks.
Even prior to the pandemic the business was facing stiff competition from newer beauty brands, like Kylie Jenner’s Kylie and Rihanna’s Fenty Beauty. These celebrity-backed businesses typically need to spend less on marketing than traditional rivals like Revlon, as they already have high profiles on social media.
Revlon’s shares on the New York stock exchange dropped more than 13% after the announcement that it had filed for bankruptcy.
WFA to launch global Charter for Change at Cannes
The World Federation of Advertisers (WFA) is launching a global diversity, equality and inclusion (DEI) Charter for Change at Cannes Lions.
The charter is aimed at improving the lived experiences of multiple groups working within the industry. The actions are based on the findings of the WFA-led Global DEI Census, which found one in seven members of the industry say they could leave their company or industry due to a lack of diversity and inclusion.
The WFA identifies 11 action areas for change, falling under three groupings. There are four actions at a leadership level, six to tackle challenges faced by specific groups who have been found to have a worse lived experience, and one around mental health.
The actions at leadership level include the promotion of a diverse and transparent leadership team. While the actions to tackle challenges faced by underrepresented group include aiming to benefit those of diverse age, race and ability.
“Many people in marketing, both at brands and at agencies, are still having a poor lived experience in their workplaces,” says the WFA’s CEO Stephen Loerke.
“Most of the issues are global and therefore we call upon all multinational organisations to implement real change across all the markets where they operate. We believe that these actions could create real improvement. The time for that change is now,” he adds.
Practical suggestions of how to implement these action areas are given in the charter, taken from other members of the industry, which organisations can “steal and implement”.
The global Charter for Change will be officially launched at Cannes Lions, and the WFA will organise sessions based around discussing the charter and the results of the global DEI census.
Aldi launches transitioning guides to support transgender colleagues
Aldi has launched a series of guides, aimed at supporting its transgender employees who are either undergoing transition or have already transitioned.
The guides, launched as Pride month continues, are part of Aldi’s wider ‘Embrace’ diversity and inclusion strategy. This strategy is aimed at ensuring the supermarket is a respectful and positive place to work for people from all walks of life.
As well as containing advice for transgender colleagues undergoing, or who have undergone gender transition, the guides also give tips for leaders and co-workers at Aldi on how to ensure that their colleagues can return smoothly to work.
“We believe colleagues should feel confident to bring their truest selves to work, and hope the launch of these guides will help anyone who has transitioned, is going through a transition or considering it, to feel safe and supported in doing just that,” says Aldi UK’s diversity and inclusion director Richard Shuttleworth.
The guides were created with input from colleagues across Aldi, including store assistant Kimberly Taylor.
“I’ve worked at Aldi for over three years and during that time have started to transition. Throughout this experience my team have been so supportive of me, helping me to feel confident and accepted every step of the way,” Taylor says.
“The creation of the gender transition guides, when coupled with the care and support provided, makes it clear that my wellbeing and acceptance is a priority for Aldi,” she adds.
Aldi are also celebrating and recognising its LGBTQ+ community by participating in upcoming Pride parades in Birmingham and Manchester.
Thursday, 16 June
Boohoo sees ‘promising signs’ despite falling sales
Boohoo believes there are “promising signs” it is making progress towards its strategic priorities, despite seeing sales dip 8% to £445.7m in the three months to 31 May.
This revenue figure is, however, up 75% over the three-year pre-pandemic period, which Boohoo says reflects “multi-year market share gains” across the group portfolio.
In the UK, sales fell 1% during the quarter to £272.1m, although this figure is up 94% compared to 2020 levels. The picture is less encouraging across the rest of Europe, with revenues down 9% on last year to £49.6m, and significantly worse in the US, where sales fell 28% to £95m compared to 2021. The business claims its international performance during the quarter continued to be affected by increased delivery times.
Boohoo’s growth is strongest beyond Europe and the US, with rest of the world sales rising 15% over the period to £29m, driven by wholesale.
The retailer points out that gross demand growth remained positive, up 9% year on year, although net sales have been impacted by the “ongoing normalisation of returns due to product mix change.” Boohoo says underlying gross demand remained strong over the three months to 31 May – up 21% – prompting the retailer to claim its “leading proposition” is resonating with customers.
Amid the “significant inflationary backdrop”, the business says “improved marketing efficiencies” and scaling of acquisitions are two ways it is tightly managing costs.
Boohoo continued to increase its sourcing from near-shore markets to reduce its exposure to elevated inbound freight costs, resulting in a 10-percentage point increase in its short-lead time product mix compared to last year. The business has also tried to “tightly” control its stock levels during the quarter.
However, Boohoo admits pandemic-related and inflationary factors continue to negatively impact costs within its supply chain and its “international competitive proposition”. Looking ahead, the retailer expects revenue growth for the 2023 full year to be in the low-single digits, with a return to growth during the second quarter and growth rates improving in the second half of the year.
CEO John Lyttle says he is “pleased” with the progress Boohoo is making towards its strategic priorities and sees “promising signs” from the group’s sales performance in the UK.
“We are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands,” he adds.
“Looking forward, we will continue to focus on optimising both our financial and operational performance to ensure the business is well placed to take advantage of future growth opportunities.”
Sainsbury’s ramps up Aldi price war
Sainsbury’s is pledging to match rival Aldi on its 20 bestselling lines, with clearer in-store signs and posters planned to help customers compare the lowest prices.
The supermarket has 250 products price-matched to the German discounter, a percentage that will “continue to grow” amid the cost of living crisis, the Telegraph reports. The ‘Aldi Price Match’ campaign, which launched in February 2021, currently accounts for more than 6% of the retailer’s volume sales.
Sainsbury’s is currently matching Aldi on the price of chicken breast at £3.50, with a 500g pack of beef mince down to £1.89. Products such as butter, onions, oven chips, iced lollies and cauliflower are set to be added to the campaign.
Last month Sainsbury’s committed to pump more than £500m into cutting prices, with Aldi Price Match, the ‘Price Lock’ campaign, which holds the prices of more than 1,800 essential items for at least eight weeks, and ‘Sainsbury’s Quality’ key areas of investment.
“With costs going up, we’re working hard to keep our prices low,” says food commercial director Rhian Bartlett.
“Customers are watching every penny and we are making it easier for them to buy what they need in our stores. Clearer in-store signs and posters will help customers compare the lowest prices – because we know that really matters to people right now.”
The news comes as analysis from the Institute of Grocery Distribution suggests the price of essentials such as bread, meat, dairy and fruit and vegetables could rise by 15% this summer.
Ikea maps out further withdrawal from Russia
Ikea is taking new steps to scale down its presence in Russia and Belarus as the war in Ukraine rages on.
Calling out the “terrible impact” the war has had on people’s lives and the unfolding “human tragedy”, the Swedish retail giant says that since pausing operations in Russia and Belarus on 3 March circumstances have not improved. Ikea has so far guaranteed six months’ salary for all employees, as well as maintaining core benefits.
However, noting that businesses and supply chains worldwide have been heavily impacted by the war, the brand does not believe it will be possible to resume operations any time soon.
Describing the decisions as being “guided” by its brand values, Ikea’s parent company Ingka Group plans to sell its home furnishing inventory in Russia and find new owners for its four factories in the region.
In addition, the import and export of Ikea products to and from Russia and Belarus will remain on pause, while two purchase and logistics offices in Moscow and Minsk owned by Inter Ikea will close permanently.
Ikea is not the only international brand to signal a permanent withdrawal from Russia. Last month McDonald’s exited the country after 30 years, selling its chain of 850 fast-food restaurants to Siberian billionaire Alexander Govor. The outlets have since been rebranded to Vkusno & tochka, which translates to ‘Tasty and that’s it’.
Spotify to slow hiring by 25%
Streaming giant Spotify is set to reduce new hires by 25% amid fears of recession. A memo, seen by Bloomberg, confirmed the slowing of recruitment, although it is unclear which areas of the business will be impacted.
According to financial documents, Spotify increased its headcount by 18% in 2021 to more than 6,600 employees.
Despite drawing attention to the brand’s growing success at an investor day last week, chief financial officer Paul Vogel pointed to certain operating expenses Spotify chose to “pursue more aggressively”.
“This was mainly headcount in R&D, as well as a step up in marketing. The increase in headcount began toward the end of last year and continued into the first part of this year. And on the marketing side, we identified a number of markets where we believe we could accelerate our growth to gain meaningful share,” said Vogel.
“With that being said, we are clearly aware of the increasing uncertainty regarding the global economy. And while we have yet to see any material impact to our business – we are keeping a close eye on the situation and evaluating our headcount growth in the near term.”
At the time, Spotify’s CFO described the situation with marketing as “more fluid”, with plans to evaluate the level of marketing spend going forward given the current economic environment.
Spotify is far from alone in reviewing its hiring practices. In May, Twitter announced it was temporarily pausing hiring and reviewing all existing job offers amid its troubled proposed takeover by Tesla CEO Elon Musk.
Last month Meta also revealed it was freezing hiring and pulling back investments in several products, including the teams set up during the onset of Covid to compete with Zoom and build shopping features. Likewise, in May Netflix made around 150 US staff redundant after losing subscribers for the first time in a decade.
ITV promises ‘re-imagining’ of streaming proposition
ITV is promising the “complete re-imagining” of its existing catch-up service ITVHub when its new streaming proposition ITVX launches in late 2022.
At point of launch, the broadcaster is pledging more than 9,000 hours of content including 35 flagship shows, more than 250 films, 200 series and 150 plus hours of true crime. Hoping to take on the likes of Netflix and Disney+, ITVX will screen dramas with at least six months exclusivity on the platform before debuting on wider ITV channels. The broadcaster is also set to launch one flagship show a week on the new streaming service.
The company plans to win over fans by launching the full series of upcoming flagship ITV shows on ITVX on the first day of broadcast to encourage binge viewing. Furthermore, the broadcaster says it is positioned to offer the UK’s largest free film library.
While ITVX is a free streaming service, viewers can subscribe to watch ad free. The idea is to offer customers the option to view ad free for a limited monthly fee, while a subscription would also give viewers access BritBox, the streaming service from the BBC and ITV.
The launch of the revamped ITVX comes at a time when streamers are feeling the pressure. In May, Disney announced it was adding an ad-supported tier to its Disney+ service, the plan being to show on average four minutes of ads an hour. It is thought Disney’s ad-supported service will launch in the US in the last three months of 2022, rolling out globally in 2023.
Likewise, rival Netflix is positioned to launch an ad-supported tier in the final three months of this year following slowing subscriber growth.
Wednesday, 15 June
Paddy Power ad banned for encouraging socially irresponsible gambling
The Advertising Standards Authority (ASA) has banned an advert from betting firm Paddy Power for encouraging repetitive and frequent gambling.
The ad, which was released in March this year, showed a young man gambling on Paddy Power in the presence of his girlfriend’s family. In the ad, the woman asks him: “Do you think I’ll end up looking like my mum?”
He replies “I hope so” while distracted by the gambling app, before the ad features the voiceover: “So no matter how badly you stuff it up, you’ll always get another chance with Paddy Power games.”
Complaints were raised about the ad encouraging socially irresponsible gambling behaviour, and whether the ad showed someone so occupied by gambling that they made an inappropriate comment because gambling was taking priority.
The ASA banned the ad on these grounds, citing the CAP and BCAP Codes that require ads to not portray gambling as indispensable or as taking priority in life, such as over family or friends.
The advertising regulator recognised the ad was “light-hearted” in tone, but said most viewers would understand the man behaved inappropriately because of gambling.
Paddy Power refuted the complaint that gambling was taking priority in the young man’s life, and said the ad scenario was “relatable” to the average viewer.
The decision comes following the ASA’s April announcement of tougher restrictions on gambling ads to protect under-18s, which will come into effect in October this year.
Tesco, P&G and Google amongst brands championing UK advertising’s ‘All In’ initiative
‘All In’, the UK advertising initiative led by the Advertising Association, the Incorporated Society of British Advertisers (ISBA) and the Institute of Practitioners in Advertising (IPA) to encourage workplace diversity has announced its first roster of companies “championing” the cause.
The companies, which include Tesco, P&G and Google as well as the likes of Specsavers, TikTok and Pinterest have all provided evidence that they are successfully implementing All In’s guidance.
The qualifying brands and agencies have been seen to have adopted the first six actions from All In’s action plan: improving the experience and representation of black talent, disabled talent, working-class talent, women, Asian talent and older talent.
The initiative was first launched in June last year, following the Inclusion Working Group’s report that found just 1% of black talent are in C-suite positions, compared to 3% of the general UK population, and that disabled talent was underrepresented, while those whose parents had professional backgrounds were “significantly” overrepresented.
“We have been working closely with our members to ensure the All In Action Plan is championed and implemented across our industry. It is fantastic to see so many companies engaging to show what they are doing to create more inclusive and representative workplace,” says the Advertising Association’s commercial director and inclusion lead, Sharon Lloyd Barnes.
She adds: “This is just the first wave – submissions to become an All In Champion are ongoing and we will continue to celebrate all organisations who are advocating and implementing the action plan.”
UK retailers to face ‘profit crisis’ as consumers refuse to sacrifice quality
While inflation hits a 40 year high and the cost of living crisis continues, consumers, despite being increasingly driven by price, are unwilling to compromise on quality and ethics, according to new research from global professional services firm Alvarex & Marsal (A&M) and Retail Economics.
More than half (57%) of consumers say the cost of living crisis will have the biggest impact on their expectations of retailers and brands in the next year, with a third (37%) being primarily driven by price.
At the same time, 36% say quality is the most important factor in their purchasing decisions, and 83% of consumers are unwilling to sacrifice quality for lower prices.
Moreover, the majority of consumers (85%) are unwilling the compromise on a brand’s ethical credentials, and half of consumers (48%) will pay more for sustainable products.
But 37% expect “high ethical standards” but are “unwilling” to pay for them, putting the pressure on retailers and brands to consider their own actions more.
The research suggests these factors are leading to a “profit crisis” for retailers, with the long term trend suggesting declining margins. It cites data that while in the last decade UK retail sales have risen by 35.7%, profits have fallen by 10.9% too.
“As costs rise and competition intensifies, consumer-facing companies are having to transform in order to stave off a profit crisis,” says A&M managing director and head of retail, Europe, Erin Brookes.
“They are going to have to work even harder to drive efficiencies and appeal to an ever changing and more demanding consumer. To be successful, they need to align themselves with the new realities consumers are facing, whether that’s expanding value ranges or offering products and services which help to address issues like energy usage,” she adds.
Superdrug launches employer campaign to celebrate colleague diversity and attract talent
Superdrug has launched a new employer brand ‘where you can be you’ to highlight the “vibrancy and diversity” of its colleagues and retail careers.
The high street health and beauty retailer aims to raise awareness of the different roles it has on offer, showing colleagues ranging from a clinical nurse adviser to its apprentices and head office to highlight its diversity.
The campaign material includes phrases such as “one of the best things you do is to just be you” and “they make everything achievable”.
“We nurture and develop talent across all of our teams and to hear the lovely stories in our campaign makes me feel really proud to be part of such an incredible business. I really hope this campaign encourages others to join our team,” says Superdrug people director Amy Davies.
She adds that the retailer is particularly passionate about offering young people opportunities, and states how the brand’s apprenticeship scheme, in its 15th year, is key to that.
“Our aim is to not only to give young people, but everyone, the best entry into retail that we can, but also to help them grow and develop in their roles, so they choose to progress their careers within our businesses,” she says.
Co-op puts own brand at the centre of new TV ad
Co-op is highlighting how its own brand products give back to local communities in the retailer’s new summer TV ad.
The ad, created with agency Lucky Generals, emphasises the link between Co-op’s food and the communities the business supports, from apprenticeships to mental wellbeing services and Community Fridges.
Co-op worked with the Diversity Standard Collective (DSC) on the campaign process to ensure the work was authentic and representative of the communities it is showcasing.
“We know that delicious food and drink is at the heart of our summer get togethers with friends and family and it tastes even better knowing that all our customers can help support community groups and programmes across the UK,” says Co-op customer and community director Ali Jones.
She adds that local community groups are a “vital lifeline” to many people, and the Co-op is “committed to building stronger and more resilient communities” with the funds raised by its products.
The campaign launches today, and the full 60 second ad will debut during Channel 4’s Gogglebox TV break on 17 June.
Tuesday, 14 June
Tesco accused of ripping off Lidl’s logo
Lidl is taking Tesco to court, accusing its supermarket rival of copying its logo to promote its Clubcard Prices loyalty offer.
Tesco advertises the promotion using a yellow circle on a blue background, which Lidl claims is a rip off of its own logo.
It is accusing Tesco of “seeking deliberately to ride on the coattails of Lidl’s reputation as a discounter supermarket known for the provision of value”, explained Mrs Justice Joanna Smith in the pre-trial hearing.
Meanwhile, Tesco has described the accusation as a “figment of Lidl’s legal imagination”, according to court records.
Lidl first went to court last year over the apparent similarity of the logos and is trying to ban Tesco from using its logo in future.
The two supermarkets are expected to spend nearly £1.2m each on the trial, which the judge said shows “how key this brand dispute is to both parties”.
Mother to donate first year profits from clients who eschew full pitch
Mother is launching an initiative to help curb the “relentless pitching merry-go-round”, by offering to donate the first year of profit from clients who appoint the agency without a full creative pitch.
As part of its Pitch It Forward initiative, first year profits from all new retained clients that appoint Mother after a chemistry meeting will be given to not-for-profit organisations focused on inspiring future generations around creativity.
The move is one way Mother is looking to support its newly-launched mission to ‘Make our children proud’, through which it looks to encourage more young people into creative industries and shake up conventional business practices.
Chris Gallery, partner at Mother London, says: “After 25 years of pitching at Mother, deep down – no matter how hungry we are for it – we know the creative advertising pitch process is a time consuming and sadly sometimes wasteful exercise.
“The best work always comes out of strong relationships with clients, built on shared values, ambition and purpose. So why don’t we aim to build these strong relationships – and the basis for a successful partnership – earlier in the pitch process? For some clients, we believe we can and asked ourselves: what if we used the remainder of that ‘pitch time’ for good?”
The unveiling of Mother’s Pitch It Forward follows the launch of the Pitch Positive Pledge, an initiative spearheaded by ISBA and the IPA to help ensure all pitches are necessary, efficient and take mental health into consideration.
Brands including Boots, British Gas, NatWest and Samsung have all officially pledged their commitment towards making pitches more positive, with Boots’ CMO Pete Markey arguing there is “no reason” for other brands not to sign up.
Lloyds to give staff £1,000 to help with cost of living
Lloyds Bank is giving its more than 64,000 staff members a one-off payment of £1,000 to help them manage the rising cost of living.
The payment will be made in August and comes after union Unite staged a demonstration at Lloyd’s annual general meeting last month.
Unite general secretary Sharon Graham describes it as an “important step” in changing the bank’s pay structures.
“Staff will welcome the £1,000 bonus but there is still a long way to go to eradicate low pay in what is one of the economy’s most profitable sectors,” she adds.
UK grocery market expected to grow 11.3% in 5 years as cost of living crisis shifts focus
The UK grocery market is expected to grow 11.3% between 2022 and 2027, jumping from £216.8bn to £241.3bn in five years’ time. And while inflation will drive the majority of growth this year (predicted to be at 3.5%), this will moderate from 2023 onwards.
The data from IGD shows the war in Ukraine is also having an impact, with UK supply chains disrupted and food prices expected to increase by 8.9% in 2022.
While growth is forecast across all channels, discount stores are expected to benefit the most from shoppers’ desire to save money.
It means ‘discount’ as a category is likely to grow at the fastest rate over the next five years. It is predicted to grow by 23.9% between 2022 and 2027, adding 7.1bn to its value.
Meanwhile, online is expected to grow by 22.6% to £5bn, as the focus for this channel shifts to profitability, and convenience is predicted to rise by 13% to 5.9bn. Supermarkets are expected to grow by 6.2% to £5.7bn, while hypermarkets – large store formats that dedicate a large portion of floor space to non-grocery items, will rise 5.2% to £0.9bn
Caroline Myers, director of retail analysis at IGD, says: “The outlook has changed most for larger stores, where we expect more competitive pricing and the development of more inspirational store formats to achieve growth, while convenience is well placed to build on the growth achieved during the pandemic. After largely holding on to sale gains from Covid, service investments and the rollout of rapid delivery will boost the online channel further.
“Many shoppers on tight budgets will adopt a more for less mentality – managing their spend closely by trading down to cheaper ranges and pack sizes, switching brands for private label and seeking out the best promotions. Shopping will also be more planned, with many switching to more overtly value-focused retailers.
“Retailers’ sales will however be supported by shoppers eating out less often, building demand for at-home entertaining and premium meal solutions.”
Starling Bank diversifies product offer with move into mortgages
Digital challenger Starling Bank has agreed to buy a mortgage book worth around £500m as it looks to broaden its assets beyond government-backed Covid loans.
The bank’s last accounts show it lent a total of £2.3bn to the end of June, £2.2bn of which was related to bounce-back loans and the coronavirus business interruption scheme.
In order to diversify its offer, Starling is buying the loan portfolio from specialist lender Masthaven, according to the Financial Times, citing people familiar with the matter.
The challenger already acquired Fleet Mortgages in July last year for £50m in cash and shares, and there is speculation it has shown interest in a £1bn mortgage book being sold by Kensington, which Barclays has also reportedly shown interest in.
Monday, 13 June
Russia unveils brand to replace McDonald’s
Russia has reopened its first rebranded former McDonald’s restaurants, following the complete withdrawal of the fast food giant from the country in protest against the continuing invasion of Ukraine.
The restaurants will operate under the new name ‘Vkusno i Tochka’, which translates as ‘Tasty and that’s it’. A new logo replaces McDonald’s Golden Arches, featuring a circle and two lines said to represent a burger and two fries.
On pulling out of Russia, McDonald’s sold its more than 800 restaurants to Russian businessman Alexander Govor. The business is now managed by the firm Sistema PBO, which has said the composition of the restaurants’ burgers has not changed and the McDonald’s equipment remains.
As the flagship store in Moscow reopened, the CEO of Vkusno i Tochka, Oleg Paroyev, said: “Our goal is that our guests do not notice a difference either in quality or ambience.”
The outlet sported a slogan reading: “The name changes, love stays.” However, according to the BBC a male protester interrupted the event, shouting “bring back Big Mac”.
As it withdrew from Russia last month, McDonald’s said the humanitarian crisis and “unpredictable” operating environment caused by the war meant continuing business in the country “is no longer tenable, nor is it consistent with McDonald’s values”.
Former John Lewis marketer Craig Inglis joins Sage
B2B financial technology business Sage has hired Craig Inglis as executive vice-president, global brand and integrated marketing, to work alongside CMO Cath Keers.
In his new role, Inglis says he will be on a “mission” to eradicate the term B2B, arguing that businesses are “full of human beings” and “it’s all about human to human”.
Inglis is best known as the former marketing boss of John Lewis, where he worked for 12 years. He joined the retailer in 2008 as head of brand communications, became marketing director in 2010, and joined the board as customer director in 2015. In the latter role he led a team of approximately 600 across the entirety of John Lewis’s customer proposition.
He oversaw an overhaul of the retailer’s customer and marketing strategies, including moving the brand into a more emotional positioning. Campaigns launched during his tenure have won numerous Cannes Creative Lions, Marketing Society and effectiveness awards. In 2018, Inglis led the rebrand of both John Lewis Partnership brands to become Waitrose & Partners and John Lewis & Partners.
He left the retailer in 2020 to explore new opportunities, including setting up a consultancy business and becoming non-executive chair of the Marketing Society.
Prior to John Lewis, Inglis worked at Virgin Trains for a decade, latterly as sales and marketing director.
Announcing the new role on LinkedIn, which he starts today (13 June), Inglis said he is “delighted” to move into the tech sector, adding: “I’ve been totally seduced by [Sage’s] mission to knock down barriers so everyone can thrive and to be the champion of small and medium sized businesses, the lifeblood of economies across the world.”
Thomas Cook unveils first major campaign since 2020 relaunch
Three years on from declaring bankruptcy, online travel agent Thomas Cook has today unveiled its first ad campaign since relaunching the brand in September 2020.
The fully-integrated campaign will see the brand return to TV and revive its famous strapline: ‘Don’t just book it, Thomas Cook it’. Activity will also run across radio, online video and digital display.
According to marketing director Ryan Cotton, the aim is to put Thomas Cook “back into the hearts and minds of the British public” as the easing of travel restrictions inspires many to consider holidaying abroad again.
Created by McCann Birmingham, the ad plays on the brand’s strapline with a catchy soundtrack, telling consumers to ‘try it’, ‘boss it’, ‘lounge it’, and ‘photo bomb it’. This is accompanied by shots of holidaymakers enjoying their time abroad.
“The new campaign demonstrates the fun and joy of a Thomas Cook holiday and reminds people that we’ve got something for everyone,” Cotton adds.
UK economic growth to stagnate next year
The Organisation for Economic Co-operation and Development (OECD) is forecasting growth of 3.6% for the UK economy this year, followed by 0% growth in 2023.
Among the G7 nations, which include the UK, US, Canada, Germany, Japan, France and Italy, the UK will drop from the second-fastest growing economy to the slowest next year.
The Paris-based think tank’s chief economist, Laurence Boone, told the BBC the UK was being hit by higher interest rates, higher taxes, reduced trade and more expensive energy and food. Inflation is expected to reach a peak of more than 10% at the end of this year, before declining throughout 2023 to 4.7%.
However, the report doesn’t take into account the emergency measures announced by chancellor Rishi Sunak at the end of last month, the BBC notes. Worth approximately £15bn in total, the measures include a £400 energy bill discount for every household in the UK.
Meanwhile, according to the Office for National Statistics (ONS), the UK economy shrank again in April, contracting by 0.3% after shrinking by 0.1% in March. This was driven by the impact that winding down the NHS’s Covid test and trace scheme had on the services sector.
EasyJet cuts flight schedule to limit travel chaos
EasyJet is pre-emptively pulling flights over the “coming days and weeks” to try and avoid the levels of disruption seen in the most recent school half-term.
Staff shortages meant thousands of travellers faced long delays and last-minute flight cancellations over the school break, which overlapped with the Jubilee bank holiday weekend. In a message to staff last week, seen by the Guardian, chief operating officer Peter Bellew said the airline is therefore reducing its schedule for the rest of June to “increase resilience across the network”.
An EasyJet spokesperson confirmed approximately 40 out of 1,700 flights a day would be affected.
Bellew said cancellations are not something EasyJet takes lightly. “But what’s worse is to cancel our customers’ plans on the day that they are ready to fly,” he added.
“We’re all aware of the impact the current situation is having on our customers, our people and our reputation.”