Tesco, M&S, Wickes: 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.

Wickes hails a younger consumer base

Home improvement retailer Wickes claims it is attracting a younger cohort of consumers, helping to boost its outlook.

The company reported its like-for-like sales rose 3.5% in its 2022 financial year. Its sales are up almost a quarter (22.8%) on pre-pandemic levels. Its revenues also grew 1.8% to a “record” £1.56bn.

CEO David Woods told media the brand’s fastest-growing cohort of customers is now 18- to 35-year-olds. Wickes launched an Ebay store in the year, which it says has extended its reach to younger consumers. It has also introduced buy-now-pay-later provider Klarna as a payment option in a bid to appeal to younger and female customers.

“People that don’t own their homes are actually improving the home they rent and live in,” he says.

While the company has reported core sales for the first 11 weeks of 2023 are “moderately behind” the same period in 2022, it has expressed confidence in its prospects for the year ahead.

“We remain confident in our ability to drive further market share gains given the strength of our proposition and improvements we have made to our offer,” Wood says.

The retailer also reported it grew the proportion of its sales in 2022 which are “digitally-enabled”, despite less impact from the pandemic in the year.

Wickes credited its digital campaigns with driving these channels in the year and noted its wins at the Marketing Week Awards in the year. It was the most decorated brand at the 2022 awards, with its results show its marketing spend remained flat as a percentage of sales in the financial year.

Bank of England boss warns brands against raising prices

Bank of England governor Andrew Bailey has warned companies that raising prices is likely to “embed” inflation in the UK and harm the “least well off”.

“If all prices try to beat inflation we will get higher inflation,” he claimed, speaking to the BBC Radio 4 Today programme.

He said companies should be mindful that inflation is likely to drop rapidly this year. If businesses continue to raise prices, interest rates will go up again, he claimed.

Yesterday (23 March) saw the Bank of England raise interest rates by 0.25% to 4.25%, the highest level in 14 years. The rise came after an unexpected rise in inflation in February, driven by increased prices.

Bailey did acknowledge he had not yet seen evidence of companies putting prices up more than they needed to.

Martin Williams, the CEO of Rare Restaurants, a group which includes brands such as Gaucho and M, told the BBC businesses had already held back on passing on their costs to the consumer during inflation.

“If restaurants had reflected the increased ‘costs they face’ in the past year as Mr Bailey suggests, a simple side salad would be priced at £20,” he said.

Tesco’s rapid delivery service Whoosh exceeds roll-out target

Tesco has now rolled out its rapid delivery service Whoosh to 1,000 stores across the UK.

The retailer had set a goal to roll out the service to 800 of its stores by the end of February 2023; however, it has exceeded that goal by 25%.

The service was first launched in May 2021 and is now available from half of Tesco Express convenience stores. It allows customers to order grocery items from a curated list and receive them in as little as 30 minutes. Delivery is set at £2.99 for orders which cost £15 or more.

The brand claims it has improved the service since its launch, with new features on the app including 15-minute delivery estimates and driver tracking. Satisfaction scores have increased 30% in the year.

While Tesco has reported its rapid delivery service is growing ahead of expectations, the wider sector has struggled in recent times. Rapid grocery service Gorillas was acquired in December 2022 by rival Getir amid a trend of consolidation in the market.

Meanwhile food delivery service Deliveroo, which also offers rapid grocery delivery, announced last month it was making 9% of its workforce redundant, stating that it had grown too quickly during the pandemic.

Independent convenience stores struggle to compete with big brands’ loyalty offerings

Prices at independent convenience stores have risen less than at multiples, but independents are struggling to keep pace with discounts offered by the big chains.

Tesco Express prices rose 13% between November 2021 and January 2023, according to an audit carried out by data and digital company TWC. By comparison, independent convenience store prices have risen by 11%. At the time the research was carried out, prices at the Tesco convenience stores were essentially on par with those in independents.

However, Tesco’s ‘Clubcard Prices’ initiatives mean it is offering discounts in its convenience formats of up to 35%, something which many independents are struggling to keep pace with.

TWC development director Tom Fender suggests tactical promotional activity could be an option.

“Promotions can encourage a number of behaviours – from driving footfall; increasing spend once shoppers are in store; trialling categories they didn’t intend to purchase; and encouraging trade up to better and best tiers,” he says.

However, he adds research from TWC shows those shopping in independent convenience stores are by no means driven solely by price.

“Therefore, these stores do not need to be the cheapest all of the time,” Fender says.

Phone interviews carried out by TWC indicate independent convenience retailers are trying to offer better service (93%), supporting local charities (83%) and offering a wider range of cheaper products (78%) to attempt to remain competitive against the chains.

Marks & Spencer launches spring style campaign

M&S has launched its 2023 spring style campaign, which has been launched under its ongoing brand platform ‘Anything But Ordinary’.

The campaign is designed to showcase M&S’s style offering for the whole family, with an increased emphasis on kids and menswear. It will include specific menswear ads. The retailer is aiming to reaffirm its strength in these categories through the focus.

The ad which leads the campaign is soundtracked by upbeat 80s synth-pop track Enola Gay by Orchestral Manoeuvres. It is designed to showcase M&S’s spring style offering, which has been created around the diverse lives of its customers.

The ad will play across TV in 10- and 30-second formats. The campaign will also go out across channels including print, digital OOH, in-store and paid and organic social channels. It will run until 19 April.

“This is the second time a spring campaign has been born out of our brand platform, Anything but Ordinary, which, since it first launched, has helped us increase style perceptions across all departments,” says M&S clothing and home marketing director Anna Braithwate.

“Our latest collections are made up of considered pieces that offer the versatility and everyday style we know our customers are looking for and that will drive brand appraisal during the Spring/ Summer months.”

Wednesday, 22 March

Tesco makes changes to Clubcard, cutting points value

Tesco is cutting the value of its Clubcard rewards scheme for customers. Under the current scheme, Clubcard points are worth three times their value when cashed in for rewards with Tesco partners, such as Pizza Express. But from 14 June, points will drop to be worth twice their value.

Alessandra Bellini, Tesco’s chief customer officer, says the changes will “make sure we can continue to provide you with a wide range of exciting rewards, whilst keeping our product prices low”.

Amongst the changes, Tesco is extending the time rewards are valid for, from six months to a year.

“Clubcard unlocks the best value from Tesco – from thousands of exclusive deals through Clubcard Prices, to money off your groceries and fuel, or accessing double the value of your vouchers with more than 100 Clubcard Reward Partners,” says a Tesco spokesperson.

Suntory Beverage & Food hires new marketing director

Suntory Beverage & Food GB&I has appointed Elise Seibold as its marketing director, replacing former marketing director Hannah Norbury after she departed the business in February. Norbury is now marketing director for Western Europe at Molson Coors.

Seibold moves into the marketing director role following 19 years with the business across its brand marketing, commercial and innovation teams. The company’s brands include Lucozade Energy, Ribena and Orangina.

She initially joined the company in 2004 as an assistant brand manager working on Schweppes, before rising to become Schweppes’ marketing director for Europe, a post she’s been in since 2020.

As part of the promotion, Seibold will be relocating from France to the UK.

“I’ve always loved the unique heritage of Lucozade and Ribena and couldn’t pass on the opportunity to lead the marketing of these two iconic brands. Lucozade’s brand purpose around unlocking potential is a space where we can deliver some real impact and I’m equally excited to unpack the brand love for the British household staple that is Ribena,” she says.

“I can’t wait to bring my experience from the wider European business to help the teams deliver above and beyond on their plans and grow the brands even further this year.”

Google rolls out its AI chatbot to over-18s

Google has launched its AI chatbot, Bard, as the tech giant looks to rival the likes of OpenAI’s ChatGPT.

The chatbot is currently available to just 10,000 “trusted” US and UK users while Google gets it ready for wider public use. However, Google account owners can sign up to the waiting list.

“Even after all this progress, we’re still in the early stages of a long Al journey. As more people start to use Bard and test its capabilities, they’ll surprise us,” Sundar Pichai, Google and Alphabet CEO, said in a letter to employees.

“Things will go wrong. But the user feedback is critical to improving the product and the underlying technology,” he added.

This launch comes after Google’s initial press conference in February was widely criticised, as the promotional material used by the company highlighted errors in the AI’s answers when it gave incorrect information about the James Web Space Telescope.

Bard features a disclaimer that says it “may display inaccurate or offensive information that doesn’t represent Google’s views”.

Just Eat to cut 1,900 jobs as it makes changes to how couriers operate

Just Eat is cutting 1,870 jobs in the UK. The takeaway delivery company will stop employing its own couriers and will use contractors instead, alongside 170 operational role layoffs.

The impacted employees work for Just Eat’s Scoober service, which launched in late 2020 and offered drivers hourly wages, sick pay and pension contributions.

“Just Eat UK is reorganising and simplifying its delivery operation as part of the ongoing goal of improving efficiency,” the company says. “As part of this process we have proposed to transition away from the worker model for couriers.”

The changes come following a 10% drop in UK and Ireland orders for Just Eat in 2022. However, revenues were up 6%, largely due to restaurants increasing their prices.

UK inflation rises to 10.4%

Despite three months of consecutive easing, inflation rose to 10.4% in February.

The increase was driven by rising food and dining costs. For January, inflation was at 10.1%.

Higher food costs in February came as “no real surprise”, says Grant Fitzner, chief economist at the Office for National Statistics. He added, however, that “what people hadn’t been expecting is first that we’ve seen an increase in the price of alcohol in pubs and restaurants in February after some discounting.”

Clothing prices, particularly for children and women’s clothes, were also higher, contributing to the rise, he says.

Tuesday, 21 March

VW’s plan to exit Russia stalled after Russian court freezes assets

A Russian court has frozen all Volkswagen’s assets in Russia over a dispute with one of its contractors, hindering the car maker’s efforts to wind down its operations in the country.

The German car marque suspended operations in March 2022 when Russia first invaded Ukraine and has been trying to sell its Russian assets for the past year.

This includes its flagship plant in Kaluga, which has production capacity for 225,000 vehicles a year and one in Nizhny Novgorod, which VW had contracted Russian auto maker GAZ to operate.

However, when VW terminated the production agreement with GAZ in August the latter issued a lawsuit looking to halt any sale by VW, suggesting its attempts to leave Russia put its own business at risk.

GAZ is now seeking 15.6 billion roubles (£164.9m) in damages over the terminated contract, with a Russian court agreeing yesterday to freeze all VW’s assets in Russia until the dispute is resolved.

VW said it was surprised by the decision as it felt the partnership with GAZ had “ended on mutually-agreed terms”.

“We are aware of the claim from GAZ and are familiarising ourselves with the case materials,” it told Reuters.

Amazon slashes another 9,000 jobs

Amazon has trimmed a further 9,000 roles from its global workforce, with the latest round of cuts mostly affecting its cloud services, advertising and Twitch livestreaming teams.

It takes the total job losses to nearly 30,000 since the beginning of the year, with the online retailer slashing more than 18,000 roles in January, shortly before revealing 1,200 workers at three UK warehouses would be made redundant.

Amazon employs more than 1.5 million people globally, with CEO Andy Jassy telling workers about the most recent cuts in a letter, explaining the firm had been forced to make cuts to headcount given the uncertain economy.

Last week, Meta confirmed it was cutting a further 10,000 jobs after initially slashing 11,000 roles from its workforce in November. Twitter has also made substantial cuts to its workforce since Elon Musk acquired the company at the end of last year.

Theo Paphitis owned Boux Avenue appoints CMO

Lingerie retailer Boux Avenue, which is owned by former Dragon Theo Paphitis, has appointed Jason Beckley CMO.

He brings with him a wealth of fashion and retail experience having worked in senior marketing roles across brands including Alexander McQueen, Ralph Lauren, Alfred Dunhill and most recently as chief customer, marketing and digital officer at Ted Baker.

Prior to this he worked as a brand, marketing and consumer strategy consultant, before which he spent more than three years as chief brand officer at Clarks.

At Boux Avenue he will be responsible for developing and delivering the brand growth strategy, driving brand advocacy and powering sales across both the store portfolio and online.

Paphitis believes Beckley’s depth of experience will be able to “guide the brand through the next phase of its evolution”.

Beckley says he feels “inspired and motivated” by what Paphitis and the team have built. “It really is very unique in the retail sector to see such a definitively digital driven operating model,” he adds. “This will unlock the potential and give us the opportunity to go on and define the category.”

BBC asks staff to delete TikTok

The BBC has urged staff to delete Chinese-owned social media platform TikTok from corporate devices over “privacy and security” fears.

It comes days after the UK government banned the app on work phones amid concerns sensitive information could be being accessed by the Chinese government.

The BBC said the decision had been made “based on concerns raised by government authorities worldwide regarding data privacy and security”.

It told staff: “We don’t recommend installing TikTok on a BBC corporate device unless there is a justified business reason. If you do not need TikTok for business reasons, TikTok should be deleted.”

The BBC also suggested that those with TikTok on their personal phones should contact the organisation’s security team for guidance, if they also used the phone for work purposes.

The BBC does have a TikTok channel and employs a team of four to operate it.

Captain Morgan launches biggest ever responsible drinking campaign

Diageo has launched a global campaign for rum brand Captain Morgan as it looks to make responsible drinking a “social and cultural norm”.

‘Enjoy Slow’ features singer and rapper Bree Runway performing a slowed down version of 1990s classic Rhythm of the Night and encourages people to moderate their drinking.

The campaign forms part of Diageo’s Spirit of Progress goal to reach 1 billion people with moderation messages by 2030.

“We want to use the power of our marketing and partnerships to make responsible drinking celebratory and a social and cultural norm,” explains Samori Gambrah, global brand director of Captain Morgan.

“The Enjoy Slow campaign is all about people setting their own pace and not being afraid to say no to a drink or another round.”

The campaign, which features digital and broadcast executions, will initially launch in Great Britain and South Africa before being rolled out across Eastern Europe and the rest of the world. It is expected to deliver more than 163 million impressions in the UK and South Africa alone.

Enjoy Slow was developed in collaboration with Vice Media Group’s creative agency Virtue Worldwide and produced by Pulse Films.

Monday, 20 March

John Lewis considers moving away from total staff ownership

John Lewis is exploring a potential move away from its 100% staff ownership model, in a bid to drive investment in the business.

The business hopes to raise up to £2bn by selling a minority stake in the business, reports The Sunday Times. The company’s chair Sharon White would use the money raised to invest in areas such as technology, data analysis and Waitrose’s supply chain, the newspaper says.

However, the BBC cites sources from the business who say discussions of diluting the famous employee-ownership model are only in the “very, very early stages” and may not actually happen.

Under the current ownership structure, staff own the whole of the business and benefit from any profits. Occasionally, this can result in big windfalls for staff. In 2008, the profits generated meant staff received a sum equivalent to about 10 weeks’ pay as a bonus.

Last week, the John Lewis Partnership reported a £234m loss for 2022. For the year ending 28 January 2023, total sales were down 2%, reflecting “strong sales” at John Lewis and a decline of 3% at Waitrose. Staff did not receive any bonus for the year.

However, the group has insisted its five-year transformation plan is still “on track” despite the loss, which was only its second ever.

Mars chief executive: Attacks on purpose are ‘nonsense’

The new chief executive of Mars has defended the environmental and social commitments made by businesses, stating purpose and profit are not “enemies”.

Poul Weihrauch became CEO of Mars, which owns brands such as M&M’s, Pedigree and Dolmio, in September. Speaking to the Financial Times, he said company purpose was important to attract young talent to businesses.

In recent years businesses’ ESG commitments have become politicised, Weihrauch told the FT, but “quality companies are deeply invested in this”, and young employees want to see these initiatives from the businesses they work for. He called controversy around these commitments, “nonsense conversations”.

The M&M’s brand had previously generated controversy when it tweaked the mascots it uses to advertise. Commentators such as Fox News anchor Tucker Carlson had branded the changes as “woke”. The brand played on the controversy in its Super Bowl ad last month.

The ad has performed extremely well for the brand, generating 25 billion impressions, Weihrauch said.

“There’s lots of sales and it’s difficult to keep up with the orders,” he said.

He was also bullish about future growth prospects for Mars, claiming the company’s sales “could well double in a decade”.

Meta launches paid subscription service in the US

Meta has launched a subscription service, which will allow users to pay for verification on Instagram and Facebook, in a similar vein to Twitter.

The service will cost $11.99 (£9.82) per month on web and $14.99 (£12.28) on Apple’s iOS system or Google-owned Android systems. Users will be able to use a government ID to verify their account and then have a blue tick displayed beside their name.

Snapchat, Telegram and Twitter already have similar paid subscription services in place. Many social media companies have seen a decline in advertising sales in recent times and have moved to diversify revenues.

Twitter Blue was introduced in November after Elon Musk’s purchase of the service. It saw the blue tick, which had previously been limited to public figures and official accounts, rolled out to those who paid for the Twitter Blue subscription service.

Its initial introduction saw a spike in people impersonating brands and celebrities on the service. The service was paused and then reinstated several weeks later.

British households are £4,000 per year worse off than those in Germany

Households in the UK are £4,000 per year worse off than those in Germany, finds research from the Resolution Foundation.

In 2008, the gap between British and German workers’ household income was over £500. That gap has almost multiplied by eight since, finds the research from the think tank, shared with the BBC’s Panorama programme.

British workers have been adversely impacted by stagnating wages. If wages had continued to rise at the rate they had before the 2008 financial crisis, the average UK worker would make £11,000 per year more than they do now, finds the research.

The Resolution Foundation’s chief executive Torsten Bell says the wage stagnation the UK is experiencing is “almost completely unprecedented”.

“This is definitely not what normal looks like. This is what failure looks like,” he says.

While, last week, chancellor Jeremy Hunt, delivered a relatively optimistic budget in which he claimed the UK economy is “proving the doubters wrong”, most UK adults are downbeat about what lies ahead. Around two-thirds of UK adults think the economy is going to get worse in the coming year, finds polling from Ipsos.

Derry Girls launch Tourism Ireland’s new brand proposition

Tourism Ireland has launched the first iteration of its new brand proposition, with star-studded videos featuring Derry Girls’ actresses and Sharon Horgan.

The “What Fills My Heart?” proposition, created by Publicis.Poke, draws on insight around the importance of reviews and recommendations and the emotional pull of visiting Ireland, which cannot be quantified.

The campaign will run for three years, with different iterations released over time where advocates of the country share what fills their hearts when they’re in Ireland.

The platform launches with two videos. The first comes from actor, writer and director Sharon Horgan, known for the TV show Catastrophe. Horgan highlights the idiosyncrasy and humour of the Irish people in her advert.

In the second ad, Derry Girls’ actresses Saoirse-Monica Jackson and Jamie-Lee O’Donnell take viewers on a trip around their favourite places in Northern Ireland. The ad ends with the actresses declaring the trip is “absolutely cracker”.

“What sets Ireland apart? The people. That’s what this campaign is all about – personified through the brilliant stories told by Sharon Horgan, Saoirse-Monica and Jamie-Lee,” says Tourism Ireland’s head of brand and marketing communications Elmagh Killeen.

“Our aim in moving from key Irish locations to instead showcasing our rich culture will represent the human connection we so often feel after visiting somewhere as characterful as Ireland.”