LVMH, Morrisons, Asda: 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.
LVMH reports record profits following boost to marketing spend
Luxury goods giant LVMH has reported record revenue and profits for the second year in a row, after increasing advertising and promotional spend by 25%.
Revenue for 2022 reached €79bn (£69.4bn), while profit from recurring operations hit €21bn (£18.5bn) – both up 23% compared to 2021. Sales rose 9% in the final three months of the year alone.
Total marketing and selling costs jumped 26% to €28.2m (£24.7m), amounting to 35.6% of revenue. This marks a 0.8 percentage point increase compared to the previous year. According to LVMH, the increase was largely a result of “higher communications investments” and the development of retail networks.
For analysts, LVMH’s earnings are viewed as a bellwether for the luxury market. All business groups achieved notable revenue growth over the year, with the fashion and leather goods division setting a new record as revenue grew 20%. The business hailed the role marketing played for a number of its key brands, including Berluti and Celine in fashion, Parfums Christian Dior and Parfums Givenchy in perfumes and cosmetics, and Chandon, Hennessy and Belvedere in wines and spirits.
Flagship designer label Louis Vuitton performed especially well, with revenue surpassing €20bn for the first time.
According to chairman and CEO Bernard Arnault, the business’s performance is evidence of the “exceptional appeal” of its brands and their ability to “create desire” amid challenging economic circumstances around the world.
“Our growth strategy, based on the complementary nature of our activities, as well as their geographic diversity, encourages innovation and the quality of our creations, the excellence of their distribution, and adds a cultural and historical dimension thanks to the heritage of our Maisons,” he says.
“We approach 2023 with confidence but remain vigilant due to current uncertainties. We count on the desirability of our Maisons and the agility of our teams to further strengthen our lead in the global luxury market.”
CMA to investigate ‘green’ marketing claims in FMCG
The Competition and Markets Authority (CMA) is cracking down on “greenwashing” in the FMCG sector, with plans to scrutinise the accuracy of brands’ environmental claims and ensure consumers aren’t being “misled”.
Any eco-friendly claims made online or in-store will be looked at to ensure brands are complying with UK consumer protection law. Enforcement action may be taken against any brands making unfounded claims, including investigations by the competition regulator into specific firms.
According to the CMA, “concerning” practices include “vague and broad” statements, such as marketing a product or range as ‘sustainable’ or ‘better for the environment’ without any evidence. The regulator also plans to investigate the veracity of claims about products’ recyclability and the use of recycled or natural materials within them.
Research from Mintel in 2021 revealed up to 91% of dishwashing products and 100% of toilet products are marketed as green or environmentally friendly.
“As more people than ever try to do their bit to help protect the environment, we’re concerned many shoppers are being misled and potentially even paying a premium for products that aren’t what they seem, especially at a time when the cost of living continues to rise,” explains the CMA’s CEO Sarah Cardell.
“Our work to date has shown there could be greenwashing going on in this sector, and we’ll be scrutinising companies big and small to see whether their environmental claims stack up.”
The commitment expands on the CMA’s ongoing work investigating greenwashing in marketing. Last year the regulator launched enforcement action against fashion brands Asos, Boohoo and George at Asda.
Morrisons’ sales and profits tumble after losing competitive edge on price
Morrisons’ struggle to keep prices low last year dealt a blow to the grocer’s financial performance, with group sales tumbling by 4.2% compared to 2021.
Underlying profits also dropped, down 15% to £828m. According to CEO David Potts, Morrisons felt last year’s sky-high inflation rate more acutely than the other UK supermarkets due to its vertically integrated business model, in which the retailer owns parts of its production process and supply chain. “This did have an impact on our pricing position,” he says.
However, since October the grocer has invested in a programme of “meaningful” price cuts, freezes and promotions. Sales improved sequentially over the last two quarters of the year, with sales in the three weeks before Christmas up 2.5% compared to 2021. Underlying profit grew 26% in the fourth quarter on a year-on-year basis.
A further 130 price cuts were made across Morrisons’ budget friendly Savers range earlier this month, as the size of the range was expanded. As a result, Potts says the grocer’s competitive position has “considerably sharpened”.
Priorities for the year ahead include further investment in price, expanding the store estate, and further developing the My Morrisons loyalty app. The retailer will also continue to convert McColl’s convenience shops into Morrisons Daily stores.
“Together I’m confident that these moves will enable us to make further significant progress in developing Morrisons into a broader, stronger, more accessible and more popular business,” Potts says. The grocer is predicting improved profitability this year.
Last year saw Morrisons supplanted as the UK’s fourth biggest supermarket on market share by discounter Aldi. Both Aldi and Lidl gained market share rapidly in 2022, increasing their combined market share to 16.3% in the 12 weeks to 26 December, according to Kantar, compared to 14% in the same period a year prior.
Both discounters also reported bumper Christmas sales. Lidl’s sales rose by almost a quarter (24.5%) compared to 2021’s festive season, while Aldi claimed its “best ever Christmas” with sales exceeding £1.4bn.
Asda to cut 300 staff and implement over 4,000 pay cuts
Almost 300 staff members in Asda supermarkets are at risk of losing their jobs, as the grocer proposes major changes to its night shifts, in-store pharmacies and Post Office outlets in a bid to cut costs.
As many as 211 night shift manager roles will be cut as Asda shifts the restocking of packaged and frozen goods into the daytime, while 4,137 employees will lose the night shift premium paid on top of their usual hourly rate.
Asda says the decision followed trials which showed increases in customer satisfaction and product availability, as more colleagues were on the shop floor during opening hours.
Meanwhile, seven of the retailer’s 254 in-store pharmacies are set to close due to “low customer usage”, affecting 48 hourly-paid staff members and 14 pharmacists.
Asda is similarly proposing a 25% reduction in opening hours for all 23 of its in-store Post Office branches, after a decline in customer numbers. Some 23 managers and 200 staff roles will be at risk.
“The retail sector is evolving at pace and it is vital we review changing customer preferences, along with our own ways of working, to ensure we are operating as efficiently as possible, so that we can continue to invest and grow our business,” says retail director Ken Towle.
“We are now entering a period of consultation with our colleagues on these proposals. We recognise this will be a difficult time for them and will do all we can to support them through this process.”
Disney teams up with Visa to celebrate 100th anniversary
The Walt Disney Company and digital payments provider Visa are partnering on a long-term campaign to celebrate Disney’s 100th anniversary in the EMEA region this year.
Visa, along with its issuing bank partners, will invest in “significant” above the line activity to promote unique rewards and experiences that its cardholders can unlock throughout the year. These offers include pre-sale offers for cardholders for Disney on Ice, 20% off shopDisney merchandise for select periods, and a range of prize packages throughout the year.
“We are proud to play a part in celebrating 100 years of Disney, inviting Visa cardholders across Europe to unlock magical rewards and experiences as part of this very special anniversary,” says Visa’s CMO of Europe, Kim Kadlec.
Disney is launching a number of experiences to celebrate the milestone, including a touring multimedia concert, travelling exhibition and a pop-up experience in the UK and other European markets.
Thursday, 26 January
Diageo commits to ‘strong’ marketing investment as profits soar
Diageo intends to invest “strongly in marketing” in 2023, as the drinks giant continues to reap the rewards of its focus on long-term growth.
The business ramped up its organic marketing investment by 6.8% to £1.58bn in the six months to 31 December, reflecting what Diageo describes as “strong, consistent investment” in its brands. The company now expects its marketing investment to grow ahead of sales growth for the second half of the 2023 financial year.
Reaffirming its commitment to investing in premiumisation, “strategic pricing”, marketing and innovation, the drinks giant says it will use its “deep understanding of consumers” to quickly adapt to changing trends and behaviours.
During the six-month period, Diageo notched up net sales of £9.4bn, an increase of 18.4%, which it attributes to its diversified footprint, “advantaged portfolio”, strong brands and push for premiumisation. Operating profit rose 15.2% to £3.2bn, with price increases and supply productivity savings offsetting the impact of cost inflation.
In Europe, marketing spend increased by 3% over the six months to 31 December, with a focus on key spirits brands, while in North America investment grew 2% to support sales growth in tequila and Canadian whisky. Within the Asia Pacific region, marketing investment grew 9% over the six month period, focusing on scotch sales across South East Asia, Greater China and India.
To support premiumisation, in Africa marketing spend grew by 8%, while in Latin America and the Caribbean marketing investment increased by 29%, ahead of organic net sales growth.
Overall growth was delivered across most categories, primarily scotch, tequila and beer, while ‘premium-plus’ brands contributed 57% of reported net sales and drove 65% of organic net sales growth.
According to chief executive Ivan Menezes, Diageo is 36% larger than it was pre-Covid. He explains sales growth has been supported by the company’s continued focus on “premiumising” its portfolio, bolstered by global premiumisation trends and demand for its ‘super-premium-plus’ brands.
Stating that winning “quality market share” is the key focus, Menezes praised the fact Diageo has gained or held share in 75% of total net sales value in its measured markets. The Diageo CEO says he remains confident in the resilience of the business to navigate the current macroeconomic volatility.
“We have delivered targeted price increases across all regions, enabled by our expertise in revenue growth management and supported by strong consumer demand for our brands,” he adds.
“This, combined with our culture of everyday efficiency, has allowed us to increase our investments. We are investing in world-class brand building, digital and data capabilities and our ambitious 2030 sustainability plan to create a stronger and more resilient business for the long term.”
Musk defends Twitter takeover and Tesla price cuts
Elon Musk has defended Tesla’s decision to slash prices, as well as his $44bn (£36bn) takeover of Twitter, claiming the electric car company is on course to become “the most valuable company on earth.”
On a call with analysts yesterday (25 January), the Tesla CEO said the company had notched up the strongest orders in its history in January, with orders now at almost twice the rate of production. This follows a decision to cut prices for its Model 3 car, from a starting price of £48,490 to £42,990, and Model Y Performance, which is down from £67,990 to £59,990.
The Tesla CEO argued demand will remain strong, despite inflation causing a contraction in the wider automotive market.
“Basically, price really matters. I think there’s just a vast number of people that want to buy a Tesla car but can’t afford it,” he said.
“These price changes really make a difference for the average consumer. And sometimes for those…who have a lot of money, they sort of forget about how important affordability is. And it’s always been our goal at Tesla to make cars that are affordable to as many people as possible, so I’m glad that we’re able to do so.”
However, Marketing Week columnist Mark Ritson believes discounting for the first time is effectively communicating the brand’s weakness to existing and future customers.
Total revenue rose 37% year on year during the fourth quarter of 2022 to $24.32bn (£19.7bn), with a net profit of $3.7bn (£3bn), up 59% on 2021. During the fourth quarter, Tesla produced more than 439,000 vehicles and delivered more than 405,000. Across 2022 as a whole, vehicle deliveries grew 40% year on year to 1.31 million.
Despite the reality of recession, Musk said he is convinced Tesla “will be the most valuable company on earth”, adding that the business has the “most exciting product roadmap of any company on earth by a long shot.”
When asked if his takeover of Twitter in October was harming the car marque’s brand image, Musk claimed his 127 million follower base on the social media platform is driving demand for Tesla.
“It might not be popular with some people, but for the vast majority of people, my follower count speaks for itself. I have the most interactive account – social media account – I think, maybe in the world, certainly on Twitter, and that actually pre-dated the Twitter acquisition,” said Musk.
“I think Twitter is actually an incredibly powerful tool for driving demand for Tesla. And I would really encourage companies out there of all kinds, automotive or otherwise, to make more use of Twitter and to use their Twitter accounts in ways that are interesting and informative, entertaining and it will help them drive sales just as it has with Tesla.”
He ended by claiming the net value of Twitter “is gigantic, obviously.”
Trump’s Facebook and Instagram suspension to end
Meta plans to end Donald Trump’s suspension from Facebook and Instagram in “the coming weeks”, claiming the public should be able to hear “the good, the bad and the ugly” of what politicians have to say.
In a statement, the company’s president of global affairs and former Liberal Democrat leader Nick Clegg, claimed social media is rooted in open debate and the free flow of ideas, describing the former US president’s expulsion from Meta platforms as an “extraordinary decision taken in extraordinary circumstances.”
Trump was indefinitely suspended from Facebook and Instagram following what Clegg describes as “his praise for people engaged in violence” at the US Capitol on 6 January 2021. Meta’s oversight board upheld the decision, but criticised the open-ended nature of the ban.
As a result, the social media giant decided the suspension would last two years from 7 January 2021 and has now ruled the risk of letting Trump back onto its platforms has “sufficiently receded”.
The former president will, however, face “heightened penalties” for repeat offences. In the event he posts further content violating Meta’s standards, he will be suspended for between one month and two years, depending on the severity.
If, for example, Trump posted content delegitimising an election, Meta may choose to limit the distribution of these posts, temporarily restrict access to its advertising tools, remove the reshare button or stop them being recommended or run as ads.
“We know that any decision we make on this issue will be fiercely criticised. Reasonable people will disagree over whether it is the right decision,” said Clegg.
“But a decision had to be made, so we have tried to make it as best we can in a way that is consistent with our values and the process we established in response to the oversight board’s guidance.”
Kimberly-Clark to take ad spend ‘back to 2020’ levels
Kimberly-Clark intends to return advertising spend to 2020 levels, after admitting pulling back “slightly” over the past couple of years as the business encountered “challenges”.
Speaking on an investor call yesterday (25 January), CEO Mike Hsu explained retail customers are “excited” by the innovation and commercial ideas the business is bringing to the table, which has spurred the decision to increase ad spend.
“They want us to bring it. And so that’s probably the bigger reason why we’ve ticked up the investment in our advertising,” he said.
Kimberly-Clark expects marketing, research and general spending to be up year on year in 2023, driven by continued investment in the business, including higher ad spend, as well as inflation. The company spent $916m (£742m) on marketing, research and general expenses in the three months to 31 December, up 1% on the same period in 2021.
For the year period, spend on marketing, research and general expenses increased 5% to $3.58bn (£2.9bn).
Describing himself as not a fan of driving business through promotion, Hsu explained retailers are concerned about offering value for their customers and are looking for long-term plans to grow the category, rather than price increases.
“We can do it [promotion] effectively, because we know our ROIs on trade promotion as well as we know our advertising ROIs. Now the returns on both are okay. I like the advertising ones better. And so that’s kind of my go-to. And I think it’s better for the long-term health of the brand,” Hsu added.
During the fourth quarter, Kimberly-Clark notched up net sales of $5bn (£4bn), even with the year prior, with full year 2022 net sales up 4% to $20.2bn (£16.4bn). Outside North America, organic sales rose 3% in developing and emerging markets, and 11% in developed markets, during the fourth quarter.
Operating profit reached $712m (£577m) in the fourth quarter and $2.68bn (£2.17bn) over the 2022 full year. According to Kimberly-Clark, its results benefited from higher net selling prices, a “favourable product mix” and $115m (£93m) generated in cost savings.
Inflation impacts ad spend forecasts despite ongoing Covid recovery
UK advertising spend rose by 4.3% to £8.5bn between July and September 2022, the ninth consecutive quarter of growth as the industry bounces back from the pandemic.
According to the latest quarterly data from the Advertising Association/WARC Expenditure Report, the UK ad market is expected to grow by a further 3.8% in 2023 to hit £36.1bn, following an estimated 8.8% rise in 2022.
While the projection for 2023 is on par with the previous forecast published in October 2022, this equates to a 3% real terms decline taking into account inflation. The AA/WARC forecasts for the coming year show reduced growth expectations for almost all sectors of advertising.
Figures for the first nine months of 2022 confirm ad spend was up 10.8%, with the total standing at £25.3bn. Spend on cinema advertising increased 148.1% year on year during the third quarter, with spend on out-of-home up 13.2%.
Spend on search rose 7.7%, equating to almost 40% of total ad spend during the quarter. Social media, included within online display, continued growing (up 4.4%), while broadcast video on-demand (BVOD) spend rose by 4.3%.
Spend did, however, fall for both national (11.2%) and regional (10.4%) newsbrands, while investment in radio was down 7.5%.
The AA/WARC have now revised 2022 projections, with preliminary estimates putting growth at 8.8% last year, a downgrade of 0.4 percentage points from October. After accounting for inflation, real growth was thought to have been flat in 2022, at -0.1%.
Looking ahead to the fourth quarter, ad spend is estimated to have grown by 4% to £9.5bn, buoyed by Christmas and the FIFA Men’s World Cup. This growth is, however, half a point behind previous forecasts.
AA chief executive, Stephen Woodford, pointed to the ad industry’s post-Covid recovery, with investment continuing to hold up.
“However, the economic pressures of 2022, including high inflation’s impacts on the wider economy and on media costs, means in real terms spend is likely to be flat. These pressures all contribute to slower growth projections for the year ahead,” he explains.
Wednesday, 25 January
EasyJet sees strong demand and bookings despite cost of living crisis
EasyJet expects to exceed market profit expectations this year, despite an “uncertain” macroeconomic environment, as it reports strong demand for both its airline and holiday business.
In its first quarter trading update issued today (25 January) EasyJet reported it has seen “record” revenue booking days over January across both its airline and its holiday business.
The business says EasyJet Holidays is “the UK’s fastest growing major holiday company”. The holiday business delivered £13m in profit in the first quarter, versus a £1m loss in the same period the year prior.
The business reports its holiday business is now 60% sold for the summer, based on the previous expectations it would grow by 30% year on year. EasyJet now expect the holiday business to grow by 50% compared to its 2022 financial year. Growth in the business will be supported by investment into marketing and advertising as part of its turn-of-year sale.
In the airline business, revenue per seat increased 36% year on year. It flew 20.2 million seats in the first quarter, up by almost 5 million from the same period in 2022 when it flew 15.5 million. It has added 11 new UK routes to holiday destinations.
Overall, the quarter saw the business decrease its headline losses before tax to £133m, versus £213m in the same quarter last year.
“We have seen strong and sustained demand for travel over the first quarter, carrying almost 50% more customers compared with last year,” says EasyJet CEO Johan Lundgren.
“Many returned to make bookings during the traditional turn of year sale where we filled five aircraft every minute in the peak hours, which culminated in three record-breaking weekends for sales revenue this month.”
Boots launches ‘biggest ever’ savings
Boots is expanding its own-label essentials range, extending its Price Lock promise and launching new promotions in a bid to help its customers save money this winter.
The retailer claims this represents its “biggest ever bundle of savings”. It has extended essentials range ‘Boots Everyday’, which was launched in September 2022, to include 60 more product lines.
Products new to the range, which is priced between 50p and £2.50, include Boots own-brand vitamins, skincare such as face wash and cotton pads.
The retailer has also updated its Price Lock promise initiative to include more essential items. It has done this in partnership with charity The Hygiene Bank, which is committed to ensuring people have access to the hygiene products they need. The prices of the 400 lines which fall under the promise will be frozen until at least April.
Boots claims it has over 1,300 promotions and deals each month. This month has also seen it launch an additional ‘save up to half price on the brands you love’ promotion. The retailer says it has used customer research data to identify the most popular brands among customers and is offering discounts of up to 50% on these lines, which include Soap & Glory, Dove and Maybelline.
“It is more important than ever for us to offer winter savings to help our customers through the cost-of-living crisis,” says chief customer and commercial officer Steve Ager.
Saga launches media brand to help position as ‘superbrand’
Saga has announced the launch of ‘Saga Exceptional’, a media brand targeted at the “significantly under-served” over 50s market.
The financial services and travel business is aiming to become a “superbrand” for older consumers, whom it terms the “experience generation”. The new media brand is designed to be a place where over-50s can “be seen and heard”.
The company hopes the website, along with its wider media proposition, will increase the volume of interactions with its consumers, from once or twice a year to every day. It also hopes to win new customers and forge commercial relationships through its media arm.
Saga plans to grow its media arm to 10 million global customers within five years and to generate £50m of new revenue across five years to 2027/2028.
In a Capitals Market Event yesterday (24 January) the brand also laid out plans to better utilise its data and insight to understand its consumers. Last year, the brand acquired specialist research business The Big Window, which focuses on understanding the ageing process.
“As a business, we understand this generation better than anyone else – and as they change and adapt, we will build on this knowledge and continue to serve older people better than anyone can. This is a group which has, too often, been overlooked or misrepresented,” says group CEO Euan Sutherland.
“By fully leveraging insight and data and building a bespoke media business, we are focused on providing the services and products that matter to our customers, while, at the same time, moving Saga to a business with high customer engagement and a higher purchase frequency.”
Mini-heater ads banned for misleading consumers
The Advertising Standards Authority (ASA) has banned four ads for mini-heaters over misleading claims the products offer an affordable alternative to gas central heating.
It is particularly important advertisers do not misled consumers in the current cost of living crisis, says the ASA, when people are increasingly looking for ways to economise.
The regulator sought the views of the Energy Saving Trust on these ads. The Trust pointed out gas currently costs less than electricity and that it’s more efficient to heat a room with one radiator than with a plug-in mini-heater.
None of the companies behind the four ads responded to the ASA’s concerns. All four ads also used the same images to depict the products, despite being from different companies.
Alongside its rulings on the four ads, the ASA has issued a warning to advertisers that it “won’t hesitate to ban ads” if they are taking advantage of people’s concerns during the cost of living crisis.
“We’ll be keeping a close eye on claims around how consumers can save money on their bills, especially heating,” says ASA investigations executive Ben Redknapp.
Innocent becomes fertility friendly workplace
Innocent Drinks has introduced a set of policies to become a ‘fertility friendly’ workplace, including introducing extra leave days for those going through the process and enhanced flexible working.
Employees at Innocent undergoing fertility treatment will have access to set paid leave days for every cycle of treatment. These days will be separate to any other kind of leave available to employees. Partners of those undergoing treatment will also have access to additional leave.
“Going on a fertility journey can put people under a lot of pressure. Which is why we want to be as accommodating as possible,” Innocent wrote in a tweet announcing its new policy.
The policy, which was formulated by Innocent’s parents and carers groups, also allows for enhanced flexible working for those in the process of fertility treatment. The brand says these policies are not just in place for those with identified fertility issues, but also for same-sex couples and lone parents who want the chance to start a family.
The business has also introduced changes in its offices. It has introduced a dedicated quiet area to take personal phone calls and a separate fridge for employees to store medication in.
Tuesday, 24 January
Spotify to cut 600 jobs
Music streaming platform Spotify has become the latest tech business to confirm it will be laying off staff, after its CEO and cofounder, Daniel Ek, admitted to expanding too quickly.
Around 600 jobs will be affected as part of the decision, some 6% of its overall workforce.
In a blog post, he told staff the company had been guilty of trying to grow too quickly during the pandemic. He said Spotify had been “too ambitious” in investing “ahead of our revenue growth”.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” he added.
Chief content and advertising business officer, Dawn Ostroff, who is responsible for signing exclusive podcast content from the Obamas, Kim Kardashian and the Duke and Duchess of Sussex, is leaving the company as part of the shake-up.
Spotify follows a host of other tech firms in making layoffs. On Friday Google’s parent company Alphabet confirmed it would be cutting around 12,000 jobs, 6% of its workforce. Likewise Microsoft has said it will be laying off 10,000 jobs, 5% of its workforce. Amazon, Facebook owner Meta and Saleforce have also said they will be making significant job cuts to lower costs in recent weeks.
READ MORE: Spotify to cut 600 jobs after CEO admits to expanding too quickly
Tesco boss accused of living in a ‘parallel universe’ over price row
Tesco’s chair is facing a backlash after accusing food companies of using inflation as an excuse to bump up prices further than necessary.
John Allen told the BBC on Sunday it was “entirely possible” food producers were taking advantage of the poorest in society. He said Tesco was trying “very hard” to combat gratuitous price rises and had “fallen out” with “a number of suppliers” as a result.
Heinz beans and ketchup were temporarily removed from Tesco’s shelves last year in a row over pricing, for example, with Allen saying on Sunday “if you don’t want to pay £1.70p for… soup in Tesco or any other supermarket, there are own-label alternatives”.
The National Farmers’ Union hit back yesterday, accusing Allen of “living in a parallel universe”. The union’s president Minette Batters told BBC radio she was “slightly baffled” by the comments.
Meanwhile, retail analyst Ged Fetter, who is a former senior buyer at rival Asda, branded Allen’s comments “outrageous”. He said it was “disingenuous” to suggest suppliers might be “profiteering” at this time given some retailers have been raising their prices above the rate of inflation.
Elsewhere, the Food & Drink Federation (FDF) said the Tesco chair’s comments were “difficult” given the suppliers it represents have seen a “massive” rise in their costs.
“Most supermarkets are asking suppliers to open their books to justify exactly line-by-line where the cost increases are coming in,” FDF boss Karen Betts told the BBC’s Today programme. “So I think it is difficult for Tesco to come out and say they think companies might be profiteering.”
READ MORE: Food suppliers hit back at Tesco chair in price hike row
Twitter being sued over unpaid rent in UK
Twitter is being sued by the Crown Estate, which oversees the property portfolio owned by the King, for reportedly not paying rent on its London headquarters.
Court lists seen by news agency Reuters show the case against Twitter was filed at the High Court in London last week.
The Crown Estate has subsequently said the action relates to “rental arrears” on office space near Piccadilly Circus in London.
Twitter has not responded to requests for comment.
When Elon Musk acquired the social media firm for £44bn (£36bn) in October he immediately cut more than half Twitter’s global workforce of around 7,000, with 2,300 staff remaining today.
READ MORE: Crown Estate sues Twitter over alleged rent arrears for UK HQ
Spare cash drops by £40 for least affluent households
The UK’s least affluent households have seen their spare cash fall by £39 per month, an 8.3% drop, as a result of rising food inflation.
Middle income households are £40 worse off each month, a 3.7% decline in discretionary spend.
Conversely, the latest Retail Economics Cost of Living Tracker shows the wealthiest 20% of households are seeing record earnings growth, resulting in a boost of £36 per month.
The cost of living crisis has had an impact on the way different households shop too, with lower income households returning to in-store shopping more so than wealthier families.
“Freezing temperatures across the UK are focusing minds on the cost of energy and the squeeze on their budgets, with many adapting their shopping behaviour as a result,” says Richard Lim, CEO of Retail Economics. “There continues to be an uneven impact across affluence groups and the wealthiest are actually seeing their discretionary spending power rise on the back of record earnings growth, while the least affluent see their spare cash eroded by inflation.
“This will play out differently across the market with many trading down, delaying expenditure where possible and cancelling some purchases altogether. Meanwhile, luxury spending is likely to remain more isolated from the impact leaving mid-tier retailers particularly exposed.”
British Gas launches ‘money saving’ campaign
British Gas has launched a brand platform designed to help consumers save money amid sky-high energy bills.
The campaign focuses on the energy firm’s 7,500-strong team of engineers who it is dubbing ‘Money Saving Engineers’ and the products and services consumers can use to manage their household bills.
As part of the push, British Gas is also launching a savings calculator, which allow both customers and non-customers to see a clear breakdown of how they could save money after answering a few questions.
The Money Saving Engineers campaign, which was created by The&Partnership with media by OMD, comes after research shows one in two people continue to feel anxiety about being able to pay their bills.
Andy Freeman, marketing director at British Gas says: “Our expert engineers… have the experience, skills and tech to help save our customers money which, right now, is more important than ever. Putting them at the front and centre of the work, and capturing their positive and proactive attitude, were priorities for us on this campaign.”
Monday, 23 January
Twitter to introduce higher priced subscription with no ads
Elon Musk has tweeted that Twitter will be introducing a “higher priced” subscription that will have “zero ads”.
“Ads are too frequent on Twitter and too big. Taking steps to address both in coming weeks,” he tweeted on Saturday.
It comes after the company was reportedly hit by a 35% revenue drop in Q4 2022, amid a cutback in spending from advertisers, according to the Information.
Meanwhile reports suggest a 40% drop in revenue year over year, after a Twitter manager told staff revenue was 40% down on Tuesday (17 Jan) compared with a year ago.
Advertising is Twitter’s main source of income, accounting for 90% of 2021’s $5.1bn (£4.1bn) revenue.
READ MORE: Twitter hit by 40% revenue drop amid ad squeeze, say reports
Morrisons introduces fresh price cuts
Following news in early January that Morrisons was investing £16m to cut prices across a range of products, the supermarket has confirmed a second wave of price cuts.
Fresh price cuts will impact 820 products across a range of categories, such as meat, fruits and vegetables and confectionary, alongside household items, as rising costs and food inflation continue to have an impact on consumers.
The cuts in total average around 20%, and Morrisons says the reductions will be locked in for at least two months, according to the Grocer.
Morrisons CEO David Potts says the cuts demonstrate the supermarket chain’s “continued commitment” to doing all it can to help consumers with their grocery shopping costs.
“In addition to the cuts we made to the Savers range at the start of the month and then our fuel promotion, we’re now cutting the price on even more popular products to help make a positive difference to the pockets of our customers,” he adds.
READ MORE: Morrisons launches second wave of January price cuts
Google cuts 12,000 jobs as it faces ‘a different economic reality’
Alphabet, Google’s parent company, is cutting around 12,000 jobs as it becomes the latest tech giant to announce mass layoffs, following Microsoft, Meta, Amazon and Twitter in recent weeks.
In a company memo on Friday (20 January) CEO Sundar Pichai explained the layoffs, which will impact 6% of Google’s workforce, as he referenced the company’s “dramatic growth” in the last two years. “To match and fuel that growth, we hired for a different economic reality than the one we face today,” he said.
Google is looking to refocus attention on AI, with Pichai calling the company’s investment in it a “huge opportunity”.
“As an almost 25-year-old company, we’re bound to go through difficult economic cycles. These are important moments to sharpen our focus, re-engineer our cost base, and direct our talent and capital to our highest priorities,” he added.
Pichai said the cuts will affect “Alphabet, product areas, functions, levels and regions”, while the impact on the company’s marketing function is not yet known.
Google’s news comes just days after Microsoft announced similar job cuts. Layoffs at Microsoft will amount to around 10,000 jobs, 5% of its workforce.
“We’re living through times of significant change and as I meet with customers and partners, a few things are clear. First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimise their digital spend to do more with less,” said Microsoft CEO Satya Nadella.
UK consumers spent £110.6bn online in 2022
Following online shopping’s pandemic boom, new figures show online spending was up 42.3% in 2022 against 2019’s figures.
However, UK consumers spent less online in 2022 compared with 2021, with an 8.6% drop, according to the research from Adobe.
While spending took a hit, basket sizes grew from an average of 3.3 items in each online order in 2021, to 4.3 in 2022. Adobe suggests heavy discounting from retailers and consumers searching for deals and offers amid a cost of living crisis is responsible for the drop in spending.
Consumers largely shopped using their mobile devices, with more than half (56.8%) making purchases on smartphones, a 10.9% increase year on year.
“The digital economy remains strong, but to weather the cost of living crisis in 2023, businesses must be mindful of how they price and promote products and services to increasingly cost-conscious consumers,” says Abobe UK’s vice-president and managing director, Suzanne Steele.
UK recession could be worse than expected, says EY
Impending recession in the UK could be twice as bad as previously forecasted, say economic forecasters at EY.
While in October 2022 the business consultancy predicted a 0.3% contraction in gross domestic product (GDP) for 2023, today the company’s forecast suggested a drop of 0.7% this year, followed by 1.9% growth in 2024 and 2.2% in 2025.
“The UK’s economic outlook has become gloomier than forecast in the autumn, and the UK may already be in what has been one of the mostly widely anticipated recessions in living memory,” says EY’s UK chair and managing partner, Hywel Ball.
He adds that while upcoming recession could be worse than previously forecast, that it would not last longer than previous suggestions indicated, calling that the “one silver lining”.
“The economy is still expected to return to growth during the second half of 2023 and has been spared any significant new external shocks in the last three months from energy prices, Covid 19 or geopolitics,” Ball adds, noting that the main economic headwind, inflation, “may be starting to retreat”.
READ MORE: Impending UK recession could be twice as bad as anticipated, say analysts