Amazon, BA, Manchester United: 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.

British Airways may permanently shut Gatwick base

British Airways may not reopen its base at Gatwick Airport, which has been shut temporarily since the end of March due to Covid-19.

In a letter to trade union Unite, the airline’s managing director for Gatwick Adam Carson says the business is at a critical juncture with regard to its structure and has little hope for an early recovery.

“There is a possibility that we will look to close our full LGW operation,” he says. “There is little prospect of early recovery even after the immediate health crisis subsides.

“We are now at a critical juncture and must table proposals for structural change so that our business is in a credible position to respond to what will be a challenging and uncertain trading environment for a sustained period of time.”

The letter also highlights how many of British Airways’s rivals are receiving subsidies and closing its Gatwick base will help it compete in the longer term.

“The resulting competitive environment will create a distorted market where some of those competitors will have the option to provide overcapacity and lower fares,” Carson says. “We consider that these changes would allow us to have a competitive and sustainable employee cost base, which would meet demand.”

Amazon’s first quarter sales surpass $75bn

Amazon’s sales were up 26% year on year to $75.4bn in the first three months of the year, however profit declined by 29% to $2.5bn.

The sales boom is equivalent to more than $33m an hour. Net sales rose to $46bn for the first quarter, up from $35.8bn for the same period last year, while the company’s web hosting service, Amazon Web Series, grew revenue by $10.3bn.

Amazon boss Jeff Bezos, whose wealth rose by $13bn this month to $145bn, has pledged to spend at least $4bn on coronavirus-related expenses, equal to the business’s profit for the next quarter.

Bezos says: “This includes investments in personal protective equipment, enhanced cleaning of our facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams, and hundreds of millions to develop our own Covid-19 testing capabilities.”

Initiative launches to support furloughed marketing professionals

The Institute of Data & Marketing (IDM) and DM Trust are launching a fund to support home learning for furloughed employees and those made redundant due to the coronavirus.

The ‘DM Trust Home Learning Fund’ initiative will give UK-based employees access to fully funded training and professional qualifications, including both online learning and virtual classroom options.

The DM Trust and IDM will initially invest £100,000 each in the new fund.

“We remain committed to supporting both marketing professionals and businesses during these challenging times,” says chair of the DM Trust, Matt Housden.

“With around 46% of companies furloughing staff, this presents an opportunity for individuals to upskill and keep their marketing minds fresh to remain effective on their return to work.”

Manchester United funds 60,000 meals for NHS staff

Manchester United is funding an initiative that will deliver 60,000 prepared meals for NHS staff across Manchester.

The meals will be delivered free-of-charge across four sites in Manchester over the coming weeks as part of the ongoing effort to tackle the Covid-19 pandemic.

The joint initiative with Manchester United Foundation, Mealforce and the club’s catering supplier Bidfood will involve more than 80 permanent and casual club staff who have volunteered to prepare the food in the kitchens at Old Trafford.

Staff and facility costs are being covered by United, while all other costs will be underwritten by the Manchester United Foundation.

“While many of our regular programmes have been disrupted by the pandemic, Manchester United Foundation is doing everything possible to continue helping the communities that we serve during this period of elevated need,” says the foundation’s chief executive John Shiels.

“Delivering meals to local hospitals is a wonderful initiative that unites the Old Trafford workforce in its support of the NHS; I thank everyone for their commitment to this inspiring scheme.”

Oasis and Warehouse to shut permanently

Administrators have been unable to save Oasis and Warehouse, meaning they will permanently close all their stores and online shopping site.

“Covid-19 has presented extraordinary challenges, which have devastated the retail industry,” says Rob Harding, a joint administrator at Deloitte.

“It is with great sadness that we have to announce a sale of the business has not been possible and that we are announcing so many redundancies today.”

More than 1,800 jobs have been lost. A further 42 head office staff remain in post under the administrators however their jobs remain at risk.

Thursday, 30 April

Next blames coronavirus for drastic sales drop

High street retailer Next has reported a 41% drop in sales for its first quarter to 25 April, saying that the ongoing effect of the coronavirus pandemic has been “faster and steeper” than expected.

A company statement said: “The fall-off in sales to date has been faster and steeper than anticipated in our March stress test and we are now modelling lower sales for both the first and second half of the year.

“We believe that the effects of the coronavirus will be felt for longer than we first anticipated.

“The economic consequences and continued social distancing will mean that both retail sales and online sales will be disrupted even after full lockdown measures have been lifted.”

Shares in the group fell 4% yesterday at the end of trading.

BBC News presenters star in short film

BBC News readers and presenters star in a short film reassuring viewers that “one day” the coronavirus pandemic will finally be over.

The spot will be shown across all of the BBC’s television channels and includes appearances from BBC News Political Editor Laura Kuenssberg, Question Time presenter Fiona Bruce, BBC Breakfast host Dan Walker, Radio 4 Presenter and BBC News Scotland Editor Sarah Smith and Radio 2’s Tina Daheley.

The film is part of the BBC’s Bringing Us Closer campaign that so far has included short films narrated by Idris Elba, Stephen Graham and Vicky McClure.

The aim is to show that BBC News is focused on the audience and is reporting and explaining the news “with humanity”.

BBC News editorial director Kamal Ahmed said: “BBC News has never had a more important role to play – millions are relying on our journalists and presenters to bring them trusted and accurate information throughout this crisis.

“We wanted our trail to remind those audiences that we are with them throughout this crisis, and that, ultimately, this destructive pandemic will pass.”

BBC News portfolio head of marketing Christine Woodman added: “We wanted this campaign to reassure our audiences across the UK that BBC News is there for them.

“Our leading team of journalists and presenters have demonstrated this and with their help we’ve created a heartfelt and optimistic film.”

Amazon tops BrandZ Top 75 Most Valuable Retail Brands

The third annual BrandZ Top 75 Most Valuable Global Retail Brands Ranking sees Amazon in first place, followed by Chinese tech multinational Alibaba and McDonald’s in third.

And the ranking shows a 12% increase in value among the world’s leading brands, now worth a combined $1.5 trillion (£1.2 trillion).

The report incorporates stock price performance from April 2020 to reflect the impact of COVID-19.

Costco, Target and Walmart all performed well, as did luxury conglomerate LVMH, reflecting brands’ ability to be both innovative and agile when responding to the lockdown.

CEO of The Store WPP EMEA and Asia and Chairman of BrandZ David Roth said: “The coronavirus crisis underscores the essential role that retail plays in both our daily lives and the overall global economy; we are seeing some heroic examples of retail companies stepping up to meet consumer need and keep the world turning.

“While this is a fast-moving and ongoing story, the report allows us to show the businesses that, having invested in becoming a strong brand, are potentially better able to withstand the current shock.”

Global strategy director BrandZ at Kantar Graham Staplehurst said: “Brand value isn’t just determined by financial performance, but also by reputation in the eyes of consumers.

“How retailers behave now in terms of helping people through the crisis, as well as the way in which they treat their staff and whether they comply with government and health advice, will be important to their survival.”

Facebook numbers up, but uncertainty remains

Facebook’s latest quarterly revenue results show “increased engagement” in life under lockdown, but the tech giant warns that record user numbers may not last in the long term.

It also reported an improvement in advertising sales over the past month, following a marked decrease in March.

However, with uncertainty still in the air, the company says that it won’t be able to provide any further revenue guidance for the remainder of the year.

Facebook reported three billion monthly users across its range of platforms, a 10% increase on the same quarter last year.

And there were 1.73 billion users active on Facebook daily, a rise of 11%.

Facebook CEO Mark Zuckerberg told investors the company was focused on keeping people “safe, informed and connected”.

Camden Town Brewery lager pays tribute to healthcare workers

The Camden Heroes lager, a rebranding of the popular Camden Hells beer, has been launched with all proceeds going to charity.

Camden will be donating 20,000 cans to frontline staff at hospitals, ambulance stations and clinics in London.

And all NHS workers will be able to claim a free six-pack by signing up to the Camden web shop, using their NHS email address and entering the HEROESFORHEROES at checkout.

Founder of Camden Town Brewery Jasper Cuppaidge said: “We had so many people contacting us from hospitals asking for beers to replace their weekly pub team visits.

“We were more than happy to help but wanted to do more.

“That’s why we created Camden Heroes Lager to say a massive thank you to the amazing healthcare workers and show our support the best way we know how, brewing beer.

“We are so grateful to all the incredible frontline workers risking their lives during this global crisis. Let’s raise a socially distant cheers to UK health workers.”

Wednesday, 29 April

Waitrose hires Sainsbury’s exec to guide it through Covid-19

Waitrose is hiring a former Sainsbury’s executive to steer it through the coronavirus crisis as its struggling parent, the John Lewis Partnership, works out a blueprint aimed at securing its long-term survival.

James Bailey is set to be announced as Waitrose’s next boss to replace Rob Collins, who stepped down after a restructuring last year.

Bailey worked for Sainsbury’s for 18 years, most recently as grocery buying director, before leaving the chain last year.

A source told Sky News that Bailey’s title might differ from that of Collins, who was the chain’s managing director, but that he would serve as a de facto replacement.

The appointment comes as the partnership considers how to manage the UK’s eventual exit from lockdown. Currently, its 50 John Lewis department stores are closed, although it is still selling online and the 350 branches of Waitrose are open. The partnership said last week that it would accelerate a strategic review announced in March, whose remit included “right-sizing” the store estate.

British Airways to cut 12,000 jobs

British Airways is set to cut 12,000 jobs as coronavirus grounds flights.

The airline’s owner, International Airlines Group (IAG), announced the planned job cuts as it revealed that revenues dropped by 13% in the first quarter of 2020. It does not expect passenger demand to return to 2019 levels for “several years”.

In a letter to staff, British Airways chief executive Alex Cruz wrote that there is no longer any ‘normal’ and that the airline cannot rely on taxpayer money to offset salaries indefinitely.

IAG says: “In light of the impact of Covid-19 on current operations and the expectation that the recovery of passenger demand to 2019 levels will take several years, British Airways is formally notifying its trade unions about a proposed restructuring and redundancy programme. The proposals remain subject to consultation but it is likely that they will affect most of British Airways’ employees and may result in the redundancy of up to 12,000 of them.”

Thousands of workers were placed on the government’s furlough scheme in early April covering up to 80% of their wages using public funding.

Charlotte Tilbury goes up for sale

Unilever, L’Oreal, and Estee Lauder are all looking to buy luxury makeup brand Charlotte Tilbury.

The brand, founded by the celebrity make-up artist of the same name, saw sales rise 44.5% to £145m in 2018, according to the most recent accounts.

Tilbury founded her namesake brand in 2013 after rising to fame working with supermodels including Kate Moss. Her high end brand is popular among beauty editors and celebrities alike with skincare as well as make-up in its product range.

The sale could be up to £1bn, with Tilbury possibly choosing a winning bidder as early as May.

Nando’s reopens for delivery while McDonald’s trials opening

Nandos is opening six restaurants for delivery after closing due to lockdown.

Last week, the chicken chain provided NHS workers and local charities with food but now it is opening some stores to the public for delivery.

Four restaurants in London and two in Manchester are opening at a reduced menu to ensure restaurants can stick to social distancing rules.

The restaurant teams will also be working with Deliveroo to make sure that deliveries are as safe as possible, with drivers and restaurants staff maintaining social distancing when collecting orders and contactless delivery will be available upon request.

The chain says that if this first phase of re-opening is successful then more restaurants will follow suit.

A spokesperson says: “Each Nando’s restaurant has been working under Public Health England guidelines for the past week on top of their existing health and safety procedures. Every member of the team has been washing their hands more frequently while maintaining social distance during shifts.”

McDonald’s is also testing reopening a UK branch this week. The fast food giant’s UK and Ireland chief executive, Paul Pomroy, says: “Restarting our business is not an easy task, even when reopening in a limited capacity. For now we remain closed, and will only reopen when we are absolutely confident we can have the right measures in place to ensure everyone’s well-being.”

Mondelēz sees sales surge while Starbucks drops as it works through ‘abnormal times’

As coronavirus drastically affects business across sectors Starbucks and Mondelēz saw drastically different sales.

Mondelēz, owner of Cadbury and Oreo, saw quarterly sales rise by 15% in North America, helping to lift overall revenue almost 3%.

The company’s chief executive Dirk Van de Put says: “We saw a significant increase in consumer demand for snacks in developed markets, particularly in North America, which more than offset a more challenging environment in several emerging markets,

However, despite the positive sales the company, like many others, withdrew its financial guidance for the year, citing uncertainty surrounding the virus.

In contrast Starbucks saw sales fall 10% – and 50% in China, where lockdown measures were in place for most of the quarter.

Starbucks has warned investors that disappointing sales will continue through the second half of the year as roughly half of its stores are closed in the US, and more than 75% in Canada, Japan and the UK.

However, the company said its experience in China gave it confidence that the disruption would be temporary. Nearly all of its more than 4,000 stores in China have re-opened with the company predicting sales to return to prior year levels by the end of September.

The brand has also seen a huge dip in marketing with the drinks giant’s COO, Roz Brewer, telling investors on a call: “We’re operating in an abnormal position in terms of how we communicate to our customers.”

Despite little to no marketing in areas with strict lockdowns, Brewer assured investors that “we’re doing a lot of new things with marketing” as measures start to ease in the US in some states.

She added: “We’ll have digital media. We’ll have TV. We’ll have paid social, owned and earned media. That all begins early next week. We’re also creating new e-mail contacts to each one of our members. So those 30 million that we can reach we will do that in the next week. And the most important thing is to let them know that we are open.”

Tuesday, 28 April

Betting brands pull TV and radio ads during lockdown

UK gambling and gaming companies are to stop advertising their products on TV and radio during the nationwide Covid-19 lockdown amid pressure from MPs.

Betting brands have until 7 May to remove their ads from TV and radio, with the ban lasting until at least 5 June. Any booked TV and radio slots will instead feature safe gambling messaging from charities or be removed entirely if contracts permit.

Gambling companies will, however, still be able to advertise on social media, as well as via email and text.

“From day one of this crisis we have sought to protect customers potentially at risk,” says Michael Dugher, chief executive of the Betting and Gaming Council (BGC), which represents 90% of the UK’s betting, gaming, bingo and casino companies.

“This latest move by the regulated industry further underlines our commitment to safer betting and gaming with many people cut off and feeling anxious.”

The Guardian reports that the BGC, whose members reportedly account for around half of all gambling advertising on TV and radio, is calling on others in the sector, such as National Lottery operator Camelot, to implement similar bans.

Earlier this month more than 20 MPs called for a moratorium on all gambling advertising, arguing that it should have been in place since the first day of the lockdown to protect problem gamblers and addicts.

Carolyn Harris, chair of the all-party parliamentary group on gambling-related harm, described the move to pull TV and radio ads as a “clear admission” that gambling advertising is having a “profound effect” on problem gambling across the UK.

Greggs to reopen stores in ‘controlled trial’

Greggs is to reopen 20 stores in the Newcastle area as part of a “controlled trial” from 4 May, with more outlets to follow.

The bakery chain, which closed its more than 2,050 shops on 23 March, says the trial will last two weeks, and will involve a limited product range and shorter trading hours.

Chief executive Roger Whiteside has confirmed he hopes to reopen 700 stores, including 150 franchise shops, by 8 June and to have all Greggs outlets open by 1 July, when the government furlough scheme is due to end.

Whiteside expects the opening of the outlets will only be possible if the government has taken the first steps in relaxing the lockdown, such as reopening schools. Burger King, KFC and Pret A Manger have already reopened a limited number of outlets for delivery.

Greggs expects sales to be “significantly lower than normal” while social distancing measures are in place.

“We want to play our part in getting the nation back up and running again, so we are planning to conduct a limited trial with volunteers to explore how we can reopen our shops with new measures in place that keep our colleagues and customers as safe as we can when we reopen at scale,” a Greggs spokeswoman told the BBC.

People are shopping like they did 10 years ago, says Tesco

Consumers are shopping the way they did “10 or 15 years ago” says Tesco chief executive Dave Lewis, who has seen customers switch to ‘big shops’ amid social distancing measures.

Tesco’s number of transactions in April nearly halved, but the size of the average basket doubled.

Speaking to the BBC, Lewis explained the shift in consumer behaviour: “People are shopping once a week, a little like they did 10 or 15 years ago, rather than two, three or four times a week that was happening before the crisis.”

The supermarket has also hit 1 million online delivery slots a week for the first time. Lewis describes the shift to online shopping as the “single biggest” change to come from the Covid-19 pandemic.

Whereas prior to the crisis 7% of all groceries were bought online, Tesco has achieved an increase in online capacity of 103% in the space of a few weeks and expects to add a further 200,000 delivery slots over the next 10 days, prioritising vulnerable customers.

During the surge in panic buying early in the crisis, Tesco sold seven weeks’ worth of sales in “one or two days”, says Lewis, who believes the outbreak has highlighted the importance of food retail: “I think in the past, perhaps, a little bit we may have taken that for granted. So I hope that as a nation, we’ll think carefully about food, food strategy and distribution.”

John Lewis reopens factory to make NHS gowns

John Lewis has reopened its textiles factory in Lancashire to make protective gowns for the NHS.

Employees who usually sew bespoke blinds, curtains, pillows and duvets will begin making around 8,000 washable, clinical gowns for the Northumbria NHS Foundation Trust. The factory expects to produce 2,000 gowns a week.

The retailer is also donating more than 20,000 metres of cotton fabric from its haberdashery departments and distribution centres to two community groups – For the Love of Scrubs and Scrubs Glorious Scrubs – whose members are making scrubs for the NHS. The donated fabric is expected to make around 6,000 scrubs.

Alongside this, John Lewis has created a wellbeing area for staff at the NHS Nightingale London field hospital and worked with the British Medical Association to deliver 60,000 essentials to key NHS staff.

This week, the retailer will begin donating 250 electrical products, such as coffee machines, kettles and toasters, to the staff rooms and wellbeing areas at 25 acute London hospitals, and the Nightingale Hospital in Harrogate.

In addition, John Lewis has also designed two wellbeing areas and a multi-faith room for NHS staff at the Nightingale in Manchester and will donate more than 150 items of furniture for these rooms next week.

TikTok rolls out donation stickers to fund Covid-19 relief

TikTok is rolling out a new in-app donation feature users can include in their videos and livestreams to raise funds for charity.

The donation stickers are clickable buttons that can be embedded directly in videos and livestreams. When a user clicks on the sticker they are guided to a window where they can submit a donation without having to leave the app.

The British Red Cross and Help Musicians are the first UK charity beneficiaries to be given dedicated donation stickers.

Globally, TikTok will be matching users’ donations made through the stickers until 27 May. Users will be able to track donations in-app, displaying the biggest contributors, as well as the top videos and livestreams that have driven fundraising efforts.

The British Red Cross will use the funding to get food and medicine to vulnerable people, support refugees and people seeking asylum, and help the NHS. The donations will be used to fund Help Musicians’ ongoing coronavirus hardship funding.

“Our community on TikTok surprises us every day with their creative, uplifting spirit through this crisis and we hope they’ll join us in helping those in need,” says TikTok UK general manager, Rich Waterworth.

“We chose the British Red Cross and Help Musicians as our initial launch beneficiaries – as charities on the frontline of the coronavirus response – where we know this funding will deliver meaningful support for communities that have been hugely impacted by this crisis.”

Monday, 27 April

Facebook takes on Zoom with messaging push

Facebook is upping the competition with Zoom with the launch of bigger group calls on Messenger and WhatsApp.

The update will allow users to create a video call room from either Facebook or Messenger and invite anyone to join, even if they don’t have a Facebook account. Rooms will be able to hold up to 50 people at a time with no time limit (Zoom has a time limit of 40 minutes). Facebook plans to introduce a way to create rooms using Instagram, WhatsApp and Portal too.

Facebook is also making its video chats more interactive, introducing 360-degree backgrounds, 14 new camera filters and more augmented reality effects. Plus, it says rooms are built “with privacy and safety top of mind”, with Facebook promising it won’t view or listen to calls.

On WhatsApp, users will be able to have group voice and video calls with up to eight people, rather than the current four. Plus on Facebook, Instagram and Portal there will be an expansion of live video features to allow people do live videos with another user, mark events as online only and integrate live video, and livestream games.

Adidas preparing for 40% sales drop as lockdowns hit business

Adidas is predicting that its sales could fall by more than 40% in the second quarter after the German sportswear firm reported a decline of 19% in the first quarter.

More than 70% of Adidas’s stores globally are shut, with a 35% rise in ecommerce in Q1 only partially offsetting the sales lost from stores. Sales dropped to €4.8bn in the quarter, below analyst estimates, while profits fell by 93% year on year to €65m.

Marketing investment has, however, so far held up. Marketing and point-of-sale spend was “stable” at €704m as the company executed the majority of its consumer marketing campaigns and increased spend in ecommerce.

“Our results for the first quarter speak to the serious challenges that the global outbreak of the coronavirus poses even for healthy companies,” says Adidas CEO Kasper Rorsted.

“At the moment, we are focused on managing the current challenges and doubling down on the recovery in China and the opportunities we see in ecommerce. While we prepare for the return to a more normalizsd state of the business, we also remain realistic: over 70% of our stores worldwide are currently closed.”

Virgin Atlantic in coronavirus bailout talks

Virgin Atlantic is mulling how to fund its ongoing business as it struggles amid the impact from coronavirus.

The company says it is still in talks with the UK government about a bailout, calling them “ongoing and constructive”. However, is is also considering whether it could raise money from the private sector though a buyout to keep the brand going.

Airlines and travel companies are struggling as travel bans have hit revenues. Virgin Atlantic in particular is at risk because of its high levels of debt.

The company’s founder, Sir Richard Branson, has already put £250m into the business and the Virgin Australia brand has entered administration.

Virgin Atlantic tells the BBC: “Because of significant costs to our business caused by unprecedented market conditions which the Covid-19 crisis has brought with it, we are exploring all available options to obtain additional external funding.”

Nestle sales up as stockpiling boosts business

Nestle’s sales increased by 4.3% year on year in the three months to the end of March as it benefited from household stockpiling staple products, particularly in the US.

That is ahead of Unilever, which reported flat sales growth, but behind Procter & Gamble where sales were up 6%.

Pet food sales were a particular high point, up 14% in the quarter, while sales of store cupboard foods such as Maggi noodles benefited as consumers eat at home more. Ecommerce demand was also up, especially for Nespresso coffee where the company was able to offset the closure of retail stores through online sales.

Nestle has kept its guidance for the year but has warned over uncertainties. Heavy stockpiling particularly in the US and Europe will not last, while a shift to more cautious spending could hit its premium brands, which make up around a quarter of its sales.

Google mulls 50% cut to marketing budgets

Google could cut its marketing budgets by as much as 50% in the second half of they year as it tries to limit the impact of coronavirus on its business.

In an email seen by CNBC, Google says cuts may be needed and that there will be a hiring freezing for full-time and contract employees. One message says marketing has “been asked to cut our budget by about half for H2”.

Google has confirmed that in some areas budget may be reduced by 50% but that others may not be since the company is “recalibrating” its spend.

“As we outlined last week, we are re-evaluating the pace of our investment plans for the remainder of 2020 and will focus on a select number of important marketing efforts,” says Google in an email to CNBC. “We continue to have a robust marketing budget, particularly in digital, in many business areas.”