Amazon, Samsung, Nando’s: 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.
Amazon to cut 18,000 jobs amid an ‘uncertain economy’
Amazon is to make the largest round of job cuts in its history, with its consumer retail stores set to be especially hit.
In a memo to employees, CEO Andy Jassy said the company would be getting rid of just over 18,000 roles, after undertaking its annual business review.
“This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” he wrote.
Amazon currently employs 1.5 million people globally. During the pandemic it saw demand sore and hired accordingly, with an estimated 743,000 staff additions globally.
Jassy did not share in exactly which regions the 18,000 job cuts will be made but confirmed there would be some in Europe. Consumer retail staff, including Amazon Fresh and Go staff, and those working in human resources are set to be especially impacted by the job cuts, he said.
In August, it was reported that Amazon was putting the roll-out of its Fresh stores on ice. In November 2021, leaked documents detailed the company’s ambitious plans to roll out a further 260 Amazon Fresh stores in the UK by the end of 2024.
However, last summer it was reported the existing 19 London stores were seeing lacklustre sales, and that Amazon was backing away from negotiations to acquire additional locations.
READ MORE: Amazon to axe 18,000 jobs as it cuts costs
More ‘major’ disruption predicted for European air travellers this summer
The European air traffic control agency has warned travellers are likely to face “major” disruption again this summer, due to crowded airspace.
The closure of Ukrainian and Russian airspace as well as a return to pre-pandemic flight schedules is likely to make the skies more congested than before, warns Eurocontrol. It adds 2023 could be the toughest year in a decade for managing air traffic.
Air traffic issues were one component of problems which caused travel chaos for customers over summer 2022, as airlines and airports struggled to cope with a surge in passenger numbers post-pandemic.
The warning comes as budget airline Ryanair has upgraded its profit expectations, as it saw a surge in passenger numbers over the holiday period. It credited “strong pent-up travel demand over the holiday season”, when for the first time in three years there was little impact of Covid.
In December 2022 it saw 11.5 million passengers, which represents a 21% increase from 2021’s figure. Its traffic guidance for its full year, which runs from April 2022 to March 2023, remains unchanged at 168 million. It expects its fourth quarter to be loss making, partly due to the absence of Easter from the period.
READ MORE: Air travellers in Europe face more ‘major’ disruption this year
Samsung profit drops to eight year low
Samsung saw its operating profit drop by 69% in its fourth quarter as the business experienced less consumer demand for its products and memory chips.
The operating profit of 4.3tn won (£2.8bn) is the lowest made by Samsung for eight years. Investors had been expecting profit of around 5.9tn won (£3.9bn).
The business is the world’s largest producer of memory chips, smartphones and TVs. The global memory chip market is seeing prices drop due to a surplus of the item.
Samsung reports it saw a great-than-expected decline in demand and price drop for its chips, as its customers clear their inventories. The technology manufacturer has pursued a strategy of investing in a downturn to gain market share. However, analysts say this tactic has contributed to the current surplus of memory chips.
Demand for its consumer products has also fallen, as people face increased pressure on their income due to the cost of living crisis.
“Smartphone sales and revenue decreased due to weak demand resulting from prolonged macro issues,” Samsung said.
The business is due to publish its full financial statement at the end of this month. Other technology companies such as Amazon and Meta have suffered financially in recent times, cutting jobs amid a difficult economic environment.
READ MORE: Samsung sees profits plunge by 69% as chip prices slump
Government says £1bn of fraudulent Covid business grants ‘unlikely to be recovered’
Around £985m of public money paid to businesses during the pandemic is likely to be lost due to “fraud and error” says the Department for Business, Energy and Industrial Strategy (Beis).
“The majority of payments made in error are unlikely to be recovered,” the department admitted.
The predicted losses represent around 8.4% of all payments handed out under schemes for small businesses, and retail and hospitality businesses. In total £11.7bn of grants were given in 2020 to 2021.
“The debt recovery work stream within the department is gaining momentum with further recoveries expected throughout 2022-23,” Beis said in its annual report.
However, the head of the National Audit Office Gareth Davies says only 0.4% of erroneous grants made by local councils have been recovered.
“Delays in the department’s planned assurance exercises contributed to slower progress in activity to recover irregular payments,” Davies says.
“We’re continuing to crack down on Covid support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers,” a government spokesperson told The Guardian.
These grants formed just part of the government’s £154bn investment to support businesses during the pandemic, which included schemes like furlough, which cost £70bn and was designed to protect jobs during coronavirus.
READ MORE: Nearly £1bn of fraudulent Covid grants made to UK firms ‘unlikely to be recovered’
Nando’s introduces ‘liability waiver’ as it brings back its hottest spice level
Nando’s is introducing a ‘liability waiver’ for its diners to sign before they order food at the hottest spice level.
The Chicken restaurant chain has reintroduced its ‘VUSA XX HOT’ spice level to its branches. The spice sits above the Nando’s ‘extra-hot’ rating on its ‘peri-o-meter’.
Consumers can choose which spice level they would like for their main through the ‘peri-o-meter’ and now will have the addition of the VUSA flavour if they want to take the heat levels off the scale.
At the same time as the launch, the brand has created a tongue-in-cheek ‘liability waiver’ for customers brave enough to try the revived spice level. The document, which is to be signed by the customer, states that they “assume all responsibility for the risk” of ordering Nando’s “hottest ever” spice.
The document also states that the revival of the VUSA XX HOT flavour is limited edition, with signatories pledging to “keep [their] cool on socials” once it is no longer available.
The name of the spice links back to Nando’s South African roots, with Vusa meaning ‘excitement and fire’ in Zulu.
Thursday, 5 January
Next reports ‘better than anticipated’ Christmas sales, but remains cautious
Next is remaining “cautious” in its outlook for the year ahead, despite its Christmas sales being better than “anticipated” in 2022, as the company lays out its trading statement for the nine weeks to 31 December last year.
In those nine weeks, the retailer reports full price says were up 4.8% against 2021 levels, with full price sales online rising 0.2%, and retail rising by 12.5%. As a result of the sales uplift, Next has increased its full year profit before tax guidance by £20m to £860m, up 4.5% on 2021.
Remaining cautious, Next says it’s initial guidance for the year ending January 2024 is for full price sales to be down 1.5% and profit before tax to be £795m.
Both online and retail exceeded the retailer’s full price expectations, with retail being particularly strong, says the company. “We think that we underestimated the negative effect COVID was having on our Retail sales last year,” it adds, having also “underestimated the effect improved stock levels would have on both businesses” in 2022.
In terms of the retailer’s end-of-season sale stock, it’s up 60% on the previous year, as a result of low surplus stock in 2021.
The company notes inflationary and economic headwinds in its trading update. It expects inflation to peak at 8% for the Spring Summer season, and says while it expects inflation in the second half of 2023 to be no higher than 6%, it is still negotiating prices.
Greggs sales rise and loyalty proposition grows as customers focus on value
Reporting its results for the 2022 financial year, Gregg’s reports its total sales rose 23% to £1.5bn, up from £1.2bn in 2021. The company says it’s anticipating its full year outcome to be inline with its previous expectations as we move into 2023.
“I am proud of the progress Greggs made during 2022 in challenging conditions,” says chief executive Roisin Currie. In 2022, Greggs opened 186 new shops, and closed 39. Overall, Greggs now has 2,328 shops trading as of 31 December 2022.
“We enter 2023 in a strong financial position that will enable us to invest in shops and supply chain capacity to bring Greggs to even more customers across the UK” adds Currie, who notes that while the market conditions in 2023 will “remain challenging”, Gregg’s “value-for-money offer of freshly prepared food and drink is highly relevant” as consumers look to manage their budgets without compromising.
In the fourth quarter, sales in company managed shops grew by 18.2%, despite the trouble posed in this period by adverse weather and rail strikes. Seasonal products were in “high demand”, such as the brand’s festive bake and mince pies.
Greggs says that at a time when consumers are “increasingly focused on value”, it is seeing growth in its Greggs App, which rewards customer loyalty with free products and features such and Click + Collect.
“We continue to see material cost inflation in the year ahead. However, whilst consumers are clearly seeing pressures, our value offering remains attractive in the food-on-the-go market,” the retailer adds.
Meta fined £346m for breaking EU data rules for targeted ads
Facebook parent company Meta has been fined €390m (£346m) by the Irish Data Protection Commission (DPC for its “unlawful” use of seeking permission to use users’ data for ads on Facebook and Instagram.
The ruling relates to how Facebook and Instagram asked its users to choose “I accept” as their answer to agree to updated terms of service related to how their data would be used in ads. If a user didn’t accept, they couldn’t access Facebook or Instagram. The initial complaints in 2018 flagged that Meta was “forcing” users to consent to their data being used, which breached GDPR rules.
A Meta spokesperson says the company will challenge the size of the fine. In November, the DPC fined Meta for a data breach that led to the personal details of hundreds of millions Facebook users being shared online.
READ MORE: Meta fined €390m over use of data for targeted ads
UKTV and Mars announce marketing hires to kick off new year
UKTV has named Nick Gilmer as its new marketing director, after initially joining the company in 2021 as its head of marketing for the Dave and W channels.
The new role will see Gilmar be responsible for UKTV’s strategic leadership of its marketing team across UKTV’s linear broadcast network and its streaming service, UKTV Play. Gilmar has been tasked with building a “high-performance marketing division” at the company.
“After an intensive recruitment process, it was clear that Nick was the perfect fit for the role of Marketing Director thanks to his extensive broadcast marketing experience and the exceptional support he provided during his time jointly covering the role,” says UKTV chief marketing officer Penny Brough.
Prior to joining UKTV, Gilmar headed up the marketing for BBC iPlayer and BBC One at the broadcaster, and before that worked at both ITV and Channel 4. “This is an incredible opportunity to lead a brilliantly talented group of marketers as UKTV goes through a period of exciting change,” he says.
Meanwhile, Mars has announced Matthew Mill as its new regional brand director. Mill joins Mars from The Kraft Heinz Company, where he held various roles across a nine year period having joined the company as a graduate.
Most recently, he’d been head of marketing for meals across Northern Europe, and has also worked as head of snacking for UK, Ireland and Europe and led the Heinz masterbrand refresh in 2018.
Gymbox fights back against fitness toxicity with new addition to ‘Anything goes’ campaign
With January being the time of year many people look to boost their fitness, the London-based gym chain Gymbox has launched a new campaign dispelling the “cliched motivational quotes” that have long been taken as gospel when it comes to working out.
The new campaign is an addition to the gym chain’s ‘Anything Goes’ brand platform, which first launched in 2021, and is the brand’s first with agency AMV BBDO.
It comes following a Gymbox survey of 2,500 Londoners which found 48% of respondents named outdated fitness quotes as their “biggest turn off” when it came to exercise, alongside intimidating environments (21%) and body transformation images (16%).
In the campaign, stereotypical quotes are scribbled over and replaced by different phrases that link to the Gymbox brand. The campaign is running across London out-of-home locations and activity across Meta, TikTok and YouTube.
“When did gym culture get so serious and weird? AMV have done a great job at helping us cut through the bulls**t because there’s no right way or wrong way to work out. Working out should be as fun as going out and at Gymbox, we are about pure, unadulterated fun and self-confidence,” says brand and marketing director, Rory McEntee.
“With this attention-grabbing campaign, we wanted to get across Gymbox’s unique approach to keeping fit and it really brings our messages to life, raising a smile and demonstrating a positive Gymbox attitude.”
Wednesday, 4 January
Twitter to reinstate political advertising
Twitter plans to “expand” the scope of political advertising on the platform, reversing a ban brought in by former CEO Jack Dorsey in November 2019.
According to the Twitter Safety account, the business now believes “cause-based advertising” can facilitate conversations around important topics: “We’re relaxing our ads policy for cause-based ads in the US. We also plan to expand the political advertising we permit in the coming weeks.”
Moving forward, Twitter says it plans to align its advertising policy with that of “TV and other media outlets” and will share more details as this work progresses.
The social media giant banned all political adverts globally in November 2019, beyond messages about issues such as voter registration, with Dorsey insisting “political message reach should be earned, not bought.”
At the time, the Twitter co-founder and former CEO described political ads as representing an “entirely new challenge” to civic discourse, spanning machine learning-based optimisation of messaging and micro-targeting, unchecked misleading information and deep fakes.
“While internet advertising is incredibly powerful and very effective for commercial advertisers, that power brings significant risks to politics, where it can be used to influence votes to affect the lives of millions,” he added in a Twitter thread posted on 30 October 2019.
It is thought the social media giant could use the reinstatement of political ads to recoup some lost revenue, after brands such as General Motors, Audi, Pfizer, General Mills and Volkswagen paused advertising on the platform last year following the takeover by Elon Musk.
READ MORE: Twitter is reversing its ban on political ads
Warning 2023 ‘will be another difficult year’ as food inflation hits 13.3%
The British Retail Consortium (BRC) is warning 2023 “will be another difficult year for consumers”, as food inflation hit 13.3% in December.
A rise from inflation of 12.4% recorded in November, December registered the highest monthly inflation rate since the BRC-NielsenIQ shop price index began collecting data in 2005.
The cost of fresh produce accelerated to a record 15% in December, according to the index, up from 14.3% in November. The inflation rate for ambient food, including pasta and tinned goods, rose by 11% last month.
The overall shop price inflation figure in December fell slightly to 7.3% from 7.4% a month earlier, as retailers with excess stock offered discounts on non-food products, enabling some shoppers to “bag bargain gifts”.
However, the ongoing war in Ukraine continues to contribute to soaring costs for animal feed, fertiliser and energy, meaning the rise in food prices shows no sign of letting up in 2023.
Recognising it has been a “challenging Christmas” for many UK households grappling with the cost of living crisis, BRC chief executive Helen Dickinson expects 2023 “will be another difficult year for consumers and businesses as inflation shows no immediate signs of waning.”
Dickinson is calling on the government to provide urgent clarity on its energy support scheme for businesses, warning that without further help retailers could see their bills rise by “£7.5bn collectively”. According to the BBC, business groups expect government help with their energy bills to be halved after March, when the existing support package ends.
Head of retailer and business insight at NielsenIQ, Mike Watkins, expects consumer demand to be weak during the first quarter of 2023 due to the impact of energy price increases and Christmas bills. This means shoppers will have less money to spend on discretionary retail, having paid out for essential groceries, he adds.
“The increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mindset around personal finances in the near term,” says Watkins.
READ MORE: Record 13.3% UK food inflation raises fears of ‘another difficult year’
Gousto CMO Tom Wallis to depart
CMO Tom Wallis is leaving meal kit brand Gousto after six years to explore new opportunities.
Named one of Marketing Week’s Top 100 Most Effective Marketers in 2022, Wallis is looking to leverage the experience gained at Gousto with a business “searching for data-driven, high growth marketing leadership.”
The company’s revenue grew more than 20 times during his tenure, as Gousto branched out into brand building with the launch of its ‘Give it some’ platform in 2019.
Launched on 22 December, the latest iteration of the campaign builds on the Give it some platform, which has driven strong uplifts in awareness and consideration over the past two years. Indeed, while 80% of sign-ups to the meal kit service were driven by performance marketing in 2018, by late 2021 82% of registrations came organically and through referral.
Having proven the value of marketing, Wallis was given the green light to double his team in 2021, with the addition of 30 people across marketing and tech.
He joined the meal kit business in 2016 as vice-president of growth with responsibility for the acquisition and customer marketing teams. The move to Gousto came after 10 months as head of online sales and marketing at Ovo Energy.
Prior to his shift into the energy sector, Wallis spent more than seven years at Sky. He joined the broadcaster from Accenture in 2008 as a senior business analyst within marketing, before being appointed sales performance controller for acquisition marketing.
Wallis was promoted to head of trading and digital marketing at Now TV in 2012, with responsibility for executing the channel’s acquisition and digital marketing plans.
Aldi celebrates record Christmas as sales hit £1.4bn
Aldi is celebrating its “best ever” Christmas, as a combination of festive shopping and the World Cup helped the retailer achieve sales in excess of £1.4bn for the first time.
Sales in December rose by more than 26%, driven in part by demand for fresh meat. The supermarket notched up “strong growth” in sales of fresh poultry and pork – both up over 28% – with alternative roasting joints such as decorative gammon proving popular, in addition to turkey.
The festive season also drove sales of chilled desserts and fresh cheeses, which rose by almost 30% and 50%, respectively. In the weeks leading up to Christmas, Aldi claims to have sold more than 48 million mince pies, 38 million pigs-in-blankets and more than 1,700 tonnes of sprouts.
The World Cup coinciding with Christmas for the first time fed demand for crisps and nuts, up more than 40%.
The festive season and football combined to help bring families together after two years of pandemic, says CEO of Aldi UK and Ireland Giles Hurley, who praised Aldi’s continued affordability amid the cost of living crisis. The supermarket has reiterated its commitment to offer shoppers “the lowest grocery prices throughout 2023”.
“As the UK’s cheapest supermarket, we were able to help shoppers enjoy the Christmas they deserved and provide them with the highest quality products at the most affordable prices,” Hurley adds.
“As we head into a new year, our promise to customers is that they will always get the UK’s lowest prices at Aldi, no matter what.”
Santander scraps 2:1 degree requirement for graduates
Santander UK is hoping to attract an additional 64,000 applicants for its graduate scheme by dropping the requirement for a 2:1 degree or higher.
Acknowledging that university performance is not the only indicator of workplace success, the bank is hoping to widen the social-economic background of its recruits. The graduate programme, which opens for applications this month, will instead focus on a broad range of assessments to measure potential.
Given that around 16% of students leaving university do not achieve a 2:1 or 1st class degree, Santander estimates this change to its entry criteria will enable 64,000 more graduates to apply to the programme.
According to the Guardian, the decision to scrap the 2:1 degree requirement is part of Santander’s wider efforts to boost the proportion of employees from lower socioeconomic backgrounds in senior roles from 28% to 35% by 2030.
Santander UK was ranked 40th on the Social Mobility Foundation’s 2022 Social Mobility Employer Top 75 Index, a list topped last year by legal firm Browne Jacobson.
“Academic achievement is important, but it is only one of many factors we look at when searching for new talent,” says HR director, culture and capability, Anouska Ramsay.
“We believe potential can be found anywhere and this move reinforces our commitment to finding the best candidates from a wide range of backgrounds. We’ve won awards for our social mobility initiatives and this is an important development to widen our recruitment criteria.”
READ MORE: Santander UK drops 2:1 requirement for graduate scheme
Tuesday, 3 January
2022 saw highest number of shop closures in five years
2022 saw more than 17,000 shop closures in the UK, the highest figure in five years.
Around 150,000 retail jobs were lost as a result of the 17,145 shop closures last year. This figure represents a 50% increase on the 2021 number. In 2022, around 47 shops closed for the last time every day, according to figures from the Centre for Retail Research (CRR).
The analysis from the CRR suggests many of the closures were down to businesses making strategic decisions about the future of their retail sites, rather than whole companies going bust. Only around a third of closures were due to companies going out of business, the research finds.
The number of shop closur,es which were due to businesses with 10 or more shops going under, actually fell last year. These types of closures were 56% lower in 2022 than in 2021, but included high profile names such as Joules and Sofa Workshop.
Companies deciding to close certain branches while retaining others, which is classed as “rationalisation” by the CRR, made up around one third of the closures. Independent shops deciding to close up shop is also classed as “rationalisation” and made up over one in three of the closures.
“Rather than company failure, rationalisation now seems to be the main driver for closures as retailers continue to reduce their cost base at pace,” says CRR director Joshua Bamfield.
READ MORE: Retail: Last year saw a big jump in the number of shops closing
Tesla reports record number of cars delivered in 2022
Tesla delivered 1.3 million cars in 2022, which the car marque says is a record number and 40% more than in 2021. However, the company’s delivery figures for the fourth quarter fell below Wall Street estimates.
In its fourth quarter, the company delivered 405,278 vehicles, missing Wall Street predictions Tesla would deliver 431,117 vehicles in the period. In the final three months of 2022, Tesla produced approximately 34,000 more vehicles than it delivered.
The electric vehicle brand often reported an equal or greater number of vehicles delivered than it produced until recently. In its third quarter of 2022, Tesla produced 22,000 more units than it delivered. In October, CEO Elon Musk said he was working to resolve this issue.
The brand will announce its fourth quarter financial results later this month, as it faces the challenges of a tougher economic environment and other entrants to the electric vehicle market, from startups to legacy car manufacturers.
Tesla went public in 2010 and in 2022 saw its worst year yet on the stock market, with shares falling by 65%.
READ MORE: Tesla says it delivered record 1.3 million vehicles in 2022
Netflix predicted to lose 700,000 UK subscribers in two years
By the end of this year, Netflix will have lost 700,000 UK subscribers in the space of 24 months, according to research firm Ampere Analysis.
According to the analysts, the streaming service lost 500,000 viewers in 2022, even as it launched an ad-supported service in a bid to retain customers at a lower price. It is predicted to lose a further 200,000 this year.
According to the research, it will have seen its UK user base drop from 14.2 million to 13.7 million this year. It is predicted Netflix will return to growth in 2024, in line with the UK economy.
It will take some time for the company’s ad-supported tier to pay off, finds Ampere Analysis. It predicts Netflix’s subscriber numbers will see a 4% boost by 2027 through the initiative.
Ampere Analysis estimates Amazon’s Prime Video streaming service grew its UK base slightly from just over 12 million to 12.3 million accounts in 2022. Disney+ was the only major streaming service to make significant gains and is predicted to add 1.4 million subscribers, taking its UK base to 6 million in 2023.
READ MORE: Netflix to lose 700,000 UK customers in two years, analysts predict
Unilever, HSBC and P&G accused of exploiting ‘loopholes’ over Russia
Unilever, HSBC Holdings and Procter & Gamble are among a dozen high-profile multinational companies which have been accused of failing to properly exit Russia by a recent report from a think tank.
The Moral Rating Agency was founded by businessman Mark Dixon last year after the Russian invasion of Ukraine and is designed to call out corporate behaviour and hypocrisy on this issue. A recent report from the organisation names a “dirty dozen” of well-known multinational businesses who are still heavily involved in the country.
FMCG giants Unilever, P&G, PepsiCo and Nestlé all make the list, as well as banks HSBC Holdings and Goldman Sachs.
The think tank’s founder claims big companies “often get credit before they have left” Russia and says some pledges mean very little in practice.
“Some company announcements are not worth the paper they are written on,” Dixon claims. “You read the statement and it sounds like the company is doing something real – but often it is just a promise that the company will be able to tear up.”
The MRA is calling for the companies it has listed to be boycotted in 2023.
READ MORE: BP, Unilever, and HSBC have failed to properly exit Russia, new report warns
Compare the Market introduces new brand character in latest campaign
Compare the Market is renowned for its use of meerkat brand characters such as Aleksander and Sergei, who have been starring in ads since 2009. However, in its latest ad the price comparison site has introduced a wombat to the fold.
In its latest ‘Don’t wombat it, meerkat it’ ad campaign, created by VCCP, viewers are introduced to Carl, Aleksander’s Australian nephew. In the ad, the wombat character is shown immediately creating chaos when he arrives at the airport.
The ad is designed to encourage consumers to “be less wombat and more meerkat” by making informed financial decisions.
“We’re delighted to welcome a new character to the meerkat family, the loveable, well-intentioned yet hapless Carl,” says Compare the Market marketing director Kristin Sonfield. “We all have those relatable wombat moments where we don’t get it right, despite our best intentions.”
Carl made his TV debut on Boxing Day and the campaign will run for 12 weeks across various channels.