John Lewis, shifting shopping habits, digital ad spend: 5 things that mattered this week and why

Catch up this week’s news including marketer’s approach to investment, the rise of online grocery shopping and the impact furloughing is having on marketing teams.

By Marketing Week Reporters 1 May 2020 2:36 pm

Are marketers asking for more investment ‘wasting’ finance’s time?

What the response of your CFO be if you want to them and asked for money to invest in marketing at the moment. Despite industry experts lining up to show how brands that invest more during economic recession come out stronger, it’s not something many companies feel in a place to act on.

In fact, one in 10 marketers say if they took a request for more money to their finance and executive teams, they’d be told where to go. Almost half (46%) said they would be told there is not any cash to spend and a further 32% to prove the link between the investment and returns before they would consider it. Just 13% say they would be asked for a plan on how to do it.

Given these figures, it is not surprising that just 7% of marketers are taking a ‘seize the opportunity’ approach and investing more in marketing. For many, there simply isn’t the money to do so now.

UK digital ad spend falls for the first time

Amid a global pandemics and lockdowns, it is hardly surprising that the advertising expenditure forecasts for 2020 have been downgraded, with Covid-19 bringing an end to 10 years of consecutive growth.

What is interesting, however, is digital ad spend is predicted to fall for the first time ever. Even the lure of cheap impressions and instant measurement has been trumped by marketers’s gut instincts to tighten their purse strings.

This is unchartered territory for the Advertising Association (AA) and Warc’s expenditure forecasts, which predicts total UK ad spend will decline 16.7% this year to £21.13bn.

Given the restrictions on movement and the closure of non-essential businesses, it makes sense that cinema is predicted to be the biggest casualty this year. But it is also expected to make the biggest recovery in 2021, showing brands are still thinking about investing in quality audiences beyond the pandemic.

TV spend is expected to decline 20% this year. But with viewing figures through the roof as a result of people spending more time indoors, some brands may see this as an opportunity to reach some very large audiences and in a more cost-effective way than usual.

The AA’s chief executive Stephen Woodford says brands must keep connecting with customers where they can. “We’re certainly buying lots of food and drink, consuming lots of downloadable content, we’re dreaming of holidays,” he says.

“It’s about planning for that resumption of business.”

Furloughs compromise marketers’ ability to meet goals

As the Covid-19 crisis wears on more people in businesses across the marketing spectrum are being furloughed in order to prevent mass redundancies.

While it makes sense from a business perspective – keeping employees effectively on hold until they are needed again – the implementation of furloughs is having a significant impact on those left behind.

Some 43% of marketers have seen either ‘very significant’ or ‘significant’ furloughing, or staff reductions, in the marketing team since the onset of the Covid-19 pandemic, according to an exclusive survey of 477 UK brand marketers conducted by Marketing Week and its sister title Econsultancy.

Over half (52%) of marketers working in smaller organisations say there has been either ‘very significant’ or ‘significant’ furloughing, or staff reductions, in the marketing team, compared to 30% of those who work in larger companies.

More than a third of marketers working in both B2B (37%) and B2C (39%) have seen either ‘very significant’ or ‘significant’ furloughing, or staff reductions, in marketing since the outbreak began.

Regardless of the level of furloughing in their business, 70% of UK marketers say their ability to accomplish current goals has been ‘significantly’ or ‘somewhat’ compromised by furloughs. In addition, over half (56%) of marketers have also seen their organisation reallocate marketers to ‘high demand areas’ to cope with the crisis.

As the UK awaits the publication of details on the government’s exit strategy from the lockdown next week, amid predictions of a damaging recession ahead, marketers must ready themselves to see more colleagues furloughed over the coming weeks.

Supermarkets prepare for future online

Covid-19 has forced changes to the way people shop, with the grocery market in particular getting a taste for what a more digitally-driven future might look like.

Data from Kantar reveals online sales accounted for 10.2% of the grocery market in April versus 7.4% last month. The data shows over-65s have had to adapt especially quickly and have increased their online grocery spend by 94% year on year.

The accelerated shift to digital is certainly putting supermarkets to the test. Tesco has increased its online capacity by 103%, Morrisons has vastly improved its delivery offering and Aldi has launched its first online grocery service.

Sainsbury’s Smart Shop technology, meanwhile, is driving an increasing proportion of its in-store sales. Sainsbury’s outgoing boss Mike Coupe believes many of these new online habits will stick.

“When people get into the habit of ordering their groceries online it’s likely to be sticky,” Coupe said in his final earnings call as CEO this week. “Almost a third of our sales are now through SmartShop and once you you’ve used it once and got used to it I suspect you won’t go back to the usual checkout.”

The grocers will no doubt be thinking about how this might shape their sector beyond the pandemic. And, crucially, how they can innovate in ways that will give them a competitive advantage in the longer-term.

John Lewis Partnership brings back separate brand bosses

The John Lewis Partnership (JLP) is bringing back separate director roles for its Waitrose and John Lewis brands, scrapping the idea that there would be one single brand boss.

It had previously decided that John Lewis’s now former managing director Paula Nickolds would take on the role of executive director of brand becoming the overarching person in charge as part of a wider management shake-up.

However, she left the Partnership just after Christmas following poor sales at the department store.

Nickolds wasn’t the only one to leave the group at the beginning of this year John Lewis’s customer director Craig Inglis left at the end of March.

It has left Martin George, who was customer director at Waitrose, as the most senior marketer at the business in his role as marketing director of JLP.

James Bailey, Sainsbury’s former buying director for grocery, is now joining the JLP board in a new role as executive director of Waitrose. Bailey will have responsibility for Waitrose’s trading, merchandising, marketing and developing customer propositions for shops and waitrose.com while recruitment is ongoing for an executive director of John Lewis.

This shows that the group is recognising the need for some separation for the two brands that, although they have much overlap, have different strategies and consumers.

However, there is still a single executive team for John Lewis and Waitrose bringing together functions such as customer service, strategy, finance, supply chain, property and HR.