Planning digital transformation during a pandemic
We are now entering a time of unpredictability and volatility for businesses, triggering the imagination when it comes to the impact of technology on private life, business and society.
In many cases, the coronavirus pandemic will bring into question how we use and engage with digital technologies, which have now become intimately entwined with business change.
To this extent ‘digital transformation’ has become a pleonasm and the next twelve months will be defined by businesses’ ability to survive in a time of uncertainty and a renewed quest for simplicity.
Simplicity is what is needed – in the form of simple messages, instant action, zero friction and a continuous stream of exciting and rewarding signature moments.
US overtakes China in number of COVID-19 cases
The US has overtaken China as the country with the most COVID-19 cases, as the number of confirmed cases reaches 86,000. The number of deaths in the US has reached 1,300.
US President Donald Trump has attributed this spike in cases to an increase in coronavirus testing. Despite this, the president has publicly said he hopes to have the country reopened by Easter Sunday.
22 states have now instructed residents to stay at home, only leaving to buy food or medical supplies. These measures are thought to affect 49% of the US population, according to Business Insider.
Value to put market competition on hold to combat Covid-19 virus
According to GlobalData’s 2019 Q3 consumer survey, 36% of consumers globally claim that they find living a less complicated lifestyle very important. GlobalData forecasts more consumers to find this aspect of lifestyle more important as grocery shopping experiences have become complicated and stressful since the Covid-19 outbreak.
In response to ease consumer choice and to ease the complication of brand loyalty, government bodies are starting to introduce policies for supermarkets to work as a collective in the duration of the virus outbreak. The UK Government has requested supermarkets to exchange information on pricing and temporarily hold off their market competition in order to keep on top of staff availability and inventory in consideration of serving the public.
This collective act of social responsibility plays a critical role at the time of crisis such as Covid-19, as putting people’s interests first instead of focusing on market competition is needed to align with consumer demands for a less complicated lifestyle. Looking forward, a social responsibility strategy would serve brands well in the long term as consumers would more likely engage and be loyal to the brands that go the extra mile to combat a global crisis.
Coronavirus cybersecurity: Ten tips for secure remote working
As the ongoing Covid-19 pandemic continues to affect numerous aspects of daily life, workers and employers are adapting to new ways of working.
Although social distancing and social isolation are key to slowing the spread of the virus, they have tested organisations’ infrastructure and remote working practices.
“Remote working on a scale we’ve never seen before has now become a fact of life; doing this without compromising security will be more important than ever,” says Jeremy Hendy, CEO at cybersecurity firm Skurio.
Here are ten key pieces of advice from experts from the cybersecurity industry to help organisations maintain robust security while remote working.
Ireland to increase contactless limit from €30 to €50
Banking and Payments Federation Ireland (BPFI) announced yesterday that banks, retailers and technology companies are working together to increase the contactless payment limit from €30 to €50.
BFPI expects the new limit to roll out across all retail outlets by 1 April.
BPFI head of payment schemes Gill Murphy said: “The rollout is well underway and BPFI is working in collaboration with all the various parties involved, to make sure the new limit is available across all retail outlets by 1 April.
“We are working together to make it happen as a matter of urgent priority in order to facilitate consumers’ ability to make some payments without the need for physical contact.
“Due to the many technicalities involved, there is no central method by which this can be delivered but, rather, it is a case of all parties working together to ensure consumers can avail of the new limit of €50.”
Murphy assured retailers that the change “is already well underway and progressed by the industry”.
She added that BPFI is encouraging consumers to follow the advice issued by UK government agency the Health and Safety Executive (HSE) when inserting PIN in card terminals. The advice includes washing the hands and face properly and often, cleaning and disinfecting objects and surfaces, and for people not to touch their eyes, nose or mouth.
In Ireland, the demand for cash has reduced by around 20% due to decreased overall spending and preference for using cards amid the Covid-19 coronavirus outbreak. Non-essential retail stores in Ireland have temporarily closed increasing demand for online shopping and home delivery.
Global GDP may drop by 1% in 2020, says Goldman Sachs
Goldman Sachs expects global real gross domestic product to contract by about 1 per cent in 2020, a sharper economic decline than in the year following the 2008 global financial crisis.
“The coronacrisis or more precisely, the response to that crisis — represents a physical (as opposed to financial) constraint on economic activity that is unprecedented in postwar history,” the investment bank said in a note to its clients published late on Sunday according to India Today.
Japanese consumers use imagination to combat Covid-19 crisis
Far East Asia has been experiencing the Covid-19 outbreak ahead of Europe – observing the regional challenges, such as Japan cases, can help identify what comes next or where to move on.
When consumers cannot buy what they want, they tend to try to find products that can be used as a substitute. One of examples is high alcohol spirits. People who cannot buy sanitizers are now trying to create their own version of sanitizers with spirits. According to Million Trading, a wine and spirits importer, Polish vodka Spiriytus that has 96% alcohol by volume has been suddenly seeing high demand from February; the demand is more than twice compared to its usual pace and its supply is not keeping up.
When the effect of Covid-19 has become prolonged, consumers are also searching for products that protect their health in general. Particularly, to improve their immunity, consumers are more actively buying probiotic products. An example from Japan is natto, fermented soybeans, which have been lacking in stock consistently since the outbreak; natto is known for its health benefits, particularly in terms of lowering cholesterol, and is filled to the brim with fibre, probiotics, and vitamin K2. Similarly, yogurt, generally associated with gut health and immunity, are selling well.
There will not be natto panic buy in Europe, but spirits and probiotic products claiming to improve immune system are likely to grab the UK, as well as European consumers’ eye.
OECD expects economic fallout to be felt ‘for a long time to come’
Speaking to CNBC, the OECD’s secretary general, Angel Gurria, stated: “What you have is an economic effect now that, very clearly, is going to be prolonged beyond the period of the pandemic.”
“We’ll hopefully get rid of the pandemic in the next two or three months and then the question is how many unemployed (will there be), how many small and medium-sized enterprises will be in a very, very severe situation if not disappeared by that time.”
“Life, and economic activity, is not going to be normalized any time soon,” he said. “We’re going to have the impact of this crisis for a long time to come.”
Bigbasket and Grofers urge people to stop panic-buying
Online grocery platforms Bigbasket and Grofers have reportedly urged customers to refrain from panic-buying amid the increasing coronavirus (Covid-19) scare in India.
As consumers gave into panic-buying of daily food essentials such as flours, milk and vegetables, Bigbasket’s online traffic and revenue increased by two times in the last three days, IANS reported.
The online grocery platform witnessed a 15%-20% increase in the basket value.
Grofers reported a 45% surge in orders and 18% hike in the order value.
Several consumers pointed out that essential items are immediately going out of stock for certain hours during the last three days.
However, Bigbasket said, except in the case of sanitisers, it is not facing shortages in FMCG-branded products. The basic staples are reportedly restocked within 12 hours.
Moneycontrol.com quoted BigBasket buying and merchandising national head Seshu Kumar Tirumala as saying: “Order volumes have almost doubled in the last two weeks alone. We are trying to predict demand for each item that is going out of stock.
“There are 2-3 SKUs (stock-keeping units) that go out of stock on a daily basis like hand sanitisers, and other kinds of hand wash items, and third is basic staples like rice, dal, etc.”
Meanwhile, Grofers is taking a hard approach to the existing panic-buying orders of essential commodities.
Grofers co-founder and CEO Albinder Dhindsa told IANS that it stopped promotions for essential commodities.
The retailer is seeking the help of additional manufacturing partners to scale up the supply basis demand and requested customers to opt for considerate shopping.
Rapid response and creativity vital for non-food retailers to survive coronavirus crisis
Next’s guidance on how it expects to be impacted by the Covid-19 coronavirus pandemic indicates that retailers have plenty to contend with over the next few months. As many retailers operating in affected countries have already experienced, revenue will drop off a cliff, stores will need to be closed and staff potentially let go. Retailers will also need to deal with excess stock and adjust marketing strategies quickly in an attempt to safeguard at least some revenue while trying to keep business development plans on track.
Reporting its FY19/20 results this morning, Next gave a sobering outlook for the year ahead with sales (primarily generated in the UK) expected to decline between 10% in a best case scenario and up to 25% at worst – equivalent to lost sales of £1bn. The main cause of this will be significantly reduced demand as worried consumers cut right back on discretionary spend, given the threat of unemployment and the unknown duration of the pandemic, but sales will also be lost unless retailers quickly react by making changes to their assortment and marketing communication.
Although spring/summer stock will be on its way from suppliers, retailers will need to cancel orders wherever possible, particularly on holiday and high summer products such as swimwear, suitcases and inflatables. Even countries that normally experience prolonged warm weather are unlikely to see much demand for these products as consumers make do with what they already have without the usual reasons to purchase, such as holidays, weddings and other summer occasions. Home products such as BBQs, outdoor furniture and paddling pools will be more protected as consumers spend more time in their gardens, however, stocks should still be reduced given the lower propensity to spend in general.
Retailers will also need to think creatively about how to market their products during the crisis, with many campaigns normally centred around key occasions that are unlikely to take place this year. Consumer mind sets will shift towards focusing on wellbeing, communication and relationships, and there is likely to be more interest in the home environment. Planned marketing campaigns will need to be reworked in response to how consumers are behaving and engagement will be even more important than before. Retailers who can find ways to provide social interaction for their target audience will stand out. For example, Sweaty Betty has introduced free online workouts. Other retailers such as John Lewis & Partners and Hobbycraft could partner with influencers to run live crafting sessions online where items needed could easily be bought online beforehand.
All retailers’ first priorities at the moment will be confronting the crisis caused by the coronavirus, but Lord Wolfson made clear that Next will not be standing still during this uncertain period and will be pushing ahead with its plans to improve the business. Other retailers will be using all the resources (staff and capital) that they have to survive the pandemic, but those that are able to continue innovating amongst the chaos will be well positioned to gain market share when demand returns to normal.
Dixons Carphone to close 531 standalone stores in UK
UK-based electrical and telecommunications retailer Dixons Carphone is set to close its 531 standalone Carphone Warehouse stores, which is expected to result in 2,900 job cuts.
The move comes as part of the company’s plan to turnaround its UK mobile business.
Representing 8% of Dixons Carphone’s total UK selling space, the affected stores will be closed by 3 April.
Dixons Carphone will continue the sale of mobile devices and connectivity through its shop-in-shops in 305 Currys PCWorld stores and online.
These stores allow customers to interact with products and are said to be 20 times larger than Carphone Warehouse standalone stores.
Dixons Carphone group chief executive Alex Baldock said: “We remain committed to Mobile, as we’re showing by developing a new offer for customers, retaining as many Carphone Warehouse colleagues as we can, and making Mobile a core category in our big stores and online.
“As such, Mobile will be part of the one, joined-up business that customers want and that’s essential for our transformation.”
The mobile business is expected to make a £90m loss to Dixons Carphone this year. The shift in consumer behaviour is cited by the company as a reason for the revamp of its mobile business.
Meanwhile, the company stated that it has not yet seen a material impact from the coronavirus (Covid-19) outbreak and was maintaining its full-year profit forecast.
Moreover, it noted a considerable increase in sales of fridges and freezers, small domestic appliances and laptops during the outbreak.
Dixons Carphone is set to temporarily close its Greek stores due to the pandemic.
Blow for landlords as global fashion chains demand rent holidays
Global fashion players operating stores in Europe’s shopping centres and high streets will be demanding, even enforcing in some countries, such as Spain, rent holidays over the next few months as Covid-19 continues to take greater hold.
Landlords will be at the mercy of retailers with scale, as they will be forced to rely on these tenants to bring shoppers back post-crisis, providing the centres can survive following a challenging 2019.
Intersport, KiK, Deichmann, H&M and Sport 2000 all had over 2,000 stores across Europe in 2019, making them the most exposed to quarantine restrictions and mall closures caused by the spread of Covid-19. With annual sales of over €2bn each, these players have the scale to negotiate new terms with landlords and will be working hard to cut costs throughout the supply chain to protect profitability.
Following fashion retailer demands in China, Hong Kong and Singapore, European landlords will now face requests for three or six-month rent cuts, rent holidays and rent rebates from its biggest tenants to aid survival as consumer spending severely drops off. This trend will escalate with smaller players following suit once the benchmark has been set by those with influence. The likes of Intu, Hammerson, Unibail-Rodamco-Westfield and Kleppierre will, therefore, be under even more strain to raise funds, reduce debt and protect the performance of their assets.
Largest fashion specialists in Europe by revenue, 2019. Credit: GlobalData.
Note: the chart shows the annualised 2019 revenue in Europe for the top 15 fashion specialists. All of these players had more than 970 stores in Europe in 2019, with Intersport having more than 4,000 and H&M have just over 2,500. Revenue is in euros and includes sales tax.
We expect the steps to reduce rent and close stores temporarily or reduce daily trading hours, will make retailers with a large physical store presence consider long term store closures and portfolio rationalisation, particularly as online penetration continues to build across Europe. This will lead to higher vacancy rates through European towns and cities, and the shrinkage of the indoor shopping centre / mall channel over the next few years as major anchors withdraw from underperforming locations.
Killing germs may become consumer priority after coronavirus
In late 2019, GlobalData found out consumer’s attitude towards maintaining their home, asking their view on killing germs and tidiness.
The majority of consumers globally say they try to keep their home both germ-free and tidy while consumers who prioritise killing germs over tidiness stood at 16%.
Figure: GlobalData Q3 2019 global consumer survey. Credit: GlobalData.
However, GlobalData is expecting that this consumer attitude is likely to change following the pandemic coronavirus outbreak. Its recently published report `Top Trends in Household Care and Laundry Products 2020` predicts the rise of the “super sterilised society” trend in which there is an escalating obsession with hygiene, cleanliness and immunity among global consumers. Minimising germs and viruses is likely to become of high importance for many consumers.
COVID-19: US retailers urge leaders to coordinate on operations
US retailer associations have urged state governors and mayors to inform retail leaders before issuing decisions to close or reduce business operations as they work to contain the COVID-19 virus outbreak.
The Retail Industry Leaders Association (RILA) and the National Retail Federation (NRF) sent a letter to Governor Larry Hogan, Chairman of the National Governors Association and Mayor Bryan Barnett, president of the US Conference of Mayors seeking communication and coordination from the elected officials in the current circumstances.
NRF president and CEO Matthew Shay said: “This is an unprecedented situation that demands an ‘all-hands-on-deck’ approach, and community retailers are eager to do their part.
“Whatever the challenge, retailers have prepared in advance to serve the critical needs of their customers and employees. They can quickly and thoughtfully adjust a wide variety of practices, including supply chains, stores, and policies impacting communities they serve.”
The retailers noted that notice and consultation in advance can avoid causing disruption from consumers overwhelming stores and exhausting available supplies quickly.
Furthermore, retailers will prepare their supply chains to handle customer needs both before and after recommended, or even mandatory, government officials’ store closing orders.
RILA president Brian Dodge said: “Families are counting on retailers right now and retailers are determined to be there for them. We encourage elected officials to make every attempt to communicate with retail leaders to discuss recommendations on whether to close or curtail business operations.”
The associations have also sought sufficient time for employers to create and put in place contingency plans for employees and impacted communities if the government moves to minimise business operations.
Meanwhile, many retailers have closed their stores in locations and countries hit by the coronavirus.
How FMCG brands can respond to rising stress and uncertainty over Covid-19 outbreak
The Covid-19 outbreak has created an uncertain long-term global outlook. Ongoing developments surrounding coronavirus raises a key question – how can fast-moving consumer goods (FMCG) brands respond to this increasing stress and uncertainty in consumers’ lives? One example is found in Japan.
Kao is one of the largest household care and personal care manufacturers in Japan. Its recent tweet has made a buzz among consumers with positive views. The company released a tweet about how to wash a fabric face mask under its laundry brand Kao Attack.
In Japan, disposable paper-based face masks have been in shortage for quite some time since the coronavirus outbreak in the country. Thus, people have started to use reusable fabric masks. However, consumers were unsure about effective washing for these masks. The tweet leads consumers to Kao’s special webpage, which then demonstrates how to wash and sanitise the masks step by step.
Kao also has its body and hand wash brand Biore U, and under this brand, the company created a handwashing song accompanied by a video for children. Kao’s handwashing instruction is not only for the length of time but also how to wash the hands in detail, between fingers and nails.
Kao’s handwashing video was made several years ago and was not intended for the virus outbreak. But the brand tweeted this song and video in response to the current crisis, and since then, several media outlets have reused it as useful information that helps to encourage children to wash their hands properly.
When the period of uncertainty continues, consumers tend to be overwhelmed by information that can be right or not and many of them draw comfort from the traditional and the familiar. The information provided by a company like Kao, which most consumers in Japan are familiar with, will be powerful, and potentially this can be an opportunity for established brands to gain loyalty. However, these brands must be careful to present their information and marketing to reduce stress rather than to exploit consumer anxiety about uncertainty.
Covid-19: Amazon to hire additional workers to deal with coronavirus demand
Online retailer Amazon has announced plans to hire 100,000 additional workers in its fulfillment centres and delivery network across the US to meet the surge in online orders amidst the rapidly growing coronavirus (Covid-19) outbreak globally.
The online orders are witnessing a surge as shops are being shut down and more people become home-quarantined in order to contain the spread of the Wuhan virus.
The retailer will invest more than $350m across the globe to increase pay for employees and partners by $2/hour in the US, £2/hr in the UK, and around €2/hr in many EU countries. It currently pays $15/hour in the US.
They are currently working in the company’s fulfillment centres, transportation operations and stores.
Furthermore, the company said that the newly opened part-time and full-time positions are open to people whose livelihoods have been affected by the coronavirus outbreak.
Amazon said in a blog post: “We also know many people have been economically impacted as jobs in areas like hospitality, restaurants, and travel are lost or furloughed as part of this crisis. We want those people to know we welcome them on our teams until things return to normal and their past employer is able to bring them back.”
The company further added that it is consulting medical and health experts and is taking all recommended precautions in its buildings and stores to keep the employees healthy.
As part of the precautions, Amazon has taken measures to promote social distancing in the workplace and enhanced frequent cleaning, among other things.
Meanwhile, the Covid-19 cases are continuing to increase across the globe. The death toll due to the virus has crossed 7,100 globally in 155 countries.
In the US, the death toll has surpassed 100 while positive cases continue to be reported.
Covid-19 is driving a stock market rise for ‘stay at home’ providers
The coronavirus Covid-19 pandemic is affecting the global economy in strange and unpredictable ways. Stock markets have been in freefall for weeks with the FTSE 100 dropping between five and ten points as markets open each day.
Panic buying has seen supermarket shelves empty. Toilet rolls, antibacterial spray, and hand soap have been snapped up as COVID-19 has progressed. This is against the advice of governments and the stores themselves, who say it is unnecessary.
Confusion about risk of Covid-19 infection
Amidst the widespread confusion about the risk of infection, there has been a renewed focus globally on personal and household hygiene. Reflecting this, sales of Dettol, Calgon, Finish, and Cillit Bang are on the up. All of these brands are part of the Reckitt Benckiser family.
Aside from the positive of an increase in sales, the wider stock markets’ behaviour could present the company with a chance to take the lion’s share of investment in the coming months. With most consumer goods suffering as a result of the outbreak, hygiene products will be seen as a safe bet. Owning so many of them provides Reckitt with a golden opportunity to dominate a rare rising market.
Home entertainments rising in popularity
Netflix has been steadily climbing in share price since the start of the outbreak, with stock up 1.4% since the WHO signalled a global health emergency at the end of January. As public gatherings are being avoided, and in some cases banned, in an attempt to slow the spread of Covid-19, other ‘stay at home’ stocks are also expected to rise.
Disney+, in its audacious attempt to break into an already established streaming market has perhaps entered at the best possible time. With self quarantined consumers exhausting online content, the demand for new entertainment has never been higher.
The implications for Disney also have a consumer dimension, as one of the largest merchandising companies in the world, their shows are the key driver of sales of toys and video games.
A rise in streaming holds implications for other consumer goods too. Alcohol and snack food deliveries are rising, with Uber-eats’ latest acquisition of Bargain Booze in the UK fuelling the living room party trend.
Covid-19: UK food retailers urge customers to buy responsibly
UK-based food retailers have come forward to reassure their customers regarding rising coronavirus (Covid-19) fears around the world and have urged them to buy responsibly.
In a joint letter, Tesco, Sainsbury’s, Asda, Morrisons, Aldi, Lidl, Coop, Waitrose, M&S, Iceland, Ocado and Costcutter urged their customers to be considerate in the way they shop.
The British Retail Consortium (BRC), which represents supermarket groups, quoted the retailers as stating in the letter: “We understand your concerns but buying more than is needed can sometimes mean that others will be left without. There is enough for everyone if we all work together.”
The letter also noted that the retailers are working closely with the government and the suppliers to make more deliveries and to ensure the shelves are stocked up at shops.
Reuters quoted the UK’s Health Secretary Matt Hancock as saying that the government was confident that food supplies were secure, but everybody had to act responsibly as part of a national effort.
BRC chief executive Helen Dickinson said: “Retailers are working incredibly hard to keep shops well-stocked and deliveries running as smoothly as possible.
“In the face of unprecedented demand as a result of coronavirus, food retailers have come together to ask their customers to support each other to make sure everyone can get access to the products they need.”
British supermarkets reportedly witnessed intense trading in the last few days. Some shop owners said that it can only be compared with the pre-Christmas rush.
Meanwhile, the UK is witnessing an increase in the number of coronavirus cases. The government is planning extreme measures, including home quarantining elder citizens, to restrict the spread of the disease.
Covid-19: Vineyard Vines closes stores over outbreak
US clothing and accessory retailer Vineyard Vines is closing retail stores and outlets from 16 to 27 March as part of its efforts to protect communities against the coronavirus (Covid-19).
The closures are also aimed at limiting the spread of the virus.
Vineyard Vines co-founders and brothers Shep and Ian Murray said: “The safety and wellness of our team, customers and community is our #1 priority. Given the current state of Covid-19, we have decided to close all stores and encourage you all to take the precautionary measures recommended by the CDC and WHO.
“This unprecedented time leaves us incredibly thankful for the support of our team, loyal customers and communities. Together, we have shared so many Every Day Should Feel This Good moments and, in times like this, we know that the strength and character of our communities will see us through.”
The retailer noted that it will continue to pay store employees for the previously scheduled shifts during this time.
Vineyard Vines office employees, whose jobs allow them to work remotely, will work from their home until further notice.
The retailer will also continue to serve customers through its website.
Founded in 1998, Vineyard Vines offers a variety of clothing and accessories for men, women and children.
Meanwhile, Covid-19 cases worldwide have crossed 169,300. 6,500 coronavirus deaths have been reported globally as of 15 March.
In the US, the death toll has risen to 69 while the total number of cases stands at 3,774.
Covid-19: Edible to cancel fee for same-day delivery amid outbreak
US-based fresh fruit franchisor Edible has announced plans to cancel same-day delivery charges as more citizens become home-quarantined to combat the spread of the coronavirus (Covid-19).
In addition, the brand is set to start home delivery of fresh fruit and produce in several locations.
Edible president Cheikh Mboup said: “Even though large gatherings are not happening, we recognise that many smaller events and celebrations like birthdays and anniversaries are still going on. We want to make it as easy as possible for people to continue celebrating special occasions, even during this stressful time.”
Free same-day delivery is provided for any orders placed until 3pm.
Depending on what is available in each market, the varieties of fruit and other produce available for delivery will vary between stores.
Edible also stated that no timeframe has been set for how long these changes will be in place.
The move to slash delivery fee and provide customers with home delivery of fruit and produce is intended to alleviate the concerns of citizens who are staying indoors due to the current coronavirus situation.
Mboup added: “Right now, we are like everyone else. We are monitoring the situation, remaining flexible and doing what we can to help our friends and neighbours lead as normal a life as possible.”
A subsidiary of Edible Brands, Edible has more than 1,100 locations worldwide.
Meanwhile, the US is taking extreme measures to prevent the spread of coronavirus. The country has reportedly witnessed 64 coronavirus related deaths so far.
Small cap UK retailers hit hardest by Coronavirus fears
The coronavirus crisis has had a devastating effect on share prices of UK-listed retailers, down by almost a third on average over the last month, with the smaller firms suffering the most as investors worry that the virus could push weaker retailers under.
Already the impact of coronavirus has seen Moss Bros agree on an acquisition by the owners of Crew Clothing for just £22.6m, and though this was a 61% premium on its share price before the announcement, it only brought it back to pre-coronavirus levels.
When the coronavirus crisis began investors were mainly focused on retailers with high exposure to China, either in terms of sales or supply, but as the virus has spread, concerns have moved to the threat of recession and, in the shorter term, the impact on demand of self-isolation and a possible shutdown of non-food stores, as has occurred in Italy.
While the possibility of isolation and shop closures does point to a greater negative impact for physical retailers, there had been little difference in the impact between the share prices of pureplay online and multichannel retailers, up until last Thursday (11th March). Since then there has been a major shift in investor sentiment.
In terms of sectors, there is a clear difference between the investment sentiment in food retailers and the rest, with food retailers down on average 10.9% compared to 35.5% for the rest. Food is, of course, essential, and there are some aspects of the crisis that will drive sales such as people favouring eating in rather than going out to restaurants. But panic buying of ambient goods is really only a short term sales gain that will level out as shoppers destock, and ensuring that supplies are maintained will bring additional costs.
Retailers concentrating on non-essential purchases have been hit harder, with the hardest hit being stationery, books and card sellers which were down 53.3%. It should be noted though this includes the impact of WHSmith’s profit warning on 12 March, which was driven by its high exposure to the travel sector.
While mid-market retail has had a torrid few years as shoppers have traded down to value players, their share prices have, on average, not been hit as hard. Premium retailers, with exposure to demand from China and Korea, have fared even worse on the stock market, as have value players, who rely on suppliers in China to a greater degree than the mid-market.
*Data taken from share prices of 45 UK listed retailers on close of 12 February and close of 12 March 2020. All results are weighted by market capitalisation.
Consumer germ-avoidance boosts popularity of chlorine-based cleaners
Consumers who prioritise germ-killing find chlorine to be more appealing than the average global consumer, which may suggest that, with growing health concerns around Covid-19, a surge in popularity for harsher cleaning chemicals is on the horizon.
The perceived ‘naturalness’ of ingredients in cleaning products is seen as important, as demonstrated by the 80% sales growth Tesco, one of the UK’s largest supermarkets, experienced in its vegan / plant-based cleaning products last year. This is driven to a large degree by eco-consciousness and questioning the safety of the ingredients when it comes to direct skin contact and air pollution. One affected ingredient is chlorine, which is considered the least appealing in a list of household care / laundry product ingredients. Consumers generally prefer more natural-sounding ingredients such as lemon, oxygen or plant extracts.
However, consumers who prioritise germ-killing over tidiness rank chlorine as a much more appealing ingredient compared to the global average, with a 10 percentage point increase, according to GlobalData’s 2019 Q3 global consumer survey. Hand sanitisers and cleaning products are selling out in a variety of stores globally, illustrating that germ-killing is on the forefront of the average consumers’ mind, which may cause ‘harsher chemicals’, such as chlorine, to be seen as more appealing by the general public. The perceived efficacy of harsher chemicals in cleaning products underpins this, and may present an opportunity for brands. Marketing how effective cleaning products are in eliminating bacteria and germs is more crucial now than ever, as global concern over the coronavirus grows.
How the coronavirus is emptying supermarket shelves
With news of increasing cases of Coronavirus (Covid-19) reported around the world, some consumers have been stockpiling key supermarket products such as hand sanitiser, frozen goods and toilet roll. Pictures of empty supermarket shelves have become commonplace, circulating in the media and being shared online.
This consumer behaviour has been slammed as irrational and unhelpful by many who say that they fail to understand why shoppers are feeling so panicked by potential shortages, especially of products such as toilet roll, which has no specific links to a cure or prevention of the Coronavirus.
The rationale behind those failing to understand this behaviour is that there is not yet any supply-induced scarcity. However, it is evident that the real motivation behind this panic buying is a demand-induced scarcity, driving consumers to react to potential product shortages that they are seeing online.
In its Q3 2019 consumer survey, GlobalData found that over one-third (35%) of millennial consumers are actively buying products that are trending on social media and in a world where online and social platforms are purposely designed to create and promote trends, is it really any wonder that consumers are going bonkers for bog roll?
Retailers and brands now regularly include features on their online sites that show consumers how many products are left in stock, as well as low availability of certain products that consumers may be interested in, in real-time, in order to encourage them to buy. Brands and manufacturers are also aware of how limited editions and FOMO (fear of missing out) can contribute to the hype around certain products and drive sales.
Consumer’s reactions to rare or scarce products are purposely nurtured and exploited to encourage sales on a daily basis, the only difference this time is that it has not originated from a marketing ploy.
Proximity Systems and ENS Group to develop self-disinfecting retail POS products
Proximity Systems and ENS Group have formed a collaborative partnership to develop self-disinfecting retail point-of-sale (POS) products.
The new solution will use Proximity’s next-generation UV-CLEAN disinfection technology, along with ENS’ tablet, kiosk, payment terminal, self-checkout and POS solutions.
Proximity Systems OEM sales vice-president John Deutsch said: “I’m very enthusiastic about the opportunity to partner with ENS as we expand UV-CLEAN into new markets.
“We really believe in the combination of our thorough understanding of UVC disinfection and ENS’ unmatched reputation for developing innovative, unique solutions across all industries.”
John Deutsch added that the company has engaged with ENS as its primary partner for UV-CLEAN technology in the POS and retail environments.
Recent studies conducted in common public places like grocery stores, airports, restaurants, pharmacies and healthcare facilities, found that people are at risk of exposure to harmful bacteria such as Staphylococcus aureus, Enterococcus (MRSA), Bacillus, E Coli, and C difficile.
This highlights the need for individuals to be protected from germs on high-touch public surfaces.
ENS Group president Joe Mach said: “Retailers are focused on enhancing their customers’ experience by crafting a digital interaction. Over 800 million is spent annually by retailers on touchscreen technology.
“As we focus on the retail experience, we also have to ensure the safety and health of customers and store employees. UV-CLEAN uniquely balances the customer experience with wellbeing.”
UV-CLEAN technology is claimed to be effective at terminating harmful pathogens found on high touch surfaces.
Proximity Systems and ENS Group will roll out the new solutions for retail, hospitality, financial, petro and convenience, grocery and healthcare industries later this year.