Making The News This Week – 11 May 2018

This is your weekly round-up of news from the media which impacts on the independent retail sector.

MPs launch inquiry into high streets facing threat from online

A cross-party group of MPs is to investigate how to revive England’s ailing town centres which are under increasing threat from online shopping, revealed the Guardian.

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The housing, communities and local government committee has invited submissions to an inquiry that will consider what high streets and town centres could look like by 2030.

Clive Betts, the Labour MP who chairs the committee, said: “Our high streets and town centres have an important social, civic and cultural place in our society. But, many of our high streets are now struggling, facing a range of challenges including the threat posed by online retailers.

“Changing trends and behaviours in recent decades – driven by a range of economic, demographic, social and technological factors – have affected the prosperity and vibrancy of our high streets.”

The MPs’ inquiry will also consider whether councils have the correct planning, licensing, tax-raising and other tools needed to help local areas.

Nearly £60 billion was spent via smartphones and tablets in 2017 – a figure that equates to more than £1 in every £6 spent on the high street. While the shift is benefitting online-only retailers such as Amazon and Asos, it is forcing radical change on the country’s towns and a city as huge swaths of physical retail space become redundant.

The committee said it welcomes the views of the public on why their high street matters and what improvements could be made.

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Brexit could lead to a bigger bill for the weekly food shop, peers warn

Brexit could lead to a bigger bill for the weekly food shops, peers have warned – unless the government gets a secure trade deal with the European Union, reported the i.

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An inquiry by a House of Lords committee has said it is ‘inconceivable’ Brexit won’t have an impact on food prices in a no deal situation.

Currently, the UK benefits from the free movement of goods within the EU, which means foods imported from the EU aren’t subject to tariffs. While the government is seeking a tariff-free trade agreement, there is a possibility an agreement will not be reached.

Half of the UK’s food is imported, with 30 per cent from the EU and another 11 per cent from countries with EU trade deals. The committee’s report also says 40 per cent of vegetables and 37 per cent of fruit sold in the UK come from the EU.
The UK Trade Policy Observatory has predicted price increases of 5.8 per cent for meat; 8.1 per cent for dairy products; 4 per cent for vegetables; 3.1 per cent for fruit; 1.8 per cent for bread and cereals and 1.5 per cent for fish. Meanwhile, Dairy UK’s modelling warned of a 20 per cent rise in the retail price of cheese.

However, a government spokeswoman told the i: “Food prices depend on a range of factors, including commodity prices, currency exchange rates, and oil prices – this will continue to be the case when we leave the EU.

“But we also want to ensure consumers have access to a wide range of food, which is why we are considering how we best manage border checks and controls when we leave the EU without impacting the smooth flow of trade.”

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Sugar tax on Food to Wipe out Diabetes

Three leading cardiologists have told the Daily Express that a tax on sugary food could solve Britain’s obesity and Type 2 diabetes crisis in just three years.

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They have devised an eight-point plan to prevent what they describe as a health disaster.

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£2bn fire-sale of a cigarette empire

More than £2 billion of tobacco businesses look set to be sold by Imperial Brands as it moves its focus to e-cigarettes.

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Chief executive Alison Cooper said it was too early to say which parts of the business would now be sold, but admitted vaping was now a big focus.

“When you have got a dynamic like this happening – the opportunity for consumers to switch to new products – I think we are in a very strong position to capitalise on that growth.”

Chief development officer Matthew Philips added: “We see next-generation products as being an opportunity for us.”

Imperial’s specialist brands made sales of £569 million during the half year, up 1.4 per cent on last year. Profit was £833 million, down 7.6 per cent but this was due to Palmer & Harvey going bust.

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Assaults on British shopworkers almost trebled last year

Assaults on British shopworkers almost TREBLED last year amid a dramatic spike in crimes committed against businesses, Home Office figures published in the Daily Mirror have revealed.

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The newly published Commercial Victimisation Survey – which examines the nature, extent and cost of crime against traders – found there were 1,433 such incidents in 2017 per every 1,000 premises. The figure is a near three-fold increase on the 524 per 1,000 reported the previous year.

Statistics also show the number of crimes committed rose from 5.2 to 8.1 million, with almost two-thirds attributed to theft by customers.

In October last year, masked robbers armed with wrenches assaulted a newsagent worker in a terrifying raid captured on CCTV in Stalybridge, Greater Manchester, while in April a female shop worker was pushed to the floor and threatened by at a newsagents in Wigan, the Mirror said.

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Shop closures ‘set to double in three years’

Scotland is losing three shops a week and the retail conditions in many towns are getting tougher, according to data compiled for The Times.

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The Scottish Retail Consortium (SRC) said that the rate of shop closures could double in three years and will particularly affect poorer areas.

Statistics collated by the Local Data Company, a specialist in retail analytics, show that more than 9,100 retail units have gone out of business in the three years to April. Over the same period 8,628 new shops opened, giving a net loss of 476 outlets across Scotland.

LDC said that traditional retailers are under pressure from a trend towards online shopping and have faced steep increases in wages and business rates. The closure of bank branches is also having an impact on many Scottish communities.

The analysis showed that the number of shops in Edinburgh and Glasgow increased and the declines in Aberdeen and Dundee were relatively small. Ayr and Perth suffered big falls, although Paisley, buoyed by its regeneration efforts and City of Culture bid, had a notable rise.

Ewan MacDonald-Russell, from the SRC, said that shop numbers had fallen by 7.5 per cent in Scotland since the 2008 financial crisis and that trend was unlikely to reverse.

He said: “We’ve projected that closure rate will likely double over the next few years as the forces impacting on retail continue to change the industry. What is particularly concerning is these closures have, and are likely to continue, to occur in an asymmetric manner which will see some less affluent or less popular areas be affected disproportionately.

“That will lead to some town centres having a very limited retail offering, and the reality is once shops have closed there is a risk of a vicious cycle of fewer attractions lowering footfall and making the situation worse.”

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Digital delay

HM Revenue and Customs’ digital revolution has been postponed as tax officials are busy preparing for Brexit, the Daily Mail revealed.

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The Making Tax Digital plan was due to be completed by 2020, with traditional annual paper returns being phased out.  HMRC said it had delayed the scheme “to concentrate on EU exit work”.

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Bank closures to reach record levels

Since January, 628 bank branches have been closed, or earmarked for closure according to a report by Which? that was published in the Sunday Express.

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All the major banks are closing branches, due to the rising cost of operating the sites and the growing use of internet and smartphone-based services by customers. A total of 2,374 bank branches have been closed or targeted for closure since 2015.

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No reprieve for 52 RBS branches — but no more closures for two years

The Royal Bank of Scotland has pledged not to reduce its branch network again before 2020, but there is to be no reprieve for the 52 sites already slated for closure, wrote The Times.

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Ross McEwan, the chief executive, told MPs that the lender’s high street estate in Scotland was not going to be reviewed again in the short term.

The bank faced criticism from unions, politicians and community groups when it announced plans this year to shut 62 branches. The pressure forced RBS to put up 10 of those sites for independent review and keep them open until at least the end of the year. McEwan said that the remaining 52 branches would have to shut their doors because the bank was a “commercial business”.

He said that there would not be a reverse of closure decisions but pledged no additional branch losses beyond those already announced.

“I am comfortable with the size of our branch network in Scotland,” McEwan told the Scottish affairs committee at Westminster on Tuesday. “We will not look again at the size of the network until 2020. We do understand the changes we are making and the impact we are having on customers. At the end of the day I am running a commercial organisation and we have to make commercial decisions.

McEwan pointed to investment in mobile vans, ATMs and a partnership with Post Office branches as among the reasons that there are now more than 2,000 physical points across Scotland at which a customer could interact with the bank.

Ged Killen, Scottish Labour MP and member of the committee, said: “Labour has been clear that the RBS branch closure programme must be halted and reversed. It is wishful thinking on RBS’s part to think that online, telephone and mobile banking can fill the gap left by lost branches.”

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RBS sending customers to the post office

According to the Daily Mail, RBS staff are taking customers to nearby post offices and showing them how to make financial transactions when their local branch shuts.

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Boss Ross McEwan said families hit by branch closures were being escorted to the local post office so they can learn about the services it offered, such as depositing cash and cashing cheques.

Labour MP John Mann, a member of the Treasury select committee, said the report would be funny if it wasn’t true, adding: “This is one of the  many stories which prove that the banks’ line that customers no longer use branches is fiction.”

McEwan said the bank also offers customers training on using online banking.”

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Nestle pays $7bn to sell Starbucks coffee beans

Nestle is paying $7.15 billion in cash to Starbucks for the rights to sell its coffee beans in shops and supermarkets around the world, both the Daily Telegraph and Daily Mail revealed.

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For Starbucks, the deal will expand its global presence as its coffee beans and ground coffee will be sold through Nestle’s extensive food retail channels.

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Retailers suffer sharpest fall in sales since 1995

The British Retail Consortium and KPMG have reported that retail sales declined by 3.1 per cent in April, the sharpest decline since the survey began in 1995, advised the Guardian.

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Helen Dickinson, the BRC’s chief executive, said: “With much of the spending in preparation for the bank holiday weekend falling in March this year, a record low in sales growth, in contrast to last year’s record high, does not come as a surprise. However, even once we take account of these seasonal distortions, the underlying trend in sales growth is heading downwards.”

KPMG’s head of retail, Paul Martin, said: “Retailers have got their work cut out to overcome seemingly endless obstacles, whether it be unpredictable weather or the introduction of new regulation, like GDPR [the EU’s General Data Protection Regulation].

“The upcoming months will provide a number of opportunities for retailers to drive sales and navigate this assault course, including bank holidays, World Cup and of course the royal wedding, although it is clear that trading will remain challenging.”

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Sainsbury’s-Asda merger could create ‘monopoly’ towns

Torquay, Brighton and Kirkcaldy are among locations that could become ‘’monopoly’’ towns if the Sainsbury’s/Asda merger goes ahead, warned the Guardian.

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MPs are demanding action to protect communities from such an outcome, fearing it could lead to higher prices. The Competition and Markets Authority is expected to scrutinise the proposed merger carefully, with its investigation to be launched within weeks. It is expected to take at least six months to complete.

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Aldi and Lidl fight back against Asda Sainsbury’s tie-up

Aldi and Lidl have vowed to remain the cheapest options for customers if Sainsbury’s does slash prices following its £14 billion takeover of Asda, reported the Daily Mail.

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An Aldi spokesman told the newspaper: “We will never be beaten on price and are absolutely committed to maintaining the significant price gap between us and our competitors.”

A Lidl spokesman said: “Our customers can be assured that we cannot be beaten on price.”

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Amazon ‘could buy Morrisons and spark another supermarket price war’

Amazon could buy Morrisons, as it makes a deeper push into the grocery market, analysts have suggested to the Sun.

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Morrisons already agreed a deal with Amazon that saw it offer “fresh and frozen” products through Amazon Pantry and Amazon Prime Amazon started delivering food for the first time in the UK last summer with AmazonFresh, after signing a wholesale deal with supermarket Morrisons.

But the recent slew of mergers in the UK’s grocery market could now spur the online giant retailer to takeover the supermarket, Bryan Roberts, from TCC global, suggested.

He said: “Investors will be nervous about the growing threat from consolidation in the grocery market following the recent slew of mega mergers, with the planned deal between Sainsbury’s and Asda announced last week and Tesco and Booker earlier in the year.

“Looking ahead, a takeover bid from Amazon is not beyond the realms of possibility, as the e-commerce behemoth looks to grow its footprint in UK retail – something that became clear after rumours surfaced that it made moves to buy Waitrose in 2017.”

Both Morrisons and Amazon told the Sun Online that they do not comment on rumours and speculations.

Last week, Asda and Sainsbury’s announced that they would be joining forces, creating a supermarket superpower with sales of more than £50 billion and 2,800 stores across the UK.

The news came as Morrisons revealed that sales rose in the first quarter and

10 quarters in a row, as its recovery continues.

Chief executive David Potts said: “We are pleased to have made a strong start to the year, again becoming more competitive for customers while delivering growth on growth. We expect to continue to improve in the year ahead.”

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