Making the News This Week – 9 August 2019
This is your weekly round-up of news from the media which impacts on the independent retail sector.
High street sales remain flat as soaring temperatures fail to boost figures
Soaring temperatures failed to boost sales on the high street in July, but resulted in the strongest web sales growth in 18 months figures published in the Daily Telegraph and i showed.
According to the High Street Sales Tracker (HSST), published this morning (Friday) by accountancy and business advisory firm BDO, like-for-like in-store sales remained flat, up 0.1 per cent in July, putting increased pressure on high street retailers heading into the third quarter of the year.
Coming from a negative base of -1.1 per cent for July last year, the results did not provide the boost retailers had needed after a tough first half of the year and with the all-important final quarter of the year looming on the horizon.
Non-store online retailers, however, saw like for like sales up 20.5 per cent from a base of 14.7 per cent last year – the strongest figures the category has seen since December 2017.
Sophie Michael, head of retail and wholesale at BDO, said: “2019 is proving to be a year to forget for the great British high street. Discounting has been relentless this summer; July’s flat sales figures will not only be disappointing for retailers but will also add further pressure to margins that are already being squeezed to the extreme.
“It is crucial the new Prime Minister delivers on his pledge to implement measures that will help save the high street and provide some much-needed reassurance to retailers and the hundreds of thousands of people they employ.”
Tesco to axe 4,500 staff in 153 Metro stores
The Daily Star was one of the first newspapers to report that Tesco was axing thousands of jobs across 153 Metro stores.
A statement from the retailer said: “The changes in our Metro stores will be focused on better tailoring them to how our customers shop.
“The Metro format was originally designed for larger, weekly shops, but today nearly 70 per cent of customers use them as convenience stores, buying food for that day.”
There will also be changes at 134 Tesco Express stores, including a reduction in opening hours at the start and end of the day as well as simplifying stock routines.
Tesco UK chief executive Jason Tarry said: “In a challenging, evolving retail environment, with increasing cost pressures, we have to continue to review the way we run our stores to ensure we reflect the way our customers are shopping and do so in the most efficient way.
“We do not take any decision which impacts colleagues lightly, but have to make sure we remain relevant for customers and operate a sustainable business now and in the future.”
Guardian broke even last year, parent company confirms
The Guardian advised that its parent company has confirmed it hit its financial break-even target, as revenue rose to £224.5 million in the last financial year, aided by growth in digital revenues and increased contributions from readers.
The Guardian now has 655,000 regular paying supporters with an additional 300,000 one-off contributors in the past 12 months.
Although income from the Guardian’s print operations remains a very significant part of the business, largely due to the cover price paid by readers, the majority of the company’s income now comes from its digital operations.
UK print advertising now accounts for just 8 per cent of total income, in stark contrast to many rival British news organisations, which remain heavily wedded to revenue from newspaper advertising and as a result are being hit hard by the industry-wide decline in circulations.
Guardian Media Group’s chief executive, David Pemsel, said: “Achieving a third successive year of revenue growth and meeting our break-even target for GNM is a tribute to everyone within our organisation. GNM has been transformed in the last three years into a more reader-funded, more digital and more international business.”
Priti: I want criminals to be terrified
In an exclusive interview in Saturday’s Daily Mail, Priti Patel signalled the end of zero-tolerance policing to make criminals “feel terror” on the streets.
“Offenders should be fearful of committing any criminal activities on our streets,” she told the Daily Mail.” Quite frankly, with more police officers out there and greater police presence, I want them to literally feel terror at the thought of committing offences.”
Patel has been tasked by Boris Johnson with restoring the Conservative party’s battered reputation on law and order and getting a grip on rising crime.
“The Conservative party is the party of law and order. Full stop. The defence of our nation, the defence of our streets and law and order are at the heart of our values,” she said.
Retiring police could be offered pension incentives to stay on in bid to hit 20,000 officer target
Police officers about to retire could be offered pension incentives to retain them and help hit Boris Johnson’s target of 20,000 extra police in three years, the Daily Telegraph revealed.
Victory for Mail as rural postmasters get pay rise
Struggling rural postmasters will be handed a 12 per cent pay rise to stem the crisis on the beleaguered network, announced the Daily Mail.
In a further boost, the Post Office said a £1,000 per year rise for processing banking deposits will be brought forward from October to later this month. The Mail said this double announcement means postmaster salaries will be lifted by £14.8 million in total – with some pocketing an extra £2,000 a year.
The announcement is the first milestone in a government-backed pay review, which kicked off seven weeks ago.
Calum Greenhow of the National Federation of SubPostmasters said: “We’re pleased to have secured these much-needed “quick wins” and we’re very thankful for the Daily Mail’s support. These announcements are only the first outcomes of the pay review. Subpostmasters can expect further positive news later in the year.”
Uproar over rates as councils sue 750 businesses every day
According to data from real estate adviser Altus Group published in the Daily Express, more than 750 companies each day are sued by their local councils as they struggle to pay rising business rates.
Around one in 10 businesses was sued by its local council over the past year for failing to cope with the ever increasing tax burden, Altus Group continued.
Its data reveals that 9.8 per cent of all non-domestic premises were issued with a summons over arrears by local councils.
During the year to March, businesses in the London boroughs of Richmond-upon-Thames and Wandsworth were worst affected, with more than a quarter of firms in the two boroughs taken to magistrates’ court.
Next was the London borough of Islington, where 23.3 per cent of firms were sued for failure to pay rates. Some firms in Middlesbrough, Liverpool and Bracknell also particularly struggled to meet business rate payments. Urban areas were issued with the most summonses in total. The cities of Westminster, Birmingham, Manchester, Liverpool and Leeds were where the highest number of firms were taken to court.
Hayton said that a “tax stimulus is desperately needed” to address the issue.
No Deal Brexit to add £220 to food bills as Boris Johnson ‘gambles with lives’
According to the Daily Mirror, Jeremy Corbyn has accused Boris Johnson of playing roulette with family finances by risking a huge hike in food prices with a no-deal Brexit.
Experts at the University of Sussex estimate prices will rise by around 7 per cent, due to tariffs and supply chain issues. Dairy could leap by 9.8 per cent, meat 2.9 per cent and oils and fats by as much as 13.2 per cent. It comes as the Bank of England warned that no-deal would further hammer the pound.
Corbyn told the Mirror: “In threatening the country with a totally avoidable no-deal Brexit, the Prime Minister is gambling with people’s lives. The impact on food prices, jobs and our manufacturing industry will be disastrous.
“After nine years of austerity holding down people’s pay, with food bank use at an all-time high and with millions of people living in poverty in one of the richest countries in the world, a hike in food prices will be unaffordable for many families.”
Food industry calls for competition laws to be on hold in event of no deal
Several newspapers advised that the food and drink industry has called on the Government to suspend or waive competition laws in the event of a no-deal Brexit to allow them to co-ordinate and prioritise the delivery of goods to where the are most needed.
No-deal would potentially disrupt food supply chains, particularly for fresh produce, which cannot be stockpiled.
The Food and Drink Federation’s chief operating officer Tim Rycroft said that there would be “selective shortages” of food that could last weeks or months.
“It may be the government is going to come to us and say, ‘can’t you guys work together to ensure that remote communities or the elderly or children – at-risk groups – don’t suffer from these shortages’,” he said.
He called on the government to “provide cast-iron written reassurances that competition law will not be strictly applied to those discussions”.
No-deal Brexit: Sainsbury’s boss says there will be gaps on shelves within a week under Boris Johnson’s plans
Former Sainsbury’s chief executive Justin King warned in the i that fresh food shortages would start to happen by October 7 if the government pushed through with a no-deal Brexit.
King said: “Let’s be clear, there’s about 10 days of food in the UK in total.
“There’s obviously a lot more than that in packaged goods and in frozen. So a very small number of days in fresh food.”
“The kind of disruption that the government is talking about today, 50 per cent of vehicles being held up, will lead to gaps on the shelves within a week in the UK, significant gaps.”
Campaigners call for ‘CALORIE TAX’ on chocolate, cake and biscuits to curb rising obesity rates
Ministers are being urged to consider putting a ‘calorie tax’ on cakes, biscuits and other processed food, revealed the Daily Mail.
Processed snacks should be limited to how many calories they can have per 100g before manufacturers are forced to pay extra to sell them, they argue.
Campaign groups Action on Sugar and Action on Salt say cutting back sugar is not enough to tackle obesity – two thirds of adults are now overweight in the UK as well as almost a third of children.
The groups haven’t explained how the tax could work but suggested it could be based on a Mexican model which adds eight per cent tax if a product has more than 275kcal per 100g of food.
Katharine Jenner, campaign director of Action On Sugar and Action On Salt, said: “If you want people to make healthier choices, you have to hit them in the pocket where it hurts. Unhealthy food taxes are proven to be successful. It means you can still buy a massive cake covered in cream and chocolate, but it’s just going to cost a bit more.
“Cakes and biscuits are really sugary foods and they’re currently under a sugar reduction programme from Public Health England. But it doesn’t make sense to just incentivise manufacturers to reduce sugar when most of the calories come from saturated fat.”
The groups took inspiration from the sugar tax on fizzy drinks, which charges up to an extra 24p per litre in tax depending on sugar content. They will submit the proposal for a calorie tax to the Department of Health this autumn.
Cadbury set to slash calorie limits of chocolate bars in bid to tackle obesity
Cadbury is set to cut the calories of popular chocolate bars such as Chomp and Fudge in a bid to make them healthier, advised the Daily Mirror, Daily Mail and Daily Telegraph.
While this means the size of some individual snacks will reduce, Cadbury has admitted only some treats will see a reduction in price.
A Curly Wurly is set to become slightly smaller in order to reduce its calories from 118 to 100, and the calorific content of Cadbury Fudge is set to fall from 114.
Meanwhile, the individual packs of Cadbury Mini Fingers and Mini Animals could be shrunk from next month.
Louise Stigant, UK managing director at Cadbury’s owner Mondelēz International, said the firm was committed to tackling the health crisis.
She told the Telegraph: “We want to play our part in tackling childhood obesity and are focusing on the areas where we can make the greatest impact. Our brands have been around for hundreds of years and play a special role in people’s lives as treats to be enjoyed in moderation.
“We want to support parents when they choose to give their children a treat and introducing this calorie cap will make it simpler for them to find a treat under 100 calories that children will enjoy.”
Cadbury recently reduced the sugar in Maynards Bassetts Wine Gums by 30 per cent and is set to do the same with Jelly Babies later this year. It also changed the recipe of its famous Dairy Milk bar for the first time in 114 years last month, with the new bar having 30 per cent less sugar. It is now on sale alongside the traditional bar.
Stigant added: “The motivation for this is not about price. This is about creating products that are less than 100 calories. If we want to play our part taking action over childhood obesity, this is a really important way of doing it.”
Three UK coins the Royal Mint simply didn’t bother to make last year
Most newspapers advised that in 2018 not a single 1p coin was struck for general circulation – and it wasn’t the only coin the Royal Mint took a break from making.
“Our coins are of the highest quality and the amount we ask the Royal Mint to produce every year depends on demand from banks and Post Offices.”
Retail sales over past year weakest since records began in 1995, survey shows
Retail sales saw the weakest average rise on record in the past year, a survey published in the Independent has shown.
In July alone, sales ticked up 0.3 per cent from a year ago after falls in the previous two months.
“The UK may have had record temperatures in July, but retail sales were far from record-breaking at just 0.3 per cent growth,” said Paul Martin, UK head of retail at KPMG, which sponsors the survey. He added that ‘lacklustre’ grocery sales were a cause for concern.
The survey tallied with another set of data released this week, showing that broader consumer spending was dragged down in July by a 0.9 per cent fall in spending on essentials such as food and petrol.
The data from Barclaycard – which sees almost half of Britain’s credit and debit card transactions – revealed that consumer spending rose only 1.7 per cent year-on-year. That followed similarly muted growth in May and June.