Garden centres see lowest sales since 2013

The recent spell of wet weather has hampered growth in the UK gardening sector, with sales at the lowest level in five years, according to BBC News.

The Garden Centre Association says that sales so far this year are around 15-20% down on 2017 figures, with an early Easter adding to the woes.

The Association’s chief executive Iain Wylie said people opted not to buy plants when the weather was wet, as gardens would be waterlogged.

Wylie said: “We need a sustained period of good weather. The worst thing would be one good day, one bad day. It’s been too cold and too wet and we need better weather to pick things up.”

Figures from the Horticultural Trades Association indicate that the UK garden market is worth £5bn each year. Around two thirds of British adults visit a garden centre at least once each year. Plants sales have not been this low since 2013.

Wylie hopes that the weather will get warmer later in the year, making up for the missed sales: “There will be some lost sales, but hopefully [the garden centres] will catch up with later selling plants.”

He continued: “Nurseries produce crops that bud and flower at the time they should, but if the weather outside isn’t conducive, it’s very difficult to manage the production cycle.”

Prezzo to close one third of its restaurants

Italian restaurant chain Prezzo is to close around one third of its outlets as part of a restructuring plan to avoid the company going into administration, according to BBC News.

The restaurant chain, which is owned by private equity firm TPG Capital, has estimated that the closure of 90 eateries will result in around 500 job losses out of a total workforce of 4,500 people. All 33 Chimichanga TexMex restaurants run by Prezzo are to close.

The changes are part of a company voluntary arrangement which seeks to prevent the company from going into administration. Under the deal, rents will also be reduced by between 25% and 50% at 57 of the chain’s sites.

Jon Hendry-Pickup, chief executive of the chain, said: “While we continue to be profitable, the pressures on our industry have been well documented. Despite this being a tough decision, the support given today by our creditors shows that they believe we have the right approach to transforming Prezzo in the eyes of teams, customers and stakeholders.”

In 2014 TPG purchased Prezzo for just over £300m. The chain is one of a series to come under financial pressure in recent months. Jamie’s Italian and burger chain Byron have undergone restructuring, while Toys R Us and electronics store Maplin recently entered administration.

Businesses cite increased costs including a rise in the National Living Wage and higher business rates for retail woes. Competition from online retailers is also a major concern for high street retailers and restaurants.

Sainsbury’s to increase basic pay rate, remove Sunday working premiums

Sainsbury’s has announced a shake-up of working conditions for its employees, according to the Guardian. Staff are to receive a higher rate of basic pay but paid breaks and Sunday premium pay and an annual bonus are to be discontinued.

Some 130,000 workers in Sainsbury’s stores will be paid £9.20 per hour. The retailer claims this is equivalent to a rise of around 8% in annual pay, after accounting for the loss of a half-hour paid break in every eight-hour shift and a 15-minute paid break in seven-hour shifts.

However, non-managerial staff who currently benefit from annual performance-related bonuses could stand to lose out, along with longer-serving staff who are paid time and a half for Sunday shifts. The supermarket said those who would be affected negatively would be given top-up payments for the next 18 months.

Sainsbury’s said that it was investing £100m in higher pay for staff and that the vast majority would receive more under the new rules. Fow the last three years, staff have been given 4% pay increases.

London-based workers will be paid a basic rate of £9.80 per hour, which is less than Aldi pays in the capital and below the £10.20 independently calculated London living wage.

Simon Roberts, retail and operations director at Sainsbury’s, said: “The retail sector has never been more competitive and we know that our customers really value our colleagues and the excellent service they provide in our shops.”

However, union Unite said the move was a ‘classic “robbing Peter to pay Paul” situation’ and said it would recommend rejection to its members. The union criticised plans to give staff no further pay increase until 2020.

New Look to enter a CVA

UK fashion retailer New Look has announced a plan to close 60 stores in a bid to avoid going into administration, according to BBC News.

The fashion chain’s rescue Company Voluntary Agreement (CVA), which is subject to approval from creditors, would see around 980 workers lose their jobs out of the total workforce of 15,300. Rents would be reduced at 400 stores.

New Look chairman Alistair McGeorge said the changes were ‘tough but necessary’ and that employees would be moved to roles in other parts of the business.

According to McGeorge, the ‘over-rented UK store estate’ was a key problem for the retailer and negotiations with landlords had resulted in agreements that could reduce the clothing store’s fixed cost base, boosting profits.

Daniel Butters of Deloitte, who is handling the CVA, said: “The retail environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.

“New Look is an iconic brand on the high street and the Company Voluntary Agreement will provide a stable platform upon which management’s turnaround plan can be delivered.”

Toys R Us enters administration

The toy retailer Toys R Us has gone into administration. According to BBC News, the ‘orderly wind-down’ puts 3,000 jobs at risk in the UK.

The troubled toy chain had been facing a tax bill of £15m, but poor sales figures meant it was unlikely to be able to pay. All 105 Toys R Us stores will be open until further notice.

Joint administrator Simon Thomas said: “Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided.”

Thomas confirmed that the administrators would seek to find a buyer for all or part of the business. Some parts of the chain are more profitable than others, as Thomas said: “The newer, smaller, more interactive stores in the portfolio have been outperforming the older warehouse-style stores that were opened in the 1980s and 1990s.”

The online click-and-collect facility for Toys R Us has closed, but a large sale of remaining stock is expected to be launched in stores.

The chain’s US owner filed for bankruptcy in September 2017 and the UK arm of the business only narrowly avoided entering administration in December 2017 following an agreement with the Pension Protection Fund to pay £9.8m into its retirement scheme over three years. The scheme now has a shortfall of £38m.

Julie Palmer of professional services firm Begbies Traynor said: “Rising costs from the National Living Wage, apprenticeship levy and inflation, combined with ongoing pressure on consumer spending and the continued rise of the internet are hitting retailers with a big high street presence hard.”

Morrisons to cut 1,500 management jobs

UK supermarket chain Morrisons is to cut 1,500 management jobs and create 1,700 lower-paid roles, according to Reuters.

The move is a big to cut costs along the lines of similar restructuring by larger rivals. The ‘big four’ retailers, Tesco, Sainsbury’s, Asda and Morrisons are all launching cost-cutting drives to compete with market newcomers Aldi and Lidl, who are steadily gaining market share.

Tesco has said it will cut 800 jobs and Sainsbury’s is to remove all management job roles below store manager.

Morrisons has said the net loss of 200 roles would not necessarily mean managers will lose their employment, as the chain currently has around 800 management vacancies for which affected managers could apply.

Gary Mills, retail director of Morrisons said: “Very regrettably, there will be a period of uncertainty for some managers affected by these proposals.”

eBay to ditch PayPal as preferred processor from 2020

eBay has said PayPal will no longer be its preferred payments processor, according to BBC News.

In a blog post, eBay announced that users will be able to manage payments without leaving its website. The move is said to bring benefits for both sellers and purchasers.

The Dutch company Adyen will process payments for eBay, with customers able to use PayPal if they wish until at least 2020.

Shares in PayPal fell 7% in pre-market trading in the US on release of the news.

eBay said it wanted to transition to the new payment model as soon as possible within the terms of its contract with PayPal, which is set to run until mid-2020. The agreement ‘has not been extended and it will not be extended’ according to EBay.

Adyen, based in Amsterdam, processes payments for many big digital brands including Uber, Netflix and Easyjet. The company is growing very fast, moving from $14bn worth of transactions processed in 2013 to $50bn in 2015. Bloomberg has speculated that the company could issue a public offering n 2018.

Rise in UK consumer spending

UK consumer spending in September rose at the fastest rate so far in 2017, with the exception of a peak in April around Easter, according to Reuters. A survey revealed that  price rises of food and clothing after the Brexit vote accounted for much of the spending increase.

According to figures from the British Retail Consortium (BRC), retail sales increased 1.9% annually on a like-for-like basis, up from 1.6% in August.

The increase indicates that British shoppers are adjusting to the inflation rise which occurred following the drop in the value of the pound after the Brexit vote in June 2016. The Bank of England is expected to announce its first interest rate increase in a decade in the coming months.

BRC confirmed that growth in total sales in September fell to 2.3% in September from 2.4% in August but was still stronger than in most months of 2017.

BRC chief executive Helen Dickinson said: “Spending is still focused towards essential purchases with consumers buying their winter coats and back-to-school items, but shying away from big-ticket items such as furniture and delaying the renewal of key household electrical goods.”

Food sales increased 2.5% in the three months leading up to September, while non-food sales only increased 0.5%. The Confederation of British Industry announced in September that its retail tracking indicated unexpected growth in sales to a two-year high in September, boosted by sales of food and clothing.

Consumers raise a glass to celebrate Britain’s sporting success

Britain’s supermarkets have seen alcohol sales rise as shoppers celebrated the country’s success at the Olympic and Paralympic Games.

Market research firm Kantar Worldpanel on Tuesday released its latest figures for the grocery sector, showing that supermarket sales increased by an overall 0.3% in the 12 weeks to 11 September 2016, despite continued deflation of 1.1%. Alcohol sales performed particularly well.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said: ‘While overall sales growth has been slow, consumers have been keen to celebrate Britain’s Olympic and Paralympic golden summer, boosting alcohol sales by 8.5% in the past four weeks. Sparkling wines including Prosecco and Champagne led the way with growth of 36% as promotional events across a number of retailers successfully tapped into the nation’s celebratory mood.’

Looking at individual retailers, market leader Tesco had a successful summer ‘Drinks Festival’ which helped grow its alcohol sales faster than any other major category.

McKevitt noted that, although Tesco’s sales have not yet returned to growth, a decline of 0.2% year-on-year is its best performance since March 2014. During the period its market share declined 0.1 percentage points and Tesco now accounts for 28.1% of the overall grocery market.

Sainsbury’s is in second place on 15.9%, followed by Asda (15.7%), Morrisons (10.4%) and the Co-op (6.6%).

‘Co-op continues to outperform the market with sales growth of 3.1%, primarily through its own label lines,’ McKevitt said. ‘The convenience retailer was another to post strong alcohol sales, though its produce lines were its fastest growing category, helping market share increase to 6.6%.’

Discounters Aldi and Lidl are also going from strength to strength: Aldi increased its sales by 11.6% in the 12-week period and Lidl saw sales rise 9.5%.

Both chains are benefiting from opening more stores as well as an increased spend per customer.

‘Aldi and Lidl continue to grow – not only are both continuing to expand their store estates but existing customers are visiting more frequently and upping their basket size,’ McKevitt explained.

‘The discounters are helping drive the industry-wide growth in premium own-label lines, with marketing campaigns moving away from showcasing only price to a focus on quality – collectively, premium own label grew by 29.5% in the discounters this period,’ McKevitt added.

‘Shoppers now spend an average of £19.24 when visiting the discount retailers and at a time of falling prices this increase of 4% is not to be sniffed at.’

Aldi to launch online shopping site for fine wines by the case

Discount retail chain Aldi has revealed that it plans to introduce a new online shopping site for wine for home delivery or for collection from third party locations in early 2016.

It was announced on Monday that the company’s online wine shop will be followed by the launch of non-food Specialbuys in Spring 2016. Aldi Specialbuys include electrical, baby& toddler essentials, camping and clothing, along with gardening or DIY products, which are only available for a limited time.

Aldi currently operates 598 stores in the UK and expects to open 65 new stores this year. Although its operating profits fell to GBP260.3m from GBP271.4m in the 12 months to 31 December 2014 partly due to price cut, the UK’s sixth biggest supermarket achieved record annual sales in 2014, when its sales rose 31% to GBP6.9bn, in comparison to GBP5.27bn in the previous year.

Matthew Barnes, CEO of Aldi UK, reportedly stated that the company would not necessarily start selling food online, but said that “I wouldn’t say it’s inevitable. Wine by the case and non-food is the most viable place for us to start.

“We wouldn’t do anything to endanger our model or threaten our cost base.”

Barnes added: “As the grocery market continues to evolve, our unique model, operational efficiency, private ownership and financial strength mean we’re able to keep investing in our business – from people and presence to products and prices.”