Greggs, Hotel Chocolat, John Lewis: Everything that matters this morning
Good morning and welcome to Marketing Week’s round-up of the news that matters in the marketing world today.
Greggs promises to increase marketing spend in loyalty push
Greggs says it will “increase marketing investment in the months and years ahead” to drive visit frequency and average transaction value.
The bakery chain claims the recent relaunch of its app is laying the foundations for future growth as the business looks to attract “many more customers” to its loyalty scheme. Greggs says it will adopt a “CRM approach” to offer customers reasons to visit more often, as it looks to grow its membership base from the current 400,000 members.
Despite disruption to staffing and supply chains, sales rose by 3.5% during the third quarter, compared to the same period in 2019. Growth was particularly strong in August when Greggs benefited from a ‘staycation’ effect and remained positive into September, with two-year like-for-like growth of 3% in the four weeks to 2 October.
Greggs says delivery sales have continued to “develop well”, with 943 shops now involved in supplying customers. The business expects delivery to expand to around 80% of its company-managed estate in the years ahead.
Claiming that its menu already has “great relevance” for early evening dining, Greggs is planning to develop further hot food options for evening meals and identifies click-and-collect as offering further scope to drive sales, including made-to-order range extensions.
This early evening market is of interest to the business, which is planning for two-thirds of its estate to be suitable for late trading – both walk-in and delivery. By the end of 2022, 500 shops will be open until 8pm.
From a menu perspective, Greggs says the broadening of its vegan-friendly food and drink options has been well received, notably the limited-edition vegan sausage, bean and cheese melt, while pizza and savoury boxes are proving popular for delivery.
The business opened 68 new shops in the year to-date and expects to add a further 100 net shop openings this year. The plan is to accelerate the rate of net shop growth to 150 per year from 2022, with potential for at least 3,000 shops. Greggs wants to meet its “ambitious target” to double turnover to £2.4bn by 2026.
Hotel Chocolat hails evolution to ‘digital-led brand’ as profits soar
Hotel Chocolat says it is “performing strongly” against its goal to evolve from a “UK store-led brand to globally ambitious digital-led brand” as profit growth has exceeded expectations.
The premium British chocolatier saw revenue increase by 21% to £164.6m in the 52 weeks to 27 June, 70% of which was generated through “digital, partners and continuity products”. Pre-tax profit rose from £2.4m in 2020 to £10.1m, while statutory profit after tax hit £5.7m compared to a loss of £7.5m during the same period last year.
Following a year of “strong digital growth”, which the brand claims more than offset disruption to physical retail, sales growth accelerated further from April with the re-opening of UK stores post-lockdown. Hotel Chocolat says these results indicate the “effectiveness of the multichannel sales model”.
The company experienced a 31% increase in its active customer database to 1.8 million, while its in-home hot chocolate system Velvetiser is said to be offering a high lifetime-value subscription model.
The brand also pointed to success in the US market, where it has pivoted from a store-led to digital-led strategy, and the growth of its Japanese joint venture, which is now trading from 27 Hotel Chocolat stores. From a global wholesale perspective, the business claims its strategy of creating capsule ranges tailored for each partner retailer is driving strong growth.
Hotel Chocolat says it is continuing to strengthen its brand, for example through the launch of its Gentle Farming Charter. The charter enables every farmer suppling the brand to earn a ‘living income’ by further increasing the price paid for cacao to better reflect local costs of living. In return farmers commit to sustainable farming practices, zero deforestation and zero illegal child labour.
The business is also pressing ahead with innovation, including introducing new Velvetiser flavours, enhanced gifting ranges and a new Rabot Estate Coffee range. Some 94% of all Hotel Chocolat product packaging is now ‘widely recyclable’, on track for 100% recyclability by the end of 2022.
The brand plans to ramp up investments to enhance its digital customer experience, including improved VIP Me loyalty capabilities in-store launching in the spring. In addition, tech upgrades will be rolled out to support “scalable multichannel growth” and improved CRM and subscriptions.
Hotel Chocolat cofounder and CEO Angus Thirlwell says the company has improved on many fronts over the past year, with digital and subscription-continuity models surging ahead and its global aspirations ramping up.
“The continued challenges of Covid-19 pushed us to accelerate many of our existing plans and strategic initiatives, helping to strengthen our financial position, improve our multichannel capability, deepen customer engagement and loyalty, and accelerate the rate of product innovation, while continuing to make good progress in our two new and sizeable markets of the USA and Japan,” he adds.
“I am confident that the strategic progress we have achieved over the past year has improved the performance and prospects of the business for significant years to come.”
Facebook back online after six-hour outage
Facebook, Instagram and WhatsApp are back online after an almost six-hour outage, which saw shares in the social media giant slip by 4.8%.
The three platforms, which could not be accessed over the web or on app, first went down around 4pm UK time, with 10.6 million problem reports being logged by outage tracking site Downdetector.
In a statement, vice-president of infrastructure Santosh Janardhan said the outage was due to a faulty configuration change and insisted there is “no evidence” user data was compromised as a result. The underlying cause of the outage impacted many of Facebook’s own internal systems, such as emails and messaging tool Workspace, complicating attempts to solve the problem.
Janardhan apologised to all people and businesses affected, saying the company was working to make its infrastructure “more resilient”, while CEO Mark Zuckerberg said in a statement: “Sorry for the disruption today – I know how much you rely on our services to stay connected with the people you care about.”
The outage comes a day after former product manager turned whistle-blower Frances Haugen told US show 60 Minutes that Facebook repeatedly chooses “profit over safety”.
“Facebook has realised that if they change the algorithm to be safer, people will spend less time on the site, they’ll click on less ads, they’ll make less money,” she said.
Haugen is testifying today before a US Congress sub-committee entitled ‘Protecting Kids Online’, which is probing the impact Instagram has on the mental health of young users. Last week the Wall Street Journal published leaked internal research commissioned by Instagram, which showed the app was affecting girls’ mental health around issues such as body image and self-esteem.
While Facebook refuted the research findings, stating that on 11 of 12 wellbeing issues teenage girls who struggled with mental health issues said “Instagram made them better rather than worse”, the company has since paused work on Instagram Kids, a service pitched at users aged under 13.
John Lewis kicks off first media agency pitch for a decade
The John Lewis Partnership is undertaking its first media agency pitch process for a decade as the business adjusts to “enormous changes” in the media landscape.
The account has been held by MG OMD since 2006, which currently plans and buys the media – including digital and programmatic – for John Lewis, Waitrose and John Lewis Financial Services.
Working with Oystercatchers, a specialist in media agency evaluation, engagement and selection, the process will run from October, with a decision expected early in the new year.
MG OMD will be included as part of the process should the agency wish, while the pitch does not include a review of the Partnership’s creative account held by Adam&eveDDB.
Waitrose customer director Martin George explains it is important for the business to review its supplier relationships, including those with key agency partners.
“MG OMD have made an invaluable contribution to our business during our time working together, however we have not reviewed our media buying agency support in more than ten years and given the enormous changes in the media landscape this is the right time to assess,” adds John Lewis customer director Claire Pointon.
Asos rolls out ‘seven-figure’ campaign co-created with influencers
Asos is launching a “seven-figure” advertising campaign returning to its ‘As Seen On Screen’ roots, co-created with influencers.
Aimed at the fashion site’s core twenty-something female customer, the three-month campaign will run across video-on-demand, social media and programmatic channels in the UK, France and the US.
Developed by the Asos Creative Lab, The Sunshine Company, Byte London and Smuggler Productions, the campaign centres on a film designed to “reaffirm” Asos as “relevant and inspirational” during the peak shopping period running up to Christmas.
The creative is designed to offer a “renewed interpretation” of the brand’s founding ‘As Seen On Screen’ idea of fashion inspiration and features self-filmed footage from influencers including musician Sasha Keable, philanthropist Eva Apio and activist Gabrielle Richardson, aka Frida Cash Flow. The content submitted by the influencers has been used to create more than 150 social assets, tailored to how Asos customers find fashion inspiration across each social platform.
“It’s incredibly exciting to be launching this new advertising,” says Asos global brand creative director John Mooney.
“It’s smartly planned, targeted and timed, and the creative embodies Asos’s belief that inspiration comes from everywhere, no matter who or where you are, while positioning the brand as a creator, curator and champion of style. The screens have changed, but at our core we’re still about as seen on screen.”
Monday, 4 October
US company wins Morrisons auction
US private equity company Clayton, Dubilier & Rice (CD&R) has won the auction for supermarket Morrisons with a bid of £7bn and is now in position to take over the brand next month.
The takeover of Morrisons has dragged on since June due to fierce competition between CD&R and fellow private equity company Fortress.
CD&R has offered 287p per Morrisons ordinary share beating Fortress which bid 286p per share. Morrison’s board recommended accepting a bid higher than 285p per share in August after turning down a bid from CD&R worth £5.5bn in July, stating this undervalued the brand.
The board is expected to recommend shareholders accept the new offer at a meeting on 19 October. Once accepted CD&R will be official owners of the brand by November.
The acquisition also means a return to the grocery sector for former Tesco CEO Terry Leahy, who is a senior advisor to CD&R.
CD&R has said previously under its ownership, it will aid in building Morrisons strength including its close relationship with suppliers and leverage its property portfolio. It recognises Morrisons’ “history and culture” and considers its “strong heritage” when building its strategy for the brand.
Morrisons began in Bradford 1899 where it still operates its HQ, and runs almost 500 shops, employing 110,000 staff.
Wetherspoons posts record loss
JD Wetherspoons has posted a record annual loss placing the blame on Covid-enforced lockdowns.
The pub chain posted a £154.7m loss as sales fell sharply in the year to 25 July, after a £34.1m loss a year earlier.
Revenues generated through pints, meals and soft drinks fell by 38.8% from a year earlier to £772.6m.
Despite the loss, the chain says there are signs of recovery since the UK has come out of lockdown but it is struggling to find staff in some parts of its operations.
Like-for-like sales were 8.7% lower in the last nine weeks than in the same period before the pandemic.
Wetherspoons chairman Tim Martin says: “Pubs have been at the forefront of business closures during the pandemic, at great cost to the industry – but at even greater cost to the Treasury.
“In spite of these obstacles, Wetherspoon is cautiously optimistic about the outcome for the financial year, on the basis that there is no further resort to lockdowns.”
Martin has previously said lockdowns and other restrictive measures designed to curb the spread of the pandemic as “draconian”.
Chancellor to announce £500m boost for job support
Chancellor Rishi Sunak is expected to announce a £500m boost to job support to curb a surge in unemployment after the furlough scheme came to an end last month.
The Chancellor is expected to make the announcement today at the Conservative Party conference in Manchester, where he will outline funding for schemes to increase employment among the over-50s and those coming off furlough.
Measures in the new package from the government include one to one support in jobcentres and extending a £3,000 incentive for employers to hire apprentices to 31 January.
Sunak is expected to pledge he is “doubling down” on his 2020 promise to do “whatever it takes” to support people through the crisis.
Around 11.6 million jobs were supported under the furlough scheme which came to an end on 30 September, despite unions and businesses urging the government to not scrap it.
Sunak is also expected to highlight government plans to invest in infrastructure and skills.
“We are going to make this country not just a scientific superpower, not just the best place in the world to do business, I believe we’re going to make the UK the most exciting place on the planet,” he will say.
Quaker Oats launches purpose-led campaign
Quaker Oats is aiming to stand out in the cereal category with the launch of a multimillion-pound purpose-led campaign.
‘The Fire Inside’ campaign will be led by a TV campaign that shows the evolving needs of consumers at breakfast. It goes live today across TV, digital, social and in-store. It will see the introduction of a new identity across its advertising activations.
PepsiCo senior marketing manager Claire Molyneux says: “We have big ambitions for Quaker, and the Fire Inside campaign epitomises our brand purpose. To re-discover the unique role that Quaker plays in consumers’ lives, we went back to our 1909 brand manifesto.
“Quaker Oats were made not only to offer the best in wholesome nutrition, but to act as a fuel for life. With what we have seen over the past few months, we know this message is more relevant than ever before. The Fire Inside campaign will help us to deliver this iconic message but in a fresh and modern way. We are confident the activity will stand out in the cereals category, providing cut-through for retailers and ensuring Quaker is the breakfast of choice this winter.”
The campaign also builds on the brand’s 10 years of support for charity Magic Breakfast, driving awareness of child food poverty by showing empty bowls on limited edition packets. The brand, which is owned by PepsiCo, pledges to fill a child’s bowl for every packet sold, tying in with World Food Day on 16 October.
This will see an additional 500,000 breakfasts provided over the winter months, on top of the nearly 3 million bowls of porridge Quaker will supply across the full 21/22 school year.
Three celebrates football with a new perspective
Three UK is “celebrating the passion of football fans” through its latest advertising campaign which uses smartphone footage.
The activation, created with agency Wonderhood Studios uses footage entirely from smartphones to “capture the essence” of what it is like to be a football fan and player, instead of through the lens of high budget broadcasters.
The campaign is made in partnership with Chelsea FC, which the mobile operator has partnered with since July 2020 in a three-year deal.
It shows footage from Chelsea players and fans waking up with excitement on match days, travelling to grounds, players stepping off the bus and being in the crowd during high energy moments.
The latest activation is of the network’s new brand platform ‘Life Needs a Big Network’, which aims to show how important football is to the lives of millions and how mobile connectivity is integral to being a fan in this age.
All fan content featured in the advert was sourced through Seen.it, a platform that allows fans to film and submit their own content. Around 300 submissions were sent from Chelsea fans globally on the first game of the current English Premier League season.
Three marketing director Aislinn O’Connor says: “Football has been an important part of people’s lives for generations no matter what team you support. With our network fans can immerse themselves in matchday excitement from the moment they wake up, as we keep them connected to every single moment that matters, big or small.”