December 5, 2022

NORDchinaz

The Business & Finance guru

Everything that matters this morning

Elon Musk’s Twitter deposition delayed

Twitter has agreed to delay Elon Musk’s scheduled deposition, due today, as it tries to work out a deal with the Tesla boss to buyout the platform, reports the FT.

Originally, Musk was scheduled to appear on Thursday morning, where he would have been deposed for two days by Twitter’s lead litigation attorney.

Earlier this week, Musk re-committed himself to buying out Twitter, reversing his decision to back out of the $44bn (£38bn) deal. The FT reports that Twitter is seeking “precise contractual protections” from the court to guarantee that Musk will go through with the deal, amid tensions from both sides.

The delayed deposition comes after Musk tweeted that “Buying Twitter is an accelerant to creating X, the everything app.”

However, the trial set for 17 October is still in the works, as the judge overseeing it said: “The parties have not filed a stipulation to stay this action, nor has any party moved for a stay. I, therefore, continue to press on toward our trial set to begin on October 17.”

READ MORE: Elon Musk’s deposition delayed as he wrangles with Twitter over deal (£)

Bolt drivers launch claim after being ‘wrongly’ classed as self-employed

Bolt, the ride-hailing app, is facing a problem after more than 1,600 of its UK drivers working for the app seek compensation for minimum wage payments and missed holiday.

The drivers are arguing that they have been incorrectly considered to be self-employed contractors, reports the Guardian.

The claim is in its first stage, as lawyers for the drivers have now written to Acas, the government-backed workplace conciliation, to begin the claim against Bolt.

The president for the Independent Workers’ union of Great Britain, Alex Marshall, says: “Drivers working for Bolt value flexibility, but they are currently denied basic rights and protections.”

He adds that, “Like Uber has done in the past, Bolt uses the wrongful misclassification of workers as an excuse for forcing drivers to work without holiday pay, guaranteed minimum earnings and other rights”.

Refuting the claim, a Bolt spokesperson said the company complies with “applicable laws” and regulations, and that its model is different to Uber’s, which has faced contention itself.

“Bolt’s operating model means drivers receive higher earnings per trip and benefit from total flexibility. Our extensive driver engagement shows time and again this model is what the vast majority of our drivers want,” the spokesperson said.

READ MORE: UK drivers for Bolt ride-hailing app pursue worker benefits claim

Primark u-turns on changing room plans

Primark is reintroducing women-only changing rooms, following complaints raised over the retailer’s move to combine spaces.

In a statement on its website, Primark said it’s “important for everyone to have a positive experience” in their stores. The move comes in part following one female customer complaining two men walked in on her in a changing room in Cambridge.

The retailer says that alongside re-introducing women’s changing facilities, it will be lengthening the curtains on its cubicles with new mechanisms to keep them in place too.

Combined changing facilities will remain in place in 187 of its 191 UK stores, alongside female-only fitting rooms.

The company continued to say that it wants its stores “to be places where everyone feels safe and welcome” and that it was “sorry to hear this hasn’t been the experience some people have reported in our fitting rooms”.

READ MORE: Primark re-introduces women-only fitting rooms

Hackney Gelato to increase marketing spend

London-based luxury ice-cream brand Hackney Gelato is set to increase its marketing investment, following a £600k crowdfunding campaign.

The campaign has raised £667,000 from 312 backers, reports the Grocer. The business’s revenues, which launched in 2015, have grown in the last four years to £2.4m.

The brand plans to use its crowdsourced funds to grow its sales team and invest in in-store marketing and sampling to wider its customer base, while also increasing the size of its kitchen and warehouse.

“There is a clear shift towards luxury within the ice cream category, and we want more people to discover how good carefully crafted Italian gelato can be,” says cofounder Enrico Pavoncelli, who notes how the brand has gone from market stalls to being stocked across Ocado, Waitrose and Tesco.

READ MORE: Hackney Gelato to increase marketing investment after hitting £600k crowd target

Two-year fixed mortgage interest rates reach 14-year high

As mortgage rates continue to climb, the interest rate on a standard two-year fixed rate mortgage has risen past 6% for the first time since 2008.

The deal now has a typical rate of 6.07%, according to financial information service Moneyfacts, reports the BBC.

The increase will impact first-time buyers and people looking to remortgage their homes the most. An average of at least 100,000 people a month are coming to the end of their current mortgage, facing jumps in their monthly repayments.

The rise comes as Prime Minister Liz Truss gave her keynote speech at the Conservative Party conference yesterday, saying she will get Britain “through the tempest” of rising mortgages and energy bills while committing to a “growth, growth, growth” economic strategy.

When the mini-budget was announced, thousands of deals were pulled from the market – the BBC reports there are now 2,371, against 3,961 two weeks ago, but they are more expensive on average.

Representatives from banks such as Barclays, Natwest and Lloyds Banking Group are expected to attend a meeting today with Chancellor Kwasi Kwarteng to discuss the issue, amongst other concerns.

READ MORE: Average two-year mortgage rate highest for 14 years

tesco

Tesco says it’s ‘on track’ despite declining profits

Tesco has hailed “a strong operating performance” in its H1 2022 results, despite adjusted operating profits declining 9.8% from the same period last year.

The retailer attributed this decline to “post-pandemic normalisation”, which has seen volumes decrease since 2021. Adjusted operating profit was £1.32m in H1 2022 compared to £1.46m in the same period last year. Group sales (excluding fuel) rose by 3.1% to £28.18m. Revenues also increased by 6.7% to £32.5bn.

Chief executive Ken Murphy said the business is “well set up for the future”.

“By staying laser-focused on value and sticking to our strategy of inflating a little bit less and a little bit later, our price position has got even more competitive,” he said.

However, Murphy did warn that “it is too early to predict how customers will adapt to ongoing changes in the market”. Despite the uncertainty, Tesco has maintained its profit guidance within the previous range “albeit towards the lower end” and expects full year retail adjusted operating profit of between £2.4bn and £2.5bn.

Tesco also announced today (5 October) it is freezing prices of more than a 1,000 everyday products until 2023. The supermarket also announced that is is upping the hourly pay for its employees by 20p an hour.

The supermarket claims consumers are recognising its competitiveness in price, with its combination of price initiatives Aldi Price Match, Low Everyday Prices and Clubcard Prices helping to ease the cost of living crisis. The retailer says its brand net promoter score is now higher than any of its full-line grocer competitors.

Murphy also claims Tesco customers are “seeking out” the supermarket’s own brand ranges as they look to make their money go further.

Environmental campaigners ‘baffled’ by Coca-Cola’s COP27 sponsorship

Climate change activists have told the BBC they are “baffled” by Coca-Cola’s sponsorship of COP27.

More than 8,000 activists have now signed a petition, which calls the “infiltration” of corporations into COP “sickening”. The petition calls for Coca-Cola to be removed as the sponsor of the conference, which is due to take place in Egypt next month.

Activists also accuse the brand of “greenwashing” due to the amount of plastic it uses. In 2019, Coca-Cola said it uses 3 million tonnes of plastic packaging in a year. Last year, environmental group Break Free From Plastic named it “the world’s worst corporate plastic polluter”.

Coca-Cola says it “shares the goal of eliminating waste and appreciates efforts to raise awareness”.

“Through the COP27 partnership, the Coca-Cola system aims to support collective action against climate change,” said the brand’s global vice-president, public policy and sustainability Michael Goltzman at the signing of the sponsorship last week.

However, many climate activists are not convinced.

“Coca-Cola’s whole business model is predicated on fossil fuels. They have made promises to improve recycling which have never been met,” CEO of NGO the Environmental Justice Foundation Steve Trent told the BBC.

Coca-Cola told the BBC it recognises it needs to do more: “While we have made progress against our World Without Waste goals, we’re also committed to do more, faster.”

READ MORE: COP27: Activists “baffled” that Coca-Cola will be sponsor

Elon Musk to go through with Twitter purchase

Twitter

Elon Musk has seemingly reversed his decision to back out of his $44bn (£38bn) deal to buy Twitter and has told the company he is prepared to go ahead with the purchase.

Twitter and Musk had been set for a court date in a few weeks, after the social media company sued the billionaire for his previous refusal to take the deal forward. He had backed out of the purchase, citing concerns Twitter had undercounted how many spam or fake accounts it had on its platform. Executives at the business denied the allegations, claiming the billionaire had wanted out because of the price.

“We write to notify you that the Musk parties intend to proceed to closing of the transaction,” wrote Musk’s lawyers in a court filing. The document stated that the conditions of the closing of the transaction were an end to legal proceedings and securing of debt financing.

A spokesperson for Twitter also confirmed the company had received an offer “to close the transaction at $54.20 ($47.38) per share”, which was the original price Musk had offered to pay back in April.

The news Musk intends to go through with the purchase at the original price sent Twitter’s shares soaring. They closed up 22.2% at $52 (£45.46). This is still lower than the takeover price, suggesting some hesitation about the news among investors.

After the news broke Musk took to Twitter: “Buying Twitter is an accelerant to creating X, the everything app.”

READ MORE: Elon Musk to proceed with $44bn buyout of Twitter after U-turn

Mind to open vintage and designer charity shop in Carnaby

Carnaby, one of London’s most famous fashion and shopping destinations, is to get its first permanent charity shop.

Mental health charity Mind will be opening a shop in the location next week. The charity shop will stock vintage and designer clothes in its new location, including from designers such as Vivienne Westwood, Burberry and Louis Vuitton.

The charity shop will span two floors and will “embody the Mind brand”. It will feature oak floors, neon lighting and a changing room area for customers to try on second-hand items

“We are thrilled to be opening a new shop in Carnaby and cannot wait to welcome the public in,” says Mind retail managing director Andrew Vale.

“With such an exciting location, this store will offer a more innovative design and will feature top designer and vintage items for just a fraction of the cost.”

Mind has been on the high street for over 60 years and has over 160 shops in England and Wales.

READ MORE: Carnaby’s first permanent “vintage and designer” Mind charity shop to open

Smart Energy GB releases next chapter of Einstein brand platform

Smart Energy GB has released the next chapter of its brand platform ‘Join the Energy Revolution’, after claiming the first instalment of the campaign was “the most effective and efficient in [its] history”.

The new work sees physicist Albert Einstein return to help consumers get to grips with their energy usage. The ad depicts Einstein still getting used to modern life having been transported from the 1950s. He discusses smart meters with his neighbour Darren and explains that the gadget allows him to keep track of how much energy he is using.

Einstein first appeared in Smart Energy GB’s Join the Energy Revolution campaign back in 2021. The brand claims the campaign is its most effective ever and says it has accounted for nearly half of all smart meter installations since that time. While the earlier campaign brought Einstein to life using CGI, this latest iteration uses prosthetics.

The latest ad, created by AMV BBDO, directs viewers to search “get a smart meter.” With 30-second and 20-second executions running on TV, broadcaster video-on-demand, AdSmart and YouTube, the ad will also be supported by print and radio spots.

“With the cost of energy becoming a national conversation in 2022, it is more important than ever for Smart Energy GB to help people understand the positive role that smart meters can play,” says Smart Energy GB director of marketing Chris Taggart.

“With help from history’s greatest ever energy expert, we are keen to show people how having a smart meter could help them to make small changes that save energy.”

Source: Shutterstock

Government ad budget nearly doubles to £930m

The government plans to spend £930m on advertising space, according to data compiled by Labour, as Liz Truss reportedly looks to promote policy changes ahead of the next election. That is nearly double what was spent on ad space over the previous four years, not including Covid-related communications.

The Department for Business, Energy and Industrial Strategy will see its budget quadruple from £9.65m to £36m as the prime minister reportedly prepares a campaign to highlight her £150bn intervention to freeze energy bills. According to The Guardian, she told colleagues she was disappointed the move did not receive any credit as it was overshadowed by the tax-cut row.

Meanwhile, spending at the Department for Levelling Up, Housing and Communities will increase from £4.7m to £21.6m – a 361.5% rise.

The Department for Health and Social Care will receive the largest chunk of the budget, with £251m set aside, up from £37m on non-Covid ad buying over the past four years.

Not including Covid-related campaigns, the Cabinet Office spent £102m on ad space between 2018 and 2022, while it has now been allocated £182m up until the end of 2025.

The Department for Digital, Culture, Media and Sport will receive the biggest increase, with its budget rocketing from £700,000 to £9.6m, an increase of more than 1,200%.

Labour’s deputy leader, Angela Rayner, called the planned increases “absolutely obscene”, pointing out the budget is just for ad space and “doesn’t even include the vast sums that will be spent on producing adverts as well”.

According to The Guardian, most of the budget would have been agreed under Boris Johnson’s administration, with the higher figure coming after a warning from the Treasury that the government must make efficiency savings and work within existing budgets, despite inflation.

READ MORE: Ministers given £930m to spend on advertising space to tout policies

Vodafone and Three in merger talks

Vodafone and Three are in discussion about merging their UK businesses, meaning the third and fourth largest mobile network providers would combine to create the largest operator in the UK, with 27 million customers.

If the deal goes ahead it would put the joint business ahead of BT, EE and Virgin Media O2 in terms of customers. The two companies say the merger will accelerate the rollout of 5G and rural broadband.

It is understood Vodafone will own 51% of the merged business, while Three’s owner Hutchison will take 49% under the terms of the deal.

According to the BBC, the two companies are keen for the deal to happen by the end of the year. But any merger will be examined by the Competition and Markets Authority (CMA).

READ MORE: Vodafone and Three in merger talks

Deliveroo bolsters rapid delivery offer with first physical store

customer experience deliverooDeliveroo has partnered with Morrisons to open its first physical store, allowing customers to order groceries via digital kiosks or the Deliveroo app for collection straight away.

The Deliveroo Hop store, which is located on New Oxford Street in London, will stock 1,750 grocery items, including essentials and branded store cupboard staples as well as products from Morrisons’ ready to eat and The Best ranges.

It will also act as a ‘dark store’ for the Deliveroo Hop rapid delivery service, with 19 people working behind the scenes to fulfil orders, which will then be delivered to people in the local area.

Deliveroo’s chief operating officer, Eric French, describes the move as the “latest evolution” in its rapid delivery proposition.

Meanwhile, Morrisons’ head of wholesale, Hannah Horsfall, says: “The launch of Deliveroo Hop’s first bricks and mortar store represents another key moment in our partnership.”

READ MORE: Deliveroo Hop launches first physical grocery store with Morrisons (£)

UK shoppers to spend £4.4bn less this Christmas

Consumers are expected to spend £4.4bn less in the run up to Christmas this year as the cost of living crisis causes people to cut back.

People are expected to reduce spending on non-essentials across the festive season and Black Friday, according to the research by Metapack and Retail Economics.

It’s a similar story across all eight markets surveyed, with spend on non-food items in the UK, US, Germany, France, Spain, Italy, Canada and Australia collectively expected to be down by more than £36bn.

However, people in the UK look set to cut back the most of all the countries surveyed, with 40.1% of shoppers saying they plan to reduce all non-food spend. This compares to 32.8% in Spain and Italy, 32.4% in France, 30.1% in the US, 29.7% in Canada, 26.8% in Australia and 24.8% in Germany.

Looking at specific categories across all regions, clothing and footwear looks set to be most impacted, with 26% of people likely to cut back. Nearly a quarter (22.3%) plan to rein in spend on electricals, followed by 20.9% on toys and 19.8% on home products. Elsewhere, 17.4% plan to cut back on health and beauty items and 16.7% on DIY and gardening.

Nearly a third (28.8%) of consumers cite inflation as their biggest concern, with 18.3% suggest uncertainty about the economy will cause them to hold back. Meanwhile, 11.6% are concerned about their lack of savings and 11.5% about the potential loss of earnings.

The research also looked at businesses’ fears, with nine in 10 saying they expect to be negatively impacted by rising costs in the run up to Christmas.

Ikea launches product-led campaign with focus on value

Ikea is putting the focus on affordable personal touches in its latest campaign, which suggests ‘It won’t feel like home, ‘til it feels like you’.

The hero ad follows a family as they move into their new house. As they gradually add their own touches it turns from an unwelcoming, hostile space to a warm home.

Part of its ‘The Wonderful Everyday’ platform, the product-led campaign highlights budget-friendly storage for vinyl, a pegboard for trophies and kitchen shelving for budding chefs.

The campaign will launch across broadcast TV, video-on-demand and digital media, with 20- and 30-second versions, while an extended 60-second option is reserved for cinema and in-store.

Ikea is also launching a three-episode docuseries on social media, which is hosted by a psychologist and an Ikea expert. In each episode they work together to identify the challenge each person is facing and suggest ways to solve it.

“Where we live is part of who we are, so having a home that reflects our identity really matters,” says Kemi Anthony, cluster marketing communications manager at Ikea.

“We want to showcase the different ways Ikea can help make [a] home your own, from small touches to bigger revamps, there are products that cater to all personalities and styles. Our range is at the heart of this campaign and demonstrates that we design with the needs of real people in mind, no matter what their budget.”

Source: Shutterstock

Advertising legend Dan Wieden dies aged 77

Dan Wieden, co-founder of global ad agency Wieden+Kennedy and the creative brain behind Nike’s iconic ‘Just Do It’ slogan, passed away on 30 September at 77 years old.

Wieden and his late business partner David Kennedy founded Wieden+Kennedy in 1982, before growing it into one of the world’s biggest independent agencies. Kennedy died in October 2021, aged 82.

The agency is best known for its long-standing relationship with Nike. The first three ads it produced were all TV commercials for the sports footwear and apparel brand, which aired during the New York City Marathon in October 1982. Just Do It became Nike’s tagline in 1988, with Wieden credited with dreaming it up.

Wieden+Kennedy has also been behind famous campaigns for Coca-Cola, Microsoft, Old Spice, Bud Light and McDonald’s.

In 1999, Wieden was inducted into the University of Oregon’s Hall of Achievement. Three years prior he founded Caldera, a non-profit arts education organisation and camp for at-risk youth located within the state.

According to an obituary seen by Business Insider, Wieden died “peacefully with his wife by his side” at his home in Portland. Having famously promised never to sell his agency, he transferred ownership into a trust before he died in an attempt to keep Wieden+Kennedy independent for the foreseeable future.

“A writer at heart, Wieden’s intention was never to create a huge advertising agency, but rather to provide a place where people could do the best work of their lives,” the obituary said.

In a tweet, the agency thanked Wieden for “throwing the doors open for people to live up to their full potential”, adding: “We will miss you so much.”

READ MORE: Dan Wieden, the advertising icon behind Nike’s ‘Just Do It’ campaign, has died

Ad industry warned to take ‘urgent’ note of new sanctions on Russia

The Advertising Association has warned UK advertising and marketing businesses still providing services to Russia to “urgently take note” of new government sanctions on the country, which include blocking it from accessing advertising services.

On Friday, Russia’s president Vladimir Putin announced the illegal annexation of the Ukrainian regions of Donetsk, Luhansk, Kherson and Zaporizhzhia, following staged referendums which have since been branded a “sham” by UK foreign secretary James Cleverly.

As a result, the UK is moving alongside international partners to target key sectors of the Russian economy by removing its access to a number of major services it imports from western countries. These include IT consultancy services, architectural services, engineering services, auditing services, and advertising services. According to the government, Russia imports 67% of its services from sanctioning countries.

Advertising Association CEO Stephen Woodford says the industry trade body “fully supports” the new measures, as well as the decision of “many” advertising and marketing firms which have already ceased trading with Russia.

“Companies will be breaking the law if they export advertising and marketing services to Russia or to persons connected to Russia once the legislation comes into force, with limited exceptions,” he warns.

“We urge businesses to act now to avoid illegal trading. We will continue to work with government to ensure that these sanctions have the maximum impact on Putin’s regime whilst minimising disruption to UK businesses and ensuring legitimate and necessary activity may continue.”

Deliveroo unveils contextual campaign focused on grocery service

Deliveroo is launching a ten-part series of contextual TV ads on Channel 4, in a bid to drive trial of its on-demand grocery delivery service.

Created by The Outfit, the ads are filmed in an observational documentary style and spotlight occasions in which the brand’s on-demand grocery service could have “saved the day” for real-life customers. Building on Deliveroo’s brand platform ‘Food We Get It’, the customer stories include a sick mother unable to face a trip to the supermarket, a disaster dinner party, and a roast dinner ruined by a hungry dog.

The ads will play in the first break of Channel 4 shows including Gogglebox, Made in Chelsea and Grand Designs. In a first for the brand, six of the 10 spots feature contextual links back to the broadcaster’s programming, with the heroes of the ads mentioning the shows as part of their story.

On top of this, two of the six contextual spots react to events in upcoming episodes of Made in Chelsea and Celebrity Cooking School. Media planning and buying was led by Initiative.

“As we look to drive deeper emotional connection with Deliveroo customers, these spots remind customers that we are more than food delivery – we deliver light-relief in sticky situations, a helping hand at home, a touch of joy in spontaneous moments, or whatever our customers need it to be,” explains Deliveroo’s head of marketing UK and Ireland, Rhianna Smith.

“We hope that showcasing these relatable real-life scenarios will resonate with other customers, and encourage them to trial on-demand grocery on Deliveroo.”

The brand has also secured two active and six passive product placements within two Come Dine With Me episodes in November.

Government U-turns on 45p tax rate cut

Following nearly two weeks of economic turmoil, UK chancellor Kwasi Kwarteng has made a statement this morning rowing back on his proposal to scrap the 45p rate of income tax.

According to the BBC, many Tory MPs had voiced opposition towards cutting the top rate of income tax at this time, amid concerns it displayed the wrong values while many on lower incomes are being squeezed by the cost of living crisis. The 45p rate is paid only by people earning over £150,000 a year, around 1% of the UK population.

Kwarteng originally argued that removing the top rate tax would attract talent to the UK workforce and help businesses to innovate and grow. However, he has now told the BBC the proposal had become “a massive distraction on what was a strong package”.

The tax cut was one of many announced as part of the chancellor’s mini-budget last month, which constituted the biggest package of tax cuts for the UK in 50 years. The government’s plan is to “expand” the supply side of the economy through tax incentives and reforms, as it hopes to reach an ambitious growth rate of 2.5%.

However, the reforms laid out in the mini-budget spooked the markets, causing the value of the pound to crash, spiking interest rates, and provoking rare criticism from the International Monetary Fund (IMF).

Other tax cuts included in Kwarteng’s mini-budget included cancelling next year’s planned rise in corporation tax, reversing the 1.25 percentage point rise in National Insurance contributions, and freezing alcohol duty for another year.

READ MORE: Kwasi Kwarteng U-turns on plans to scrap 45p tax rate

JD Sports partners with Nike on connected loyalty programme

JD sportsBritish sportswear retailer JD Sports has become the first European retail partner for Nike’s loyalty scheme, furthering its long-standing partnership with the brand.

The Connected Partnership loyalty programme will offer JD customers access to select Nike member-exclusive products, events and offers when they link their JD and Nike membership accounts through JD’s mobile app. The scheme will kick off in the UK.

JD Sports CEO Regis Schultz says the “mutually beneficial” partnership will allow the retailer to enhance its “strong customer connections”.

“This partnership – the first to launch in Europe – amplifies the combined strength of the Nike and JD brands with our shared consumers, by leaning into their behaviour and journeys and creating new, richer and more engaging experiences,” he says.

“It provides further opportunity to inspire the emerging generation of aspirational consumers, who can continue to feel confident that they are being offered the very best of Nike products when shopping at JD.”

Nike launched the partnership loyalty programme with Dick’s Sporting Goods in the US last year.

READ MORE: Britain’s JD Sports extends Nike ties with partnership deal