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UPDATED Coronavirus round-up: Annoushka is using digital to give an in-store experience, Adidas China sales sharply down, plus Amazon, Deliveroo, WH Smith, Intu

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Coronavirus round-up: WH Smith, Intu and more on the Covid-19 effect

We’re reporting on the effect of the Covid-19 coronavirus on the way UK shoppers buy – and on how retailers are responding to that changing behaviour. This update comes as 590 positive cases have been confirmed by Public Health England as of 9am on March 12 and eight people have died. The World Health Organisation has now classified coronavirus as a pandemic.

 

Adidas says China sales 80% down over late January and February

Sportswear brand Adidas says, in its full-year statement, that its business in Greater China performed strongly in the first three weeks of 2020 but since then it has experienced “a material negative impact on its operations” following the coronavirus outbreak. Footfall has been down while “a significant” number of directly-operated and third-party shops closed. Revenues in the Greater China business were about 80% down on the previous year in the period between January 25 and the end of February.

 

“Since then, the company has started to experience a slight improvement in its Greater China business activity, with stores and warehouses gradually opening and consumer traffic slowly picking up,” it said in its full-year statement. “Since the coronavirus outbreak, adidas has been working closely together with its wholesale partners to ensure inventory levels remain healthy in the market. This resulted in the cancellation of all shipments in February and could lead to the acceptance of a significant amount of product takebacks, which the company plans to clear through its own channels throughout the remainder of the year.”

 

It said that both the situation around coronavirus as it spilled over into other countries, and the availability of raw materials remained “largely uncertain”. It added: “In the light of these uncertainties the overall impact of the coronavirus outbreak on the company’s business in 2020 cannot be qualified reliably at this point in time. Despite the temporary challenges posed by the coronavirus outbreak, the company remains fully confident about its future growth prospects thanks to its healthy fundamentals and its strong positioning within an attractive industry.”

 

Annoushka looks to digital to give shoppers who can’t get out an in-store experience

Fine jewellery brand Annoushka says its use of digital technology to mimic the in-store experience will help it to serve customers who cannot travel to them during the coronavirus pandemic.

 

The retailer uses the Hero messaging app to connect shoppers with in-store teams via chat, text and video, enabling them to see items and ask staff their questions in a similar way that they would if they were in the shop. A ’little black book’ feature enables customers to speak to the same member of staff they have previously been advised by.

 

“With a global pandemic in hand, which has almost entirely frozen travel for a population who account for 60% of luxury sales outside of mainland China, never have our virtual sales platforms been more important to us as a business and for our global clients who may be feeling entirely isolated,” says Annoushka Ducas, creative director of Annoushka. "Our upcoming campaign will ensure our global clientele know they can access us through a myriad of connected platforms."

 

The multichannel brand has shops in premium postcodes as well as own-brand concessions in London, Hong Kong and China, but it says it has made a point of using digital to complement that experience. As well as using Hero, it was an early adopter of selling through WhatsApp and WeChat.

 

Annoushka says its global sales team has seen £100,000 worth of sales made through Hero alone in the last year, with a 180% conversion increase when clients come through the app. In December 2019, it accounted for 11% of the jewller’s overall online revenue for the month – and it expects a continued increase as retail habits shift and customers are increasingly concerned about the Covid-19 coronavirus.

 

Annoushka says more customers are also connecting with their local Annoushka store via WhatsApp. In its Bicester Village store, a destination most heavily frequented by Chinese and Korean shoppers, “mail order” – a colloquialism for all sales taken through WhatsApp and WeChat – has accounted for 16% of overall sales over the last year, peaking in February 2020 at a record 22%. That, it says, is a direct reflection of lower footfall in-store due to coronavirus.

 

Ducas said: “My jewellery is often described as talismanic, defined as magical and lucky – which to me doesn’t seem like a bad thing right now. When I design, my aim is to always make someone smile. If there are customers who still want to shop and that brings them a little bit of joy at an awful time, then we’ll continue to go above and beyond to make that a special, fine tuned experience. We want our customers to know that in spite of the terrible global situation and whatever the future may hold, we’re on hand."

 

Ducas, who founded Annoushka 10 years ago, also co-founded Links Of London in 1990 with her husband and business partner John Ayton before selling it in 2006.

 

Amazon staff to work from home – where they can

Amazon is advising all its staff to work from home where they can until the end of March. That’s likely to include office-based staff rather than delivery and warehouse employees.

 

An Amazon spokesperson said: “We continue to work closely with public and private medical experts to ensure we are taking the right precautions as the situation continues to evolve. As a result, we are now recommending that all of our employees globally who are able to work from home do so through the end of March.”

 

Amazon is an Elite retailer in RXUK Top500 research.

 

Deliveroo gives the option of doorstep deliveries

Food delivery company Deliveroo is now offering customers the choice of having deliveries dropped off on their doorstep.

 

The company has launched a new no-contact service. This week, customers can leave a note on their delivery order asking for food to be left on the doorstep while from early next week both customers and delivery riders will be able to request the option via the Deliveroo app.

 

A Deliveroo spokesperson said: "At Deliveroo we are taking action to keep our customers, riders and restaurants safe. To make our delivery service even safer we are introducing a no-contact drop-off service."

 

WH Smith warns of falling visitors at its airport shops

WH Smith has warned that the outbreak of coronavirus is hitting footfall, especially in its airport-based travel business – and is likely to affect full-year sales and profits.

 

The newsagent, stationer and bookseller, ranked Top150 in RXUK Top500 research, said today that since February it had seen a “significant impact” to its travel business in the Asia Pacific region, which accounts for about 5% of its travel revenues. Passenger numbers have shown a “material reduction” in airports in the UK, which accounts for about 60% of travel revenues, the US (25%) and Europe.

 

WH Smith says it is now managing the business to protect profitability, taking “all necessary action to reduce costs” while also prioritising the health and safety of its customers, staff and business partners. It expects Covid-19 will result in falling revenues and profits across its travel business in the second half. It is now predicting, assuming a challenging third quarter but a move back to normal in the fourth quarter, a 15% drop in sales in its travel business, including a 35% in sales at airport shops, and a 20% drop across its international business.

 

Given that Covid-19 could also see declining high street footfall, the group is estimating that revenues will be hit by as much as £130m, while pre-tax profits by as much as £40m.

 

It added: “Over the longer term, the board remains confident in the strategy and believes the group is well-positioned to benefit from the normalisation and growth of the global travel market.”

 

The update came as WH Smith said in a trading update that revenues in the half-year to February 29 were up by 7%, and like-for-like sales down by 1%. Travel revenues were 19% ahead (+2% LFL), while high street sales were down by 5% (LFL -4%). WH Smith expects to report an underlying pre-tax profit in the first half.

 

Intu says coronavirus an emerging business risk

Intu, which owns shopping centres including intu Lakeside and intu Trafford Centre today said that it was monitoring the “rapidly evolving” Covid-19 situation. The company said its visitor numbers were “broadly unchanged” in the first 10 weeks of its current financial year.

 

Covid-19 is listed in its full-year results as an emerging business risk, as it monitors the financial resilience of its centres and how well-placed they are to deal with variations in income, reduced footfall and future rents. Intu also says it has well-rehearsed plans in place that have been reviewed in the light of Public Health England guidance.

 

The update came as Intu threw into doubt whether it could continue to trade as a going concern. Its short-term focus is now on fixing the balance sheet where there is, it said in this week’s full-year figures, “a material uncertainty in relation to intu’s ability to continue as a going concern.” It said that it had a number of financing options to explore and is also looking into the possibility of selling off more assets. So far it has sold assets worth £600m.

 

Testing customer loyalty

Customers’ relationships with brands are being tested in new ways in the light of the Covid-19 coronavirus, says Ben Stirling, managing director at Webloyalty.

 

“The coronavirus epidemic has taken over every aspect of our lives and the high street is no exception. Across the country, retailers of every shape and size have had to adapt. As customers inevitably and understandably panic, their relationships with brands are being tested in unfamiliar ways.

 

“Some brands are already seeing a marked increase in customers as people adapt their lifestyles in response to the virus. With consumers looking to avoid crowds, Ocado Group last week said it was experiencing ‘exceptionally high demand’, and this is likely to continue as people naturally start to avoid public spaces out of fear of contagion. Similarly, other brands that provide ‘indoor alternatives’ such as Netflix, JustEat or Deliveroo could benefit as people avoid public socialising.

 

“Aside from lifestyle changes, some brands are being judged more on their response, which could have material impact on customer loyalty that outlives even the epidemic itself. Wilko, the self-styled ‘family friendly’ homewares brand has come under intense scrutiny for its decision to clamp down on employee sick pay, this week of all weeks. While bosses have insisted this is an unrelated move on their part, it could prove a calamitous decision if the initial media response is anything to go by.

 

"A number of brands, such as the nation’s pharmacist, Boots or supermarket giant Tesco have sensitively and deftly rationed certain essentials such as toilet paper, dried goods and hand-sanitiser due to the incredible consumer demand. Scarcity is seldom a positive message but the level-headed approach could translate into long-term brand loyalty, provided they manage to make good on their assurances stores will remain well stocked.

 

“Even if Covid-19 has had no material impact on a business’ ability to deliver products and services, make no mistake, the public is watching eagerly. The agility and deftness of a brand’s response to its customers, employees and suppliers could translate into long-term brand loyalty and similarly, any fumble or insensitivity could have dire repercussions.”

 

Image: Fotolia

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