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UPDATED Coronavirus round-up: grocery delivery slots run short amid panic buying; IRX cancelled, Laura Ashley, Dixons Carphone, ScS, Kingfisher, Primark updates

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Coronavirus round-up: delivery slots run short amid panic buying; IRX cancelled, Dixons Carphone, Kingfisher, Primark updates

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 1,543 positive cases have been confirmed by Public Health England as of 9am on March 16 and 55 people have died. The World Health Organisation last week classified coronavirus as a pandemic. This rolling news story contains updates on Laura Ashley, Primark, Kingfisher, the BRC and supermarkets advising shoppers not to panic, online delivery slots running short, Dixons Carphone, Shoe Zone, ScS and more.


Retailers call on Government for support

Hundreds of UK retailers have written to the government asking for support for retail and leisure businesses during the coronavirus outbreak.

 

Jace Tyrrell, chief executive of the New West End Company which represents 600 retailers and businesses across London’s West End, said: "In London’s West End, we have seen a 50% decline in visitors, a figure that is growing daily. West End businesses are set to lose over £1 billion and tens of thousands of jobs are now at risk. It is time for our Government to rise up to its responsibilities and protect retail and leisure jobs not only in London, but across the country.

 

"Across the Channel, President Macron and Chancellor Angela Merkel have already stated that no business regardless of size will be allowed to fail, and we call on the UK government to act now to reassure the retail & leisure sector with practical measures to address the current economic emergency. This should include an immediate extension of rates relief to all businesses."

 

A statement from the Chancellor is expected at 4pm today.

Coronavirus proves final straw for Laura Ashley

Laura Ashley is calling in the administrators after Covid-19 proved the final straw. The fashion-to-homewares retailer earlier this week said it hoped to renegotiate its working capital arrangements. Today it said the ongoing pandemic had had an "immediate and significant impact on trading" that seems likely to continue – while extra funding could not be arranged soon enough to save it. It is today filing notice of its intention to appoint administrators.

 

Dixons Carphone update

Dixons Carphone says it has not yet felt the full effect of Covid-19 coronavirus, although it is preparing for that. The strongest impact so far, it says, has been in its airport-based Dixons Travel shops which have been affected by a sharp drop in passenger numbers in recent weeks. The group expects profit from this division to be down by about £5m in the current year although overall adjusted pre-tax profits are on track to come in at about £210m in its current financial year.

 

Dixons says that the effect on its supply chain has been limited and that it has worked with suppliers to get stock from unaffected areas.

 

In its UK and international electricals business – which accounts for more than 80% of group revenue – online sales have been strong and store sales have held up across its markets. Sales of fridges, freezers, small domestic appliances and laptops have all risen as customers prepare for time at home. The business said it was ready to switch fulfilment from shops to online and direct channels if that proved necessary.

 

“As a group,” it said in today’s update, “we are monitoring the situation closely. The turbulent times ahead underline the importance of acting now and staying on track with our longer-term omnichannel transformation of the group. We are aware that our stores could experience a significant reduction in sales in the months ahead and we are modelling a range of downside scenarios and planning accordingly."

 

Its Greek shops are expected to shut on March 18 and be closed for at least two weeks.

 

The retailer says it has substantial headroom on its bank lending, which is not due to mature for at two and a half years.

 

Dixons Carphone currently operates through 1,500 shops and 16 websites in eight countries, including the UK, Ireland, the Nordics and Greece. Its total workforce of 42,000 people includes 28,000 in the UK and Ireland.

 

The update comes as Dixons Carphone today said it would close all 531 standalone Carphone Warehouse stores in the next step of its omnichannel transformation programme.

 

Shoe Zone sees fall in store visitor numbers – and plans to cancel final dividend

Shoe Zone says that store visitor numbers have been down in recent days and it expects that the coronavirus will seriously impact lives and shopping habits.

It has decided to defer payment of its final dividend for the year, worth 8p per share, and expects to cancel that payout at a May general meeting.

It said in a stockmarket statement today: "In recent days we have seen a reduction in footfall, across our estate, and whilst the full extent of the Coronavirus on the short and medium term retail environment is not yet clear, it is becoming ever more apparent that it will create significant disruption to people’s lives and shopping habits in the coming months. The decision to defer and take steps to propose the cancellation of the 2019 Final Dividend has been taken with the unanimous backing of the board and is one of number of appropriate measures being implemented to conserve the company’s cash balances and ensure the robustness of the business to protect it from a sustained period of challenging trading."

ScS delays half-year figures

Sofa to carpet multichannel retailer ScS said today that it had delayed its half-year results to later in the week as it looks at the latest government guidance on Covid-19.

In a preview of the figures, it said that half-year revenues had improved by 0.3% to £152m, and pre-tax losses had narrowed to £0.6m.

David Knight, ScS chief executive, said: "Trading has strengthened since our market update on January 29 2020, with like-for-like order intake in the last seven weeks growing 3.3%. This is a significant improvement on trading for the first 26 weeks of the year, which had a like-for-like order intake decline of 4.4%. This has resulted in a like-for-like order intake decrease of 3.0% for the 33 weeks ended 14 March 2020.

"Whilst consumer confidence remains low, the group has been successful in sustaining profitable growth and increasing its resilience. Trading in the early part of the year was particularly challenging. However, the improvement and return to growth seen over the key winter sales period and for the first six weeks of the second half was encouraging. In the past week we have seen reduced footfall and we are mindful of the developing situation with Covid-19 and the potential impact on deliveries and demand. However, we believe the group is as well positioned as it can be."

How delivery is changing in the light of coronavirus

Over on eDelivery, Alex Sword is today reporting edelivery.net/2020/03/coronavirus-forces-change-driver-doorstep-etiquette-online-deliveries-ramp/">how coronavirus is forcing a change in doorstep etiquette.

He’s previously written about how the virus has exposed vulnerabilities in the gig economy model.

 

Online delivery slots run low

Online delivery slots appear to be running low at the UK’s supermarkets, in the same day that supermarkets warned shoppers not to panic buy and asked them to be considerate to other shoppers. Ocado.com is operating a queueing system and is then prioritising existing shoppers, while Waitrose.com is down. In my area (Bristol) Sainsbury’s has no delivery slots available at all for the next three weeks and only one click and collect slot, while Asda has one delivery slot this Friday and more on Saturday.

 

On its website, Ocado says: "Please note, that in this time of unusual demand, we have made the call to temporarily prioritise deliveries for existing registered customers. We will not be processing new customer bookings for the time being.

 

"We are very sorry to have to disappoint anyone that chooses Ocado, and we’re working hard to increase our delivery capacity."


The problems highlight the relatively low proportion of grocery shopping that is currently done online in the UK. January’s ONS figures estimated that 5.3% of grocery shopping takes place online – compared with 19% of all shopping categories. Capacity is now being tested to the limits, but it is possible that the coronavirus outbreak may prompt a fast expansion of home-delivered groceries.

 

IRX 2020 has been postponed

IRX 2020 is to be postponed until later in the year as a result of the outbreak of coronavirus in the UK, it has been announced today.

 

The event was to have been held on April 1 and 2 at the NEC in Birmingham. But the news came today that it would now be held later in the year instead. The new date will be announced in the near future.

 

Stuart Barker, portfolio director, IRE and payments at event organiser Clarion Events, said: “After consultation with stakeholders over the last few days, we have made the difficult decision to postpone IRX/eDX.

“Despite strong support from our stakeholders the increasing level of uncertainty, travel bans and individual concerns due to coronavirus mean that we would not be able to deliver the show that you would want to see.

“We know that IRX is a critical event in many participant’s calendars, providing the information, inspiration and contacts that they rely on to thrive and survive. As such we will be rescheduling the event for later this year. We look forward to announcing new dates when we’ll bring you a great programme of speakers, exhibitors, features, workshops and networking. In the meantime, our thoughts are with those who are directly affected by coronavirus.”


The event joins a growing number of exhibitions, events and launches to be postponed as a result of the coronavirus pandemic.

 

Online shopping uptick likely to vary by industry

Payment service provider Computop says online shopping will continue to be supported during the coronavirus outbreak but predicts that sales growth will vary by industry.

 

Ralf Gladis, chief executive of www.computop.com/&source=gmail&ust=1584451341020000&usg=AFQjCNGLZYAuvIf3OGKzV8CgJQAKe5N6lw">Computop, said: “The spread of the coronavirus and how to prevent it are dominating the media currently, and companies, including ecommerce merchants and payment service providers have little choice but to comply with the precautionary measures that governments are recommending, or in some cases, demanding. International payment processing will continue to be supported, even if PSP company employees work remotely, but this unprecedented crisis will introduce significant shifts in transaction sales.

 

"I foresee that sectors such as online pharmacies and mail-order companies will experience growth, while other areas, including hotel and travel industries will be hit hard. The idea that ecommerce as a whole will benefit is narrow-sighted because while online retailers will reap dividends in the short-term, this is entirely dependent on any goods that they order being delivered.”

 

Footfall up at end of February in first response to Covid-10

Visits to shops rose slightly in the last week in February, according to the new ShopperTrak-BRC Footfall Monitor, for February. It saw a small recovery in the last week of a month otherwise hit by rain and, in some areas, flooding.

 

Overall footfall, it found, fell by 2%, with drops across high streets (-2.5%), retail parks (-1.5%) and shopping centres (-7%). All were below both the three-month and 12-month trends.

 

Helen Dickinson, chief executive of the British Retail Consortium (BRC), said: “Multiple storms took their toll on footfall this February, particularly for shopping centres and high streets. The decline was less marked for retail parks, which provide easy parking and offered some salvation from the rain. There was a slight boost in footfall in the final week as concerns around coronavirus led to an increase in store visits.”

Kingfisher looks to home delivery to mitigate European store closures

Kingfisher Group, which owns UK retailers B&Q and Screwfix, says that it had seen no effect on shopper demand as a result of the Covid-19 outbreak until its stores in Spain and France closed by government order.

 

Up until Saturday March 14, said Kingfisher in a Covid-19 update, group like-for-like sales were up by 7.6%, or 2.3% excluding the effect of an extra leap year day, with strong online sales. But now all 221of its Castorama and Brico Dépôt stores in France are closed until Tuesday April 14 as the French government acts to close all non-essential places used by the public. All 28 of its Spanish stores have been closed until Sunday March 29 following the announcement of a two-week state of emergency.

 

It is now working to mitigate the effect of those closures through click and collect and home delivery.

 

Its 1,100 stores in the UK, Ireland, Poland, Romania, Portugal and Russia remain open.

 

In the supply chain

About 25% of Kingfisher’s retail products are sourced from the Far East, including China, and it said that more than 95% of its supplier factories in China were now open again, while about two-thirds of its outdoor seasonal products were shipped before Chinese New Year. Currently, it said, more than 85% of orders that it had placed were delayed by less than four weeks. In Italy, suppliers that make about 4% of its products are largely all open – but it is not clear how goods can be transported from the region.

 

“Given recent government actions an the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of Covid-10, we are not yet able to precept the impact of Covid-19 on our 2020/21 full-year results,” Kingfisher said in today’s update. It said it was managing the business to protect profitability, while reducing costs and optimising cash flow. It said it had significant financial headroom, including an immediately available £1bn in total liquidity.

 

Thierry Garnier, chief executive of Kingfisher, said: “We are committed to supporting local authorities and governments to limit the spread of the virus, and the health and safety of our colleagues and customers remains our top priority. Our teams are also evaluating the best ways to satisfy emergency needs in our markets, particularly for electricity, heating and plumbing.

 

"While significant uncertainty exists around the impact of Covid-19, we are taking immediate and significant measures to contain our costs and protect our financial position. We have a strong balance sheet, with significant liquidity headroom and limited financial debt.”

 

It has taken action to restrict work travel and meetings and is encouraging working from home where possible, while drawing up contingency plans to ensure customer service continues in store.

 

Primark hit by virus-related store closures and falling visitor numbers

Stores accounting for 20% of Primark’s selling space are now closed in France, Austria, Italy and Spain until governments permit them to reopen, its parent company said today. The stores currently generate 30% of Primark’s sales and parent company Associated British Foods (ABF) had expected sales of £190m from them over the next four weeks.

 

Meanwhile its remaining shops, including the UK, which represents 41% of Primark’s sales, have seen like-for-like sales fall over the last two weeks, and especially over the last few days as a result of reduced footfall. “We are managing the business appropriately,” said today’s ABF trading update, “but do not expect to significantly mitigate the effect of the contribution lost from these sales.”

 

The closures come as Primark’s supply issues from Chinese factories are now expected to be minimal since most factories supplying the retailer have now reopened.

 

The update came as Associated British Foods said first-half trading would be ahead of its previous expectations, mostly as a result of higher profit margins at Primark as in its grocery business. But it said it was too early to say what the effect of Covid-19 might be on its full-year results. It said its sugar, grocery, ingredients and agriculture businesses had not as yet seen a material impact”.

 

ABF said it had a strong balance sheet and “substantial cash liquidity with some £800m of net cash at the half year and significant undrawn bank facilities”.

 

Supermarkets call for consideration

Food retailers have written a joint letter to customers to reassure them that supplies are not threatened – and to ask them to be considerate in the way they shop.

 

Sainsbury’s, the Co-op, Tesco, Aldi, Waitrose, M&S, Asda, Iceland, Morrisons, Ocado and Costcutter have jointly written a letter published in national newspapers today and yesterday calling on shoppers to show more consideration.

 

The letter, co-ordinated by the British Retail Consortium (BRC), says: “We know that many of you are worried about the spread of coronavirus (Covid-19). We want to let you know that we are doing everything we can so that you and your families have the food and essentials you need.

 

“We are working closely with the Government and our suppliers to keep food moving quickly through the system and making more deliveries to our stores to ensure our shelves are stocked. Those of us with online delivery and click-and-collect services are running them at full capacity to help you get the products you need when you need them.”

 

But it also asks for help from shoppers. “We would ask everyone to be considerate in the way they shop. We understand your concerns but buying more than is needed can sometimes mean that others will be left without. There is enough for everyone if we all work together.

 

“Together we can make sure we are looking out for family, friends, neighbours. Together we will care for those around us and those who are elderly, vulnerable or choosing to remain at home. We are doing all we can to rise to this challenge. Serving you and keeping you and everyone who works with us safe will always be our priority."

 

Responding to the Scottish Government announcement that the April uplift in business rates would be reversed through a 1.6% relief, Helen Dickinson, chief executive of the British Retail Consortium, said:
“Tens of thousands of retailers face an uphill struggle as a result of coronavirus. Fewer store visits, lower demand for many goods, and the possibility of further restrictive public health measures, all threaten the survival of shops and jobs. As businesses are squeezed many run the risk of liquidity issues, further harming their ability to operate. It is essential that the Treasury goes much further than the limited efforts outlined in the budget. The first step should be to follow Scotland’s lead by reversing yet another rise in the business rates burden this April, but more will be needed.

 

"Prompt action could be the difference between survival and administration for some businesses, and with it, the jobs and shops that are essential to our communities around the UK.”

 

Panic extends online

Concern about shortage of toilet roll has extended to pureplays. Online retailer Who Gives a Crap, which sells recycled toilet roll online and gives half of its profits to building toilets in the developing world, is currently sold out of toilet paper and tissues.

 

 

Image: Shutterstock

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