Monday 03/08/20

  1. In TECH NEWS, the US broadens action against Chinese tech and a Microsoft/TikTok deal is still in play
  2. In CONSUMER & BUSINESS TRENDS NEWS, Britons shun foreign travel, Hobbycraft sees a massive uptick, face masks worsen the plastics problem while restaurants and gyms look forward. Businesses are pessimistic but prepare for the new normal
  3. In INDIVIDUAL COMPANY NEWS, Marathon Petroleum sells a petrol station chain for $21bn and upscale department store Lord & Taylor files for bankruptcy
  4. AND FINALLY, I bring you an unusual job description and an amusing face mask add-on…



So the US gets tougher on Chinese tech and TikTok/Microsoft talks continue…

US to widen action against Chinese tech groups beyond TikTok (Financial Times, Aime Williams and Hannah Murphy) highlights a threat by the Trump administration to “take action” against Chinese software companies that it deems as a security risk in the next few days. Until now, it seems that TikTok has been singled out for “special treatment” but US secretary of state Mike Pompeo implied yesterday that this would be broadened to more Chinese software companies. He didn’t give any further details on what action would be taken and neither did the National Security Council. The US continues to claim that TikTok user data is at risk because it is owned by China’s ByteDance and Steve Mnuchin, US Treasury Secretary said yesterday that TikTok could not continue to operate in the US whilst being owned by ByteDance. America has form on this front as the government’s Committee on Foreign Investment in the United States (aka “Cfius”) forced the Chinese owner of popular gay dating app Grindr to sell to investor group San Vicente Acquisition earlier this year.

Meanwhile, Microsoft aims for a deal to buy TikTok’s US business (Wall Street Journal, Georgia Wells, Michael C. Bender, Kate O’Keeffe and Cara Lombardo) shows that the software giant is continuing to move forward with plans to

buy the US operations of TikTok despite talks almost being derailed by remarks that Trump made on Friday night that cast doubt on the outcome. Microsoft’s chief exec Satya Nadella put out a blog post after a phone call yesterday with Trump saying that the company aims to conclude negotiations with ByteDance by September 15th. This was the company’s first official confirmation that it was interested in the acquisition. Interestingly, the deal also includes the app’s services in Canada, Australia and New Zealand. * SO WHAT? * This all sounds sooo dodgy, don’t you think? Trump needs to appeal to his anti-China voters in the run-up to the presidential election and he can basically use his power to engineer a massive tech coup by effectively enabling one company – Microsoft – to buy one of the hottest apps around! I would have thought that his threats are also limiting the price that ByteDance can charge because if Microsoft thinks they are having to pay too much, they can walk away knowing that Trump’s threat of enforcing a ban is real. When Trump spoke on Friday, ByteDance’s CEO Zhang Yiming immediately said he’d sell his stake in TikTok, for instance. It’ll be interesting to see how this continues to unfold but it looks to me very much like a deal will be reached. If Microsoft bags this deal with or without the help of other investors (it has invited others to potentially join the party), it will immediately broaden its user base which has, until now, been mainly corporate. Fun fact: Zhang Yiming used to work at Microsoft many years ago but left because he thought it stifled his creativity!



Consumer tastes evolve and business try to adapt to a new normal…

Given what happened last week, Britons shun foreign travel for holidays at home (Financial Times, Alice Hancock) is hardly surprising. According to a survey published last week by VisitBritain, the national tourist board, around 14m adults in Britain intend to take a holiday in the UK before the end of September – so owners of holiday parks, cottages and campsites have been inundated. TravelSupermarket said that clicks on UK holiday cottages increased by 274% in June versus May and by 235% in July versus June! The chief exec of Awaze – owner of Hoseasons and – said that he is seeing a trebling of bookings versus the usual levels. * SO WHAT? * This is great for businesses that rely on tourists, but there is always the risk that when overseas travel opens up properly everyone will flock abroad again. I think that the operators have to make as much money as they can now because no-one knows how long this will last. In addition, it will be interesting to see how well camping suppliers do from this – JD Sports, for instance, owns Blacks, GO Outdoors and Millets.

Meanwhile, Hobbycraft reports 200% boom in online sales since start of pandemic (The Guardian, Miles Brignall) shows that online sales for the crafts specialist spiked massively during the pandemic, but didn’t completely compensate for the closure of their 99 stores, as people tried to do something constructive during lockdown. On the other hand, Face masks: trash talking (Financial Times, Lex) highlights a problem that will continue to build as long as the coronavirus problem persists – that of what to do about all the face masks. Ocean Conservancy says that we will be getting through 129bn masks and 65bn pairs of disposable gloves per month and most disposable masks are made from polypropylene which can’t be recycled conventionally. Unfortunately, disposable masks generate microplastics when they degrade, so reusable ones seem to be the way to go, although their efficacy is unproven and will vary widely. * SO WHAT? * Consumer behaviour has changed rapidly throughout lockdown presenting both opportunities and challenges. Some behaviours, like learning a new skill or enhancing old ones, are really positive but others, like the wearing of disposable masks,

are presenting future difficulties. I think that this will continue to evolve as we face more uncertainty going into the end of summer and into autumn – when the flu seasons starts to kick in.

Businesses hope for ‘eat out to help out’ scheme boost (The Guardian, Rachel Obordo) heralds the beginning of the ‘eat out to help out’ scheme, which launches today. Under the scheme, diners are offered a discount of up to £10 a head at participating restaurants when they eat out on Mondays, Tuesdays and Wednesdays throughout August. Fitness industry aims to get back into shape as customers make a cautious return (Daily Telegraph, Ben Gartside) also shows that gym chains such as Gym Group, Power League and Total Fitness are putting a brave face on the future as they have only just been able to open up again. * SO WHAT? * It’s too early to tell how these businesses will do for now but I fear that they will be very vulnerable to any lockdown wobble and could suffer a similar fate to travel companies following the recent reversal of travel restrictions if the government suddenly alters the guidelines.

From the management point of view, Companies fear failure after virus support ends (The Times, James Hurley) highlights a report by accountancy firm BDO which shows that more than 80% of medium-sized companies don’t think they’ll be able to trade for longer than 9 months under the current funding arrangements. Over 90% had made redundancies in response to the outbreak and nearly a third had cut at least 20% of their workforce despite the fact that the government’s furlough scheme runs until October. On the plus side, a third of the 500 respondents said that sales and revenues had remained relatively steady in the last few months, 75% of them said they’d take on more apprentices due to the new government support scheme and two-thirds of the businesses said they’d be bringing back all staff – and possibly more of them – as a result of the government’s furlough bonus. This is the scheme which gives businesses the opportunity to claim £1,000 for each member of staff they bring back from furlough. ‘New normal’ emerges for companies navigating Covid-19 pandemic (Wall Street Journal, Micah Maidenberg) shows that the management teams of companies such as McDonald’s, Chevron, Equity Residential are getting a better picture of what a post-coronavirus world looks like and redesigning pricing, store designs and production accordingly. * SO WHAT? * Everyone is constantly learning throughout this lockdown – and although everyone is trying to adapt to a longer term future shaped by changing consumer behaviour, short term survival will be the main priority for most.



Marathon Petroleum sells petrol stations and another US department store bites the dust…

Marathon Petroleum to sell gas-station chain to 7-Eleven owners for $21bn (Wall Street Journal, Rebecca Elliott) shows that US oil refiner Marathon Petroleum will be selling its chain of petrol stations to Japan’s Seven & I, the owner of 7-Eleven for $21bn in cash. * SO WHAT? * This

will give Marathon a welcome cash injection and it will increase Seven & I’s footprint in the US.

Luxury department store Lord & Taylor files for bankruptcy (Wall Street Journal, Andrew Scurria) shows that the 200-year old luxury US department store chain Lord & Taylor filed for chapter 11 bankruptcy along with its owner, fashion rental subscription service Le Tote. Lord & Taylor had temporarily closed some of its physical stores in March but continued to operate online. Another department store bites the dust! It will join J.C.Penney and Neiman Marcus on the department store scrap heap.



…in other news…

A lot of people are unfortunately out of work these days, but some would-be employers are just taking ridiculous liberties as per Influencer slammed for ridiculous job listing seeking a personal assistant (The Mirror, Luke Matthews). On a completely different note, you may recall that I recently highlighted new rules in Japan for riding rollercoasters in No screaming allowed on Japanese roller coasters, and new video shows it can be done (SoraNews24, Casey Baseel) – well Japanese amusement park offers mask stickers so guests can silently ‘scream’ on roller coasters (SoraNews24, Katie Pask) shows that operators are trying to bring back the fun with some stickers (?!?)…

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Some of today’s market, commodity & currency moves (as at 0749hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
5,898 (-1.54%)26,428 (+0.44%)3,271 (+0.77%)10,745 (+1.49%)12,313 (-0.54%)4,784 (-1.43%)22,195 (+2.23%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)