Monday 10/07/23

1. In BUSINESS, CONSUMER & EMPLOYMENT TRENDS, we look at Saudi Arabia’s moves into sport, how fewer people are getting married and what’s going on in hiring
2. In RETAIL NEWS, Shein takes on Amazon while M&S gets annoyed with Ocado
3. In TELECOMS NEWS, BT is in the sights of Deutsche Telekom while Vodafone has a hissy
4. In MISCELLANEOUS NEWS, Snap tempts creators, Fisker starts to deliver, Revolut has another problem and the US gets lukewarm on Ukraine’s membership of NATO
5. AND FINALLY, I bring you country’s best places for a night out…

So the Saudi march on sport continues, marriage popularity declines and hiring slows down…

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

Spending spree thrusts Saudi football on to global stage (Financial Times, Samer Al-Atrush and Josh Noble) takes a look at Saudi Arabia’s “assault” on world sports as it splashes the cash in football, golf, motorsport, horseracing, boxing and (soon) tennis using its $650bn Public Investment Fund. Critics focus on the sportswashing aspect of Saudi investment but it is part of a broader push to promote itself on the world stage whilst also improving its domestic prospects, particularly in football. All the hype is also designed to make Saudi Arabia more appealing as a holiday destination. * SO WHAT? *China tried doing what Saudi Arabia is doing now back in the middle of the last decade, shelling out ridiculous sums to invest in foreign clubs, sign high profile managers and players to the Chinese Super League – but it all came crashing down when the government withdrew its support and private companies just ran out of money. At the moment it looks unlikely that this will happen with Saudi Arabia as the forces behind the push seem to be more aligned (last week we saw it launching a new sports investment group, for instance) and deeper-pocketed.

Then Marriage: wedding industry jilted by couples who say ‘I don’t’ (Financial Times, Lex) identifies a trend where the institution of marriage seems to be losing its lustre. Signet recently reported a weak demand for engagement rings, which it blamed on the tail-off

in dating over Covid. Marriage rates have halved since 1970 in many European countries and the proportion of births outside marriage in the EU has almost doubled to 42% since about 1993. Interestingly, although the popularity of marriages has been on the wane, the amount spent on them has been on the rise. Even more interestingly, economists in the US and Singapore say that the length of a marriage is inversely proportional to the spending on the engagement ring and wedding ceremony! Polls in the US suggest that the average wedding costs $30,000 😱 although such polls may be skewed to those who indulge in higher-cost weddings. * SO WHAT? * The wedding “industry” is important for tourism and has a pretty broad ecosystem (venue hire, hotels, services like photography etc. etc.) that feeds it (the UK wedding industry is thought to be worth £14.7bn and the US industry a whopping $70bn). However, its survival will depend on a hoped-for post-Covid rebound. FWIW, I think that as far as weddings are concerned, it’s not about the money – it’s about the people who are there with you. I’d also say spend the budget on what actually matters and what people will remember 👍.

In employment trends, Hiring by UK firms slows amid ‘lingering economic uncertainty’ (The Guardian, Jasper Jolly) cites the latest report from REC and KPMG which says that British businesses are holding back on their hiring just as more people are looking for jobs. Recruitment agency placements of permanent staff also fell and wage growth was down to its weakest rate in over two years in June. UK labour market data is due to be published tomorrow and it’s expected that the unemployment rate will still be at or near four-decade lows. * SO WHAT? * It would seem that employers are getting increasingly nervous about hiring and so are more inclined to employ temps rather than permanent staff in case they have to cut quickly in response to a downturn. The news about wages is “good” in the sense that narrower wage rise should mean that people just end up spending less, which means that inflation should calm down. Clearly, if YOU are the one whose wages aren’t going so far then this is far from “good”!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Shein takes on Amazon and M&S isn’t happy with Ocado…

Shein Takes on Amazon in the Business of Selling Everything  (Wall Street Journal, Shen Lu) highlights Shein’s stratospheric rise from discount Chinese apparel seller to global fast-fashion behemoth – and it’s new ambitions to broaden its offering. It wants to become a third-party marketplace hub selling everything! It recently launched its marketplace in Mexico, Brazil and the US and has plans to roll it out to Europe. It’s bringing in third-party sellers by offering out generous incentives and discounted commissions to sellers who already have annual sales of $2m on Amazon, according to some sources. * SO WHAT? * Given that Shein is now the top fast-fashion retailer in the US, with a 40% market share, its decision to pivot sounds like a good one as it capitalises on the power it already has. Given that it has a decent following and a strong social media presence (which helps it jump quickly onto trends), it is in a good position to take on the likes of Amazon and others! It already has more TikTok followers than any apparel brand and has the third most followers on Instagram. Still, growth isn’t likely to be easy as suddenly having to onboard a deluge of third-party sellers is going to be a tough task and it will still lag Amazon’s logistics networks, which it has spent decades building. Although Shein is taking a lot of the limelight here, let’s not forget Temu (which is owned by PDD) which launched in the US last September. Since then, it has expanded into over 20 other countries – so there’s even more competition in this space! Given the cost of living crisis, cheap-and-cheerful retail is bound to be popular IMO. Amazon needs to watch out!

M&S looks to refresh its ailing Ocado deal (The Times, Isabella Fish) shows that M&S is not best pleased with how things are going with its 50-50 Ocado Retail joint venture with Ocado. Shareholders recently asked when they would see “a proper return” from the venture as it is currently £4m in loss – and M&S paid £750m in 2019 to be half of the venture. It all started brightly enough under lockdown when everyone was stuck at home, but since restrictions were lifted the performance has tailed off somewhat thanks to poor customer service and delivery problems. * SO WHAT? * It seems to me that they rarely seem to be able to get the timing right between food and non-food in that when food does well, non-food doesn’t and vice-versa. Given all the good things that M&S has been doing to sort out its non-food offering (particularly in apparel) you’d hope that the Ocado JV could relatively easily get back on track so that the whole group can put in a storming performance! I guess that things could go either way here as it could back out of the JV, but for now it is doubling down on its commitment and looking at improving customer experience and making cost-cutting measures. It will take time to turn things around, but TBH M&S’s online presence pre-Ocado was so 💩 that I’d argue ditching Ocado now would mean a massive step backwards. Ocado itself needs Ocado Retail – it currently accounts for about 90% of the parent’s revenue – and I’d argue M&S needs Ocado Retail. To continue the marriage theme from the story in the previous section, this particular union is going through the “or worse” bit of the “for better or worse” part of the ceremony 😁!

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Bid rumours surround BT and Vodafone gets huffy…

In telecoms news, BT is put on high alert for German takeover (Daily Telegraph, Christopher Williams) shows that major shareholder Deutsche Telekom is rumoured to be limbering up for a takeover bid of BT. BT is in a weakened state currently, with an increasingly expensive debt pile and imminent change of top management. It is also thought that if a bid happens it’ll have to happen soon because if a Labour government comes in at the next election a foreign takeover of a British “institution” could arguably be less likely to happen. Deutsche Telekom has been a shareholder since 2016 and now has 12%, but it has effectively paid over £4 a share to own the stock versus the current value of just over £1.20. Will it double down or sell out?? At the moment this is just pure speculation.

Then in Vodafone threatens to cut spending if tie-up blocked (The Times, Katie Prescott) we see that the UK chief exec warned that if its proposed merger with Three doesn’t go through, it will cut investment in digital infrastructure which will slow down the government’s 5G rollout ambitions. * SO WHAT? * Vodafone and CK Hutchison, which owns Three, announced plans to merge last month to create what would be Britain’s biggest mobile operator with Vodafone owning 51% of the enlarged entity but critics argue that it would cut the choice of network providers in the UK. The proposed merger is currently being reviewed by the CMA. If they decide to do a full in-depth investigation, it could take up to 18 months to come to a conclusion. O2 tried to buy Three in 2016 but was blocked by the CMA, so there is previous here. There is also the possibility that the deal could be subject to a review committee as any deals in the telecoms sector trigger this action on national security grounds. CK Hutchison is based in Hong Kong.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Snap attracts, Fisker starts, Revolut suffers and the US gets funny about Ukraine…

In a quick scoot around some of today’s other interesting stories, Snap’s Push to Tempt Creators Seems to Be Working (Wall Street Journal, Lindsey Choo and Meghan Bobrowsky) shows that Snapchat’s efforts to attract creators back to its platform are bearing some fruit. It lost a load after cutting its big payout programme but has seen them coming back thanks to a new programme that enables creators to get a percentage of the revenues on ads shown between their posts. * SO WHAT? * User engagement has been declining, as have ad revenues – but the new Snap Star programme has given creators what they want – a percentage of the revenues rather than a flat fee paid out of a creator fund. It is worth noting that time users spend on watching Snapchat Stories from creators in the programme in the US move than doubled in the space of a year! It remains to be seen whether TikTok – and now Threads – will clip its wings or not.

Then in Electric-Vehicle Startup Fisker Is Reborn Into a Crowded, Competitive Field (Wall Street Journal, Sean McLain) we see that Fisker has finally started to deliver its first – and much-hyped – electric cars to US customers. This comes 2½ years after the company floated. Deliveries began last month with the Ocean SUV, which starts at around $37,500, but it comes to market just as everyone else is ramping up their efforts and introducing new models! * SO WHAT? * EV start-ups always have a hard time. Fisker

is hoping that it will be able to entice customers not only with the Ocean, but also the smaller and cheaper crossover called PEAR (due to be on the market in early 2025) and a pickup truck (called the Alaska) which is due out in August. Time will tell, but with rivals like Tesla cutting prices to shift volumes and an ongoing cost-of-living crisis that is even going to dent the ability of those who are more affluent it’s going to be a tricky time.

Elsewhere, Revolut’s US payment flaws allowed thieves to steal $20m (Financial Times, Siddharth Venkataramakrishnan and Akila Quinio) shows that a glitch in Revolut’s payment system in the US was responsible for letting criminals steal a ton of money over the space of a few months last year before it was able to close the loophole. This isn’t a good look for a company that is still waiting to hear about its UK banking licence application and has had all sorts of other problems recently, including some high-profile departures and a qualified audit from BDO. It did managed to claw back some of the $23m that went missing, but still…

Then in US and Germany resist pressure to advance Ukraine’s Nato bid (Financial Times, Henry Foy, Ben Hall and Felicia Schwartz) we see that the two countries are notably more reticent than other allies in supporting Ukraine’s bid to become part of NATO, with Biden saying that he didn’t think Ukraine was ready. The fear here is that if its membership was approved now, NATO could be dragged into the war. A NATO summit is due in a few days in Lithuania, so this will no doubt make for spirited discussion…

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

I thought this was quite interesting: Top 10 places in the UK for a night out on the town and the 10 WORST – see full list (The Mirror, Chiara Fiorillo). I’ve been to three out of the top 10 and none from the bottom 10 (although I have been for lunch and a pub in Bradford – Mumtaz, which was a brilliant restaurant – and a pub whose name sounds a bit rude so I won’t put it here!). I was surprised not to see Bournemouth on that top 10 list. I’ve been on two stag do’s there and thought it was pretty good!