Tuesday 31/03/20

1. In CORONAVIRUS FIGHTBACK NEWS, global pharma companies vow to work together, US firms win approval for rapid tests, J&J moves to human vaccine trials, British engineers get together to produce ventilators and the UK works on contact tracing
2. In RETAIL/HIGH STREET NEWS, US retail gets decimated, Macy’s and Gap employees get furloughed and gun stores are deemed “essential” while Hammerson suffers, M&S produces food boxes, Ted Baker gets a new CEO and Carluccio’s goes under
3. In GLUT & SHORTAGE NEWS, oil falls further, consoles sell out and the world faces a potential shortage of medical gloves
4. In OTHER NEWS, I bring you the goats taking over Llandudno…

So global pharm works together, production of virus tests, a vaccine and ventilators advance and the UK tries to replicate contact tracing…

Global pharma groups promise co-operation on coronavirus (Financial Times, Camilla Hodgson) highlights an important coming together of all members of the International Federation of Pharmaceutical Manufacturers and Associations – which includes the likes of Roche, Sanofi Pasteur and Johnson & Johnson – as they promised to share resources and clinical trial data among themselves and governments to grow testing capacity and come up with treatments. The idea is that when a vaccine or treatment is developed, the members will pool capacity to enable production to be stepped up rapidly. In Medical companies win approval for rapid coronavirus tests (Wall Street Journal, Brianna Abbott and Micah Maidenberg) we see that Abbott Laboratories got FDA authorisation last Friday to distribute the test for use in doctors’ surgeries and urgent care clinics among other places from this week. The test can detect the virus in five minutes and return negative results in 13 minutes. Meanwhile, Johnson & Johnson to begin human trials of Covid-19 vaccine by September (Wall Street Journal, Matt Grossman) highlights a statement from the company yesterday that it had made progress on an anti-Covid-19 vaccine with a view to being ready for release in early 2021. * SO WHAT? * This is all great to hear, but treatments and vaccines all take time to develop and get to market no matter how desperate the need. Let’s hope for continued progress! At least everyone will be working together.

Big names of UK engineering in push to make 30,000 ventilators (Financial Times, Michael Pooler, Laura Hughes, Sarah Neville and Peggy Hollinger) shows that VentilatorChallengeUK, a consortium of aerospace,

automotive and other engineering companies (such as Airbus, Ford and McClaren), has just received an order from the UK government to make 10,000 ventilators based on an existing design. This follows another order for 10,000 devices from the designed-from-scratch Dyson device, which is still awaiting regulatory approval. The NHS currently has around 8,000 ventilators and ministers say this is likely to double in the next few weeks, but the target is to have 30,000.

Race is on to replicate virus contact tracing app (Daily Telegraph, Hasan Chowdhury) highlights efforts by countries such as the UK and Germany to replicate the success that Singapore has had with the TraceTogether app, which tracks people that might be infected with the coronavirus. It was launched on March 20th, was developed by 40 engineers from the government in collaboration with the health ministry and has been downloaded over 800,000 times. It uses Bluetooth on mobile phones to give out signals to others within a 2m radius, but keeps IDs anonymous. If an individual who has the app subsequently tests positive for the coronavirus, the data can be downloaded so contact tracing teams can contact others who may be at risk. The use of Bluetooth means that there’s no geolocation involved, personal data is not stored or designated to a user and it is to be deleted once the outbreak peters out. The tech has now been made open source and the UK is now in talks about using it, although there are existing apps out there. * SO WHAT? * This sounds like a great idea and although there will always be privacy concerns on something like this, I suspect that current priorities will probably override the concerns people would have under more normal circumstances. If people can be convinced that this data won’t be held long term, I’m sure that there will be widespread adoption. An existing app from King’s College London, called ZOE, has already received over 1.5m downloads – so maybe something “official” from the government will be even more  widely used.

We take a look at what’s going on in retail in the US and the current state of the UK high street…

US retailers teeter on the brink as 630,000 outlets close (Financial Times, Alistair Gray) shows that many US retailers will still struggle despite the recent $2.2tn US stimulus bill as the National Retail Federation forecasts that $430bn in industry revenues could be lost over the next quarter with no guarantee as to who will reopen once the current situation dies down. Retail workers at Victoria’s Secret owner L Brands are to be furloughed without pay and Macy’s will start to furlough most of its staff this week while companies such as Nordstrom are postponing dividend payouts and companies including Best Buy, TJX and Kohl’s are trying to get money from credit lines. * SO WHAT? * Current circumstances are difficult for all (unless you are Amazon or a supermarket) but companies that were already struggling before the pandemic hit, such as department stores (especially Neiman Marcus and JC Penney) and mall-based clothing chains (such as Ascena and J Crew), will be particularly vulnerable. The struggle continues…

Gun stores ruled essential businesses during coronavirus shutdowns (Wall Street Journal, Zusha Elinson) shows that Americans will still have the right to buy a gun and shoot each other in these difficult times as the federal government is saying that gun stores, gun makers and shooting ranges are “critical businesses” that should not be shut down during the pandemic. Gun sales have shot up (I couldn’t resist that!) during the coronavirus outbreak, presumably because people want to protect their supplies of pasta and toilet paper. * SO WHAT? * “Critical business”?? Really?? Well I guess if everyone else is packing, you need to protect yourself and your pasta with an even bigger gun. This just goes to show how powerful the gun lobby is in America – even in times like this! 

Back in the UK, Hammerson shop rent takings down two thirds due to crisis (The Guardian, Julia Kollewe) is further evidence of crisis among UK retailers as one of the country’s biggest shopping centre owners announced a massive hole in its rent takings. Hammerson owns the Bullring in Birmingham and Brent Cross in London (among other properties) and has been, unsurprisingly, inundated with requests for rent deferrals, cuts and waivers.

Meanwhile, M&S to sell food boxes online (Daily Telegraph, Laura Onita) heralds another development in grocery retail as M&S will start to deliver £30 packages containing 20 items and give priority to customers over 70, with a limit of one box per customer and a £3.99 charge for contact-free delivery. However, Food imports tested by outbreak as border controls and labour shortage bite (Daily Telegraph, Laura Onita) suggests that there may be fruit and veg shortages to come as lack of manual labour to pick the produce and transport restrictions in getting it here may get tricky as time goes on. This is especially significant for us as Britain imports way more fruit and veg than it exports. * SO WHAT? * As time goes on, this could mean that we all start to eat more in season, but it could also accelerate the demand for produce from vertical food farms which grow crops under LEDs in controlled conditions – and Jones Food in Scunthorpe is Europe’s biggest example.

In other high street developments, Finance chief to lead Ted Baker’s fightback (The Times, Callum Jones) highlights the appointment of the troubled fashion retailer’s new CEO – it’s Rachel Osborne, who was appointed the company’s CEO only three months ago and who was the one who spotted the massive hole in its accounts, which prompted the departure of its then-CEO and chairman. This will plug the management vacuum to some extent (they are still looking for a chairman), but whether it will be enough to make up for the company’s shortcomings remains to be seen. Still, she is highly regarded. Then Coronavirus pushes Carluccio’s and BrightHouse to collapse (Financial Times, Alice Hancock) heralds the failure of yet more businesses, putting 4,500 jobs at risk. Both companies had been struggling before the coronavirus hit anyway.

Weak oil prices continue and there are shortages of consoles and medical gloves…

Oil rig closures rising as prices hit 18-year lows (The Guardian, Jillian Ambrose) highlights the ongoing mass-closures of oil rigs as oil prices continue to weaken since Saudi Arabia decided to flood the market. Storage space for the black stuff is running out at a rapid rate as oil prices hit new lows. Saudis gambling on game of oil-price chicken (The Guardian, Larry Elliott) does a good job of summarising the story so far and concludes that in order for the price to rise from here, the Saudis need to limit their production and consumers need to start spending again. Unfortunately, neither look likely in the short term.

The coronavirus outbreak has resulted in a shortage of many things as demand has increased exponentially for

some goods that production can’t keep up with. Consoles selling out causes games fans’ frustrations to rise (Daily Telegraph, James Cook) highlights shortages of consoles such as Nintendo’s Switch (sales of which quadrupled in the week of March 16th – and it is now sold out in Amazon, Game and ShopTo) and the PS4, which is probably at the more “annoying end of the scale” (but great for Sony as the PS4 is getting an unexpected boost in sales towards the end of its life before the introduction of the PS5) whereas Medical gloves/Malaysia: the next shortage (Financial Times, Lex) suggests something rather more serious. Apparently, around two-thirds of the world’s supply of medical gloves is made in Malaysia and it is struggling with a recent influx of global orders. Malaysia is in lockdown for at least one month and the factories that are open are running at less than 50% capacity. There is an order backlog of four months. * SO WHAT? * This provides yet more evidence of why, when this crisis recedes, it will be so important for governments, health services and industries to place orders with a broader picture in mind rather than just focusing on cost.

And finally, in other news…

Streets up and down the country are deserted as more people heed government advice to stay at home. Some Welsh goats decided to take advantage of this situation in Herd of goats take over deserted Welsh streets as locals obey coronavirus lockdown rules (The Sun, Andy Jehring https://tinyurl.com/tek9zoc). Nothing like a day out/night out on the town, eh?? I envy them at the moment!