Wednesday 07/10/20

  1. In TECH NEWS, the Big Tech report calls for action and Facebook defies Turkey
  2. In CONSUMER/RETAIL/HIGH STREET NEWS, UK consumers stay upbeat but don’t spend, Rolex’s main UK dealer does a roaring trade, Wagamama benefits from the ‘burbs, Ikea opens loads of stores, Ocado falls and the US retail landscape changes
  3. In CORONATREND NEWS, Boeing tries to quantify the impact and The Batman gets delayed
  4. AND FINALLY, I bring you a brilliant wedding…



So the Big Tech report is released and Facebook ignores a new Turkish law…

House panel says big tech wields monopoly power (Wall Street Journal, Ryan Tracy) shows that a report published by the Democratic staff of the House Antitrust Subcommittee – which comes at the end of a 16-month inquiry into the market power of Amazon, Facebook, Google and Apple – concluded that the companies have used their size to crush the competition and restrict innovation. They are recommending that Congress should consider forcing Big Tech to break up their businesses as a result. The Republican staff issued their own conclusions separately and, while they agreed with strong antitrust enforcement, they did not go as far as the Democrats in their recommendations. * SO WHAT? * This is just a report – not law – at this stage, but its conclusions were clear and boost the likelihood of new laws to crack down on the companies’ behaviour. Amazon, Google and Apple have all objected to the report’s conclusions – but then again they would, wouldn’t they!

Facebook to defy new Turkish social media law (Financial Times, Laura Pitel and Hannah Murphy) highlights Facebook’s decision to ignore a new law in Turkey that requires social media companies to have a formal presence in the country. It informed the Turkish government in the last few days that it would not comply with the law that came into force last week, paving the way for President Erdogan to block it. He had said earlier this year that he wanted “immoral” social media platforms to be “banned or controlled” after the Twitter trolling his daughter and son-in-law got after the birth of their fourth child. This got translated into law that was heavily criticised that requires tech companies with over 1m daily users in Turkey to store user data in the country and provide a local representative who would be accountable to authorities. Other platforms, including Twitter, have yet to respond. * SO WHAT? * It’s not clear yet how the Turkish authorities will respond. Although it has banned YouTube, Twitter and Wikipedia at various times over the last ten years, the government also needs such platforms to spread its political messages as well.



UK consumers stay positive but don’t spend, Rolex sales continue to be strong, Wagamama does well in the suburbs, Ikea aims to open more stores, Ocado loses momentum and the US retail landscape changes…

‘Upbeat’ consumers are still not prepared to splash out (Wall Street Journal, Hannah Boland) cites a PwC survey which shows that consumers are actually feeling pretty confident about their finances but are only spending on groceries and DIY. The survey said that consumer confidence had rebounded to pre-pandemic levels and was at the highest level in September for seven years. Interestingly, those in the 18-24 age group were most positive despite everything. On the other hand, the majority of respondents said that they were planning on cutting back their spending across the board. * SO WHAT? * Spending is key here. It’s all very well people feeling confident about their finances – but if that money is just left gathering dust everything will grind to a halt as money is the “oil” that greases the wheels of the economy. With the prospect of rising unemployment, things are not looking great going into Christmas.

Mind you, UK’s biggest Rolex dealer says sales rising despite Covid crisis (The Guardian, Zoe Wood) shows that Watches of Switzerland, which also owns the Mappin & Webb brands, saw sales rise by 18% versus the previous year as British shoppers made up some of the sales shortfall due to the lack of tourists with an average spend of £5,000. Chief exec Brian Duffy said that the purchases had been financed by cash that would have been spent on holidays, eating out and clothes. * SO WHAT? * The news boosted Watches of Switzerland’s share price by 26% in trading yesterday but Duffy is critical of the government’s plans to scrap tax-free shopping for international tourists as this could adversely affect sales when tourists do actually return.

Elsewhere, Wagamama sees sales revival at suburban eateries (Daily Telegraph, Hannah Uttley and Ben Gartside) shows that Wagamama’s parent company, The Restaurant Group (aka “TRG”) announced a resurgence in sales at its suburban pubs and restaurants powered by more people working from home. Conversely, sales in central London suffered as office workers stayed away. * SO WHAT? * This

is a decent performance, but whether momentum continues will depend hugely on any further movement restrictions that may or may not come into force.

Ikea to open record number of stores this year despite online shift (Financial Times, Richard Milne) shows that the meatballs-to-flat-pack-furniture purveyor is continuing unabated in its journey to the future by opening a record number of stores this year. It is betting that it needs a large physical presence despite the continued shift of consumers to online spending. The world’s biggest furniture retailer is planning on opening over 50 stores in the current financial year, with most of them in city centres in a smaller format. * SO WHAT? * Ikea has been trying various things to evolve from its out-of-town megastore roots and is sticking to its plan to be more accessible despite seeing weaker sales due to lockdown and enforced store closures (although some of that was mitigated by online sales shooting up by around 50%!). This shows that the retailer’s biggest overhaul in its 77-year history is proceeding apace!

Talking of online, Ocado loses 10% of its value after legal action by Norwegian rival (The Times, Ashley Armstrong) shows the impact that legal action from Norwegian rival AutoStore has had on the e-tailer’s share price so far. It is still possible for Ocado to countersue. AutoStore is trying to get injunctions to stop Ocado and Tharsus Group, its UK partner, from manufacturing or using its tech. * SO WHAT? * Clearly this is a cloud that will hang over Ocado, but it seems to me that investors aren’t overly concerned. 10% isn’t that much considering the stellar run that the stock has had this year. When you contrast this with the way Nikola’s share price has been treated since various recent allegations were made against it it would seem that investors are probably selling down on the news – but they are also arguably crystallising the gains they have made this year. This can change, but as thing stand at the moment it does not appear to be disastrous.

I thought I’d include How coronavirus changed the retail landscape (Wall Street Journal, Inti Pacheco) because it is an interesting summary of how the coronavirus has changed things for retailers in the US. It confirms the ongoing shift to online shopping (online credit and debit card transactions have increased by 88% on average per month since the beginning of April) with companies like Home Depot and Dick’s Sporting Goods seeing particularly strong performance. On the other hand, JC Penney, Neiman Marcus, GNC Holdings and Brooks Brothers filed for bankruptcy protection. It looks like the US retailers are suffering in the same way as British retailers are over here!



Boeing quantifies its pessimism and The Batman gets delayed…

Boeing expects pandemic to put big dent in jet demand (Wall Street Journal, Doug Cameron) highlights what we probably all knew anyway – that jetliner demand is going to decrease given fewer people are flying around the world. They just put a number on it – 2,000 fewer planes over the next ten years, according to its annual forecast. This is the first such forecast from a major aircraft maker since the height of the pandemic. I don’t think anyone will be surprised by this given what’s going on at the moment!

Then in The Batman grounded as pandemic hits blockbusters (Daily Telegraph, Ben Woods) we see that Warner Brothers film The Batman is the last blockbuster to get postponed only days after the latest Bond film’s release was delayed yet again. Its original release was supposed to be October 1st 2021, but it will now be pushed back to March 4th 2022. No wonder Cineworld decided to temporarily close its UK and US cinemas – there’s not much to watch! * SO WHAT? * This is a major headache for insurers facing claims from movie and TV studios and will also prompt such companies to think more about how they might distribute things if lockdown persists past 2021. Releasing via streaming is clearly an option, but they will probably want to keep to movie theatres for the moment.



…in other news…

I thought I’d leave you today with the brilliant ‘Drive-in wedding’ in Chelmsford bypasses Covid restrictions ( which shows that large weddings can take place if you are willing to be creative (and spend the money!)

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