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What’s been happening in the commercial world over the past week? Read on to find out!
Last weekend, the Prime Minister announced a second national lockdown, resulting in the temporary closure of all non-essential shops. Much like the March-June period, businesses in the hospitality, aviation, leisure and retail industries will be worst affected.
The International Monetary Fund (IMF) has stressed the importance of continued government support to save the economy. At the beginning of October, the IMF predicted Britain’s economy would decline by 9.8% for 2020. This figure has already been revised to 10.4%.
Analysts agree that Britain will be pushed into a double-dip recession, with the tighter restrictions set to ‘obliterate the country’s fragile economic recovery’.
Talking points: To what extent do you think Brexit uncertainty plays into this winter recession? How can the UK afford to support businesses through a second lockdown?
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Ryanair: In the wake of the new lockdown announcement, CEO Michael O’Leary stated that customers would not be refunded, only awarded the ability to reschedule, for their November flights. There are still some allegations that Ryanair is yet to refund passengers for cancelled flights from March onwards.
Primark: The Europe-based fast-fashion retailer operates solely in stores meaning it does not sell clothes online. Its stores in Belgium, Catalonia, France, Ireland, Slovenia and Wales are already closed due to COVID-19. This means that, from Thursday, 57% of Primark’s stores will be closed. Parent company Associated British Foods (ABF) have predicted a £375million loss in sales for the four weeks from November. Chief Executive of the British Retail Consortium Helen Dickinson has already expressed her concern that the lockdown will considerably and permanently set back the recovery of the wider economy, particularly given this is typically one of the busiest trading periods for retailers.
Pizza Express: The restaurant chain has reported a further 1,300 job cuts across its 370 UK restaurants due to declining footfall. It is not clear whether this figure will increase as a result of the new lockdown.
DHL: One of the world’s biggest delivery companies is preparing for another boom in e-commerce. Already up by 35% this year, DHL has hired more than 10,000 workers to help through the Christmas period. Given many European citizens will be in lockdown throughout November, 2020 is likely to see online shopping as key to any Black Friday, Cyber Monday and holiday season profits. Interestingly, 8000 of these jobs will be permanent, highlighting the longer-term change to shopping. Global Sales VP Michiel Greeven suggested COVID-19 had accelerated e-commerce so far this year that it “brought 2030 to 2020”. The delivery company has enjoyed great success this year across key parts of its business, notably the Express division, whose pre-tax profits have grown from €454m (January-September 2019) to €750m in the same 2020 period.
Talking point: Do you think 2020’s e-commerce boom will kill the high street? Which other companies and sectors do you think are at risk during November’s lockdown?
Global hotel chain Marriott International has been fined £18.4m for a security breach. It is not certain when exactly the cyber-attack began, but investigators believe it could be as early as 2014 continuing until discovery in September 2018. The details of around 300m people were exposed, including 7m records relating to UK guests.
Although the Information Commissioner’s Office (ICO) acknowledged the hotel chain’s fast response, the regulatory authority still claimed that Marriot failed to take timely steps to secure its reservation system. A second data breach in April this year, with 5.2m guests’ personal information stolen, is likely to have contributed to the fine.
A Marriott representative announced the company would not appeal the decision but ‘makes no admission in relation to the decision or the underlying allegations’. More important, though, is that the news came only weeks after the ICO fined British Airways £20m for a similar data breach. Under GDPR, the ICO is undoubtedly becoming more activist and punitive in its fines.
Read more about British Airways’ ICO fine
Talking point: What should executives do to ensure their companies stay GDPR compliant?
Q3 reports have revealed that the combined sales of four of the five Big Tech companies: Alphabet, Amazon, Apple and Facebook have increased by 18% and their after-tax profits by 31%. Google and Facebook have seen a rebound from their temporary advertising boycotts and Amazon continues to grow under COVID-19’s e-commerce boom.
However, Apple has acknowledged that through weaker than expected iPhone 12 sales and the increasing regulatory pressure on the company’s App Store, it faces a material financial risk. Read more about Fortnite’s antitrust lawsuit.
Similarly, Facebook mistakenly blocked thousands of Joe Biden ads from the platform this week, only days before the US presidential election. An inquiry is likely to follow. With this in mind, it seems as though lawmakers’ pressure is beginning to affect Big Tech.
Talking point: What risk does Fortnite’s lawsuit against Apple carry for the Big Tech company? What are the biggest threats to Big Tech companies going into 2021?
Words by: Holly Porter
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