[Image: Peter Bond on Unsplash]
11% of UK food is now bought online
Tesco is hiring 16,000 staff in its online business: 10,000 to pick customer orders from shelves and 3,000 delivery drivers. Many of them will be “lockdown temps” already working for the company. This is Tesco’s answer to one of the big lockdown questions for retailers: would shoppers return to the shops as lockdowns ease, or would they stick with online shopping?
💥 Why this matters: the shift to online has been very big and very fast but hasn’t snapped back at the same speed as lockdowns started easing. This suggests that some shopping activity formerly done in store may have permanently shifted online. If so, the virus accelerated online shopping’s share of spend by years.
Three quarters of UK does grocery shopping online: “Waitrose polled 2,000 people across the UK and found that 77% now do at least some of their grocery shopping online, compared with 61% the year before”. If that’s how many people do *some* of their shopping online, how much of total spend is now online? The Office for National Statistics says:
“In July 2020, retail sales volumes increased by 3.6% when compared with June, and are 3.0% above pre-pandemic levels in February 2020. [...] Online retail sales fell by 7.0% in July when compared with June, but the strong growth experienced over the pandemic has meant that sales are still 50.4% higher than February’s pre-pandemic levels.”
Ocado thinks the shift to online is permanent, but that’s their business so they would say that! Research company Retail Economics thinks that “almost half of consumers feel that the pandemic will have a permanent effect on the way they shop” (link to that BBC story because Retail Economics’s site is paywalled).
“We expect John Lewis to be a 60% online retailer”
John Lewis plans to reinvent itself for an era of online, and Chair Sharon White sent a plan to partners (staff) in the group. “We expect John Lewis to be a 60% online retailer, from 40% pre-Covid-19; and Waitrose to rise above 20%, from 5%.”
One interesting part is a new “rental/resale/recycle” option for furniture in which furniture can be rented until purchased, or rented and then returned:
“The scheme means shoppers can use the service to try before they buy - payments stop if they reach the original purchase price before the end of the hire period, and they can keep the item or have it collected. After two 12-month rental periods the items will have been paid for outright.”
The other interesting bit is:
“Private rented housing: As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use. We are exploring with third parties the concept of new mixed-use affordable housing.”
Loyalty cards, membership programmes and delivery costs
Tesco plans to add free grocery delivery to its Clubcard Plus service. Responding to Amazon including free grocery delivery in Prime for some customers, CEO Dave Lewis said:
“I understand the move [from Amazon]. The idea of Prime is very similar to where we are in Clubcard Plus, in terms of bringing a whole bunch of benefits together. So an opportunity into the future for us is to think about how we put delivery into Clubcard Plus. That’s always been the direction of travel.”
Elsewhere in retail, Walmart’s Prime-like membership programme Walmart+ is delayed.
💥 Why this matters: supermarkets are working out how they might recoup delivery costs. One logical end point might be the Costco model, in which the retailer sells goods at 0% markup but finds its margin in membership fees. A big risk is that if the retailer bundles too much or the wrong things into a membership whose fees keep increasing, it starts to look like poor value for money.
UK government and exam results: move fast and break things
The exams results controversy is an early and obvious example of what “life under the algorithm” would be like. Often painful. The problem they were trying to fix (standardised grades that made sense from one year to the next) ended up being a smaller problem than the algorithmic fix (moderating grades downward in a way that ended up disadvantaging pupils from poorer areas). The algorithm’s decisions looked unfair and capricious. The eventual fix was to revoke the algorithm.
Rachel Coldicutt’s piece is good on how the current UK government likes to dismantle things and move faster. It’s not clear that the answer is governance, in that Ofqual no doubt had endless governance process and documentation. Maybe the answer is making sure leaders are empowered to form teams that can achieve the desired outcomes, and held accountable.
💥 Why this matters: it would be good if algorithms were more open and opportunities for redress clearer. “Getting rid of the algorithm is v welcome, but not enough.”
Other retail news
M&S to cut 7,000 jobs over next three months - challenging times ahead for all retail, as job uncertainties increase. Better news: UK retail sales climb back to pre-pandemic levels.
Morrisons considers ditching all 'bags for life' - “It said a full replacement of its bags for life would save 90 million plastic bags being used each year, the equivalent of 3,510 tonnes of plastic per year.”
Google can now read grocery labels for the blind - an update to Google's assistance app adds AI image recognition for food shopping.
Amazon launches online pharmacy in India.
4 ‘CovTech’ success stories you probably haven’t heard of - Sierra Leone, Bangladesh, Togo and Rwanda responding decisively with digital transformation projects.
Apple’s low-carbon aluminum is a climate game changer - the same metal but a manufacturing process that doesn’t result in the direct release of greenhouse gases. Apple plans to be “carbon neutral across its entire business, manufacturing supply chain, and product life cycle by 2030”.
Amazon is now delivering 66% of its own orders - gradually bringing in house all of its logistics. It shipped 415 million packages in July. But thanks to the virus delivery cos like Fedex and UPS are still growing.
South Wales police lose landmark facial recognition case.
Co-op Digital news and events
Introducing our accessibility policy for Co-op products and services - “The policy makes accessibility standards more tangible because colleagues can see what their responsibilities include”.
Free of charge events:
Paid for events:
More detail on Federation House’s events. You can also see how The Federation is planning for a safe return to the co-working floor.
Thank you for reading
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