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Sunday Retail News Roundup

M&S chief defies MPs' pay freeze call, Transformation of retail, Poundland may expand clothing or store swap, Asda pays biggest dividend, Supermarkets aim small space, Canny to carry cash in pocket Mike Ashley, Contactless new-wave revolution.


Sunday Retail News Roundup

M&S chief defies MPs' pay freeze call, Transformation of retail, Poundland may expand clothing or store swap, Asda pays biggest dividend, Supermarkets aim small space, Canny to carry cash in pocket Mike Ashley, Contactless new-wave revolution.

Mail on Sunday.

New Marks & Spencer chief executive Steve Rowe was last night standing firm against demands by Labour MPs that he accept a pay freeze for three years. The MPs have waded into a staff pay row at the retailer via a letter and targeted Rowe’s own salary as part of their campaign. However, Rowe said he and other executive directors had already agreed not to take a pay rise next year, but offered no further freeze. He also rejected the MPs’ call for the board to reconsider staff pay changes, saying ‘the vast majority’ would be better off. And he argued that M&S customer assistants will be paid more than the recently introduced National Living Wage and that from April next year M&S staff would be ‘amongst the highest paid in UK retail’. Rowe took over as chief executive in April with a salary of £810,000. He also received £1.4 million in benefits and bonuses over the past two years.

Carl Rogberg, former finance director of Tesco UK; Christopher Bush, former managing director of Tesco UK; and John Scouler, former commercial director for food were charged on Friday in relation to the £263 million black hole that appeared in Tesco’s accounts in 2014. Combined with the public scandals over the BHS pension scheme, working conditions at Sports Direct and even M&S coming in for a browbeating by MPs over staff and boardroom pay, Britain’s senior shopkeepers are under the commercial and moral spotlight, the big retail names are facing a revolution. Consumers became bargain hunters during the recession and have remained so. Overseas competitors with lower cost models, Aldi and Lidl, have invaded and the online explosion has allowed upstart competitors to establish themselves faster. Few of our established retailers saw this revolution coming and they are losing out to those who did. Andy Bond, the former Asda boss is leading an aggressive retail takeover spree in the UK by South African billionaire Christo Wiese. Online retailer, largely unheard of just three years ago has surged in value to £1 billion.

The new owner of Poundland may dramatically expand its clothing range or even swap some of the 700 stores with its own fashion chain Pep & Co. Andy Bond, the former Asda boss who leads Pepkor Europe, which won shareholder backing for its £610 million takeover of Poundland last week, said: ‘There are a number of areas we will look at whether it is looking at how we could use each other’s ranges or exchanging properties.’ Bond also said he was starting the latest expansion for Pep & Co next week, increasing the number of outlets from 50 to 80.

Asda has paid parent company Wal-Mart the biggest dividend for 12 years, even as a food price war raged about it. It transferred £450 million to a sister company owned by Wal-Mart in January despite sliding sales and as it saw its market share further eroded by fast growing German discounters Aldi and Lidl. The money was paid after Asda made record profits of £975 million in the year to December 2015, a rise of 5.9 per cent on the previous year. Sales dipped 3.7 per cent to £22.4 billion. The dividend was the first Asda had paid to Wal-Mart since 2009 and the biggest since the £1.4 billion it paid in 2003. It was transferred from Asda to its holding company, Corinth Investments, which is owned by Wal-Mart Stores UK. A trail of documents shows a higher sum of £505 million was then transferred from yet another Wal-Mart-owned company based in Britain to an Amsterdam firm, Broadstreet European Holdings, also controlled by the US group.


Tesco and Sainsbury’s are the only members of the “Big Four” to have submitted planning permissions for new shops this year. All but one of the 20 applications filed by the pair during 2016 are for convenience stores. The convenience market is the fastest growing food retail sector and is estimated to be worth £37.7bn today and forecast to be as much as £44bn by 2020. Around 40pc of shops are still owned independently while a third are owned by groups such as Nisa, Costcutter and Spar. Asda has steadfastly refused to enter the convenience market so far while Morrisons last year pulled out, offloading its M Local stores, which subsequently went bust nine months later. Aldi and Lidl are continuing rampant growth, dwarfing bigger rivals’ number of new store applications. Aldi has submitted 42 applications during the year, while Lidl has filed 54, three times more than the 30 from the major supermarkets and upmarket rival Waitrose. Marks & Spencer is considering closing some international stores as well as others in the UK as it grapples with a clothing sales slump but is still planning to build more food halls. Marks & Spencer has filed 10 planning applications for new stores this year and all of them are specifically for food shops.

Sunday Times.

Workers at Sports Direct’s infamous warehouse in Shirebrook, Derbyshire, have no hope of becoming as wealthy as the company’s founder, Mike Ashley, on the low wages they are paid. So it must have been galling in the extreme to watch their boss take a thick wad of £50 notes out of his pocket while he was going through a security check last week. If you were about to show the media around your warehouse, you would empty your pockets beforehand, wouldn’t you, if you knew you would have to put their contents into one of those grey security trays when everybody was watching? But then, have you ever had such a large stack of £50 notes in your possession?. Ashley laughed it off, saying he had “been to the casino”. There are currently 3.4bn banknotes in circulation, according to the latest figures provided by the Bank of England.


One in every five card payments we make is now contactless, marking a major milestone in the “wave and pay” revolution. Contactless payment cards were introduced in the UK in 2007. Initially, the public was slow to embrace the technology. However, things are really taking off it recently emerged that spending on contactless cards during the first six months of 2016 has outstripped the amount for the whole of 2015. Contactless accounted for 18% of UK card spending in June, the most recent month for which industry data is available, and at the current rate of growth will almost certainly have passed 20% by now. As recently as October last year, the figure was 10%. And Brits are now more likely to make a payment using a contactless card than a cheque book.

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