The Brand Move Roundup – May 26, 2020
We’re tracking the notable brand moves & highlighting the companies who are tackling this challenge successfully.
We started this series of brand updates on March 12, but the reaction has been so positive, and the crisis so fast-moving, that we’re going to move to a continuously updated rolling news format from now until it’s all over (hopefully soon). Keep checking back here for the latest updates on how brands are dealing with coronavirus.
Fashion label Gucci’s creative director, Alessandro Michele, has announced that the brand is slashing the number of fashion shows it holds each year from five to two. Declaring the fashion week calendar obsolete, Michele said he was no longer adhering to a rota staked out by spring/summer, autumn/winter, cruise and pre-fall shows. Instead, the brand will show “seasonless” collections twice a year. There are no plans for a show in September, when the Gucci collection would normally be staged as a key part of Milan fashion week.
Dries Van Noten has also led a number of independent designers calling for a radical overhaul of the industry, with fewer fashion shows and less product. The biggest labels, which have a financial cushion to ride out the economic crisis, have so far been less motivated to change than smaller brands. But by throwing their weight behind the forces of change, Gucci has the ability to shift the conversation. Last month, Saint Laurent announced it would sit out Paris fashion week this September and set its own schedule going forward. Overhaul of the fashion week system has been mooted for years, but in 2020 change seems to be becoming an economic necessity. Kering and LVMH, the two largest luxury groups, recorded a drop in revenue of about 15% for the first three months of this year.
Negotiations between TV networks and agency executives in the current upfronts are on a very different basis this year. Many had expected business outcome guarantees, such as lifts in sales or store visits, to be a major focal point in the next round of upfront negotiations. Now both sides are trying to figure out whether those guarantees can even stay on the negotiating table with so many businesses closed or limited for the past two months. A&E Networks, NBCUniversal and WarnerMedia are among the network groups that have publicly offered business outcome guarantees, though other networks have done so privately. Advanced TV advertising firm Simulmedia began offering these deals in 2015, and they account for roughly 25% of the company’s business, said Simulmedia CEO Dave Morgan. Simulmedia has been working with advertisers, especially food delivery services, financial services companies and direct-to-consumer marketers, to adjust the models used for correlating business outcomes with ad exposures. “The models have to be brand new, based only on data from the last weeks not the last year,” said Morgan.
Renault and Nissan have apparently shelved plans to push towards a full merger and will instead fix their alliance to try to recover from the coronavirus pandemic. With carmakers around the world reeling from the pandemic, the partners are planning to overhaul an alliance that largely failed to convert its global scale into a competitive advantage beyond the joint procurement of parts. Both struggling carmakers are set to announce mid-term restructuring plans designed to resolve long-standing tensions. Nissan and Renault are each planning substantial restructuring and cost cuts; the crisis at both carmakers has accelerated efforts to resolve disagreements that have hurt collaboration and cost-sharing in technology and product development for five years. The alliance also includes Mitsubishi Motors.
Chinese tech giant Tencent has said that it will invest 500 billion yuan ($70 billion) over the next five years in technology infrastructure including cloud computing, artificial intelligence and cybersecurity. Other key sectors of the investment include blockchain, servers, big data centers, supercomputer centers, internet of things operating systems, 5G networks and quantum computing, Dowson Tong, senior executive vice president of Tencent, told state media. Tencent is best-known for its WeChat messaging app and a range of popular games but is aiming to expand into business services as consumer internet growth slows and companies shift number-crunching from their own computers to the cloud. Tencent has said while cloud businesses suffered amid the COVID-19 outbreak it expected to see accelerated cloud services and enterprise software adoption from offline industries and public sectors over the longer term. “Expediting the ‘new infrastructure’ strategy will help further cement virus containment success,” Guangming Daily quoted Tong as saying. Tencent Cloud had 18% of China’s cloud market in the fourth quarter, trailing Alibaba which commanded 46.4%, according to research firm Canalys.
Ride-hailing service Bolt said on Tuesday it has raised 100 million euros ($109 million) in a deal valuing the European rival of Uber at 1.7 billion euros. Bolt said the funding would allow it to grab market share in a sector hurt by COVID-19, as lockdowns have kept customers indoors, and rivals Uber, Lyft and Ola cut thousands of jobs. “In the next 12-18 months we have an opportunity to win market share,” Bolt founder and Chief Executive Markus Villig said. “Even though the crisis has temporarily changed how we move, the long-term trends that drive on-demand mobility such as declining personal car ownership or the shift towards greener transportation continue to grow.” Bolt offers also scooter rental and food delivery. It has expanded its food delivery business to 15 countries from four this year as demand has surged. The 2013-founded Bolt — which has over 30 million users in 35 countries — has mostly won business from Uber in major African cities and Eastern Europe.
According to a survey taken by the U.S. Travel Association, when Americans are willing to travel again, whether Covid-19 is lingering or not, they’ll be doing it by car, and not traveling nearly as far as they used to. Consumers’ intent to travel within the next six months sits roughly at 36%. That’s down 2% from the last time consumers were asked two weeks prior.
When they do travel, it’ll be in their personal cars, where more than 68% of respondents feel safest. Only 12% of participants said they felt safe on an international trip. Importantly, one-third of Americans are postponing their vacations in 2020, rather than outright cancelling, which keeps money in the pockets of America’s airlines, hotel brands and Airbnb hosts.
Leading U.S. home improvement retailers Home Depot, Lowe’s and Ace Hardware all reported first-quarter sales growth, demonstrating that some companies continued to thrive during a difficult time for the industry. Home improvement retailers benefited from consumers investing more time and money in home improvement projects—a side effect of stay-at-home orders. Home Depot reported a comparable sales increase of 6.4% during the first quarter as well as net sales growth of 7.1% to $28.3 billion, while Lowe’s revealed a rise in comparable sales of 11.2% and a boost in net sales of 10.9% to $19.7 billion. Ace Hardware, meanwhile, said comparable sales in the U.S. rose 4.2% and revenue grew 3.8% to about $1.4 billion. Home Depot, the largest of the three, showcased its efforts to make the shopping experience more seamless, highlighting its mobile app featuring image search and an inventory locator, its offering of in-store pickup, same-day delivery and truck and tool rentals. Lowe’s also invested heavily in technology, hiring close to 1,000 technologists in 2019 while rolling out new devices with apps for in-store associates to access to answer customer’s questions in real time, making for a smoother sales process. Ace Hardware, meanwhile, teamed with Google, utilizing the technology giant’s tools to inject new life into its digital strategy due to the heightened expectations of consumers around online ordering and faster delivery. The retailer said its online business surged 580% in April primarily due to curbside pickup, in-store pickup and delivery from locally owned stores.
The New York Stock Exchange is reopening its trading floor, more than eight weeks after it moved all operations to the digital sphere when the coronavirus pandemic sent New York and other parts of the U.S. into lockdown. “It’s going to be certainly a very historic moment, and special moment for the traders on the floor,” NYSE President Stacey Cunningham said. While traders are eager to return, the trading floor they are coming back to will look a bit different. Personal protective equipment like face masks will be required, and social distancing guidelines will be in place. Hand sanitizer dispensers and plastic barriers will be a common presence on the floor. Not all NYSE employees will be part of the open, either — only about 25% of the normal trader workforce will be on the floor to start with.
Drinks education organization The Wine & Spirit Education Trust (WSET) is introducing online examinations for its most popular courses. Until now most WSET courses have been available online but for study only, with students having to sit an offline exam to complete a WSET qualification. Now they can sit the exams online too. “I am really excited that, with these latest developments, we can now offer our course providers and students a 360° digital learning experience at a time when traditional classroom education is very challenging or impossible,” says WSET CEO Ian Harris. “At a time when many people in the industry have much more time at their disposal, it’s great that they can upgrade their drinks knowledge, studying and qualifying for a WSET qualification without leaving home.” Harris hopes that this will add ‘global reach’ to the organisation now and in the post-COVID era. The online exams will be carried out using remote invigilation so students can sit the tests on a computer at home while being monitored via webcam, screen sharing technology and a secondary recording device such as a smartphone. The system has already been trialed and will be rolled out across WSET’s network of over 800 course providers globally.
Art competition The Turner Prize will select ten winners to receive bursaries in place of the 2020 award. Tate Britain announced today that it will award £10,000 each to ten different artists selected by the jury, in light of the coronavirus pandemic making the exhibition unfeasible to mount. Director of Tate Britain and chair of the Turner Prize jury Alex Farquharson said: “Gallery closures and social distancing measures are vitally important, but they are also causing huge disruption to the lives and livelihoods of artists. The practicalities of organising a Turner Prize exhibition are impossible in the current circumstances, so we have decided to help support even more artists during this exceptionally difficult time.”