With just five weeks until what will be a very different Christmas this year, this Clear Digital Digest examines:

• The impact of the second lockdown on retail and online sales.
• The increasingly spread out nature of Black Friday – plus the potential implications of massively increased online sales on deliveries; Santa will be a busy boy this year.
• Christmas advertising is in full swing with ITV now forecasting an increase in revenue over this period so we take a look at this, plus a favourite campaign of the last week: Sony’s PlayStation 5.
• And finally: a novel approach to strategic planning. 

LOCKDOWN 2.0

Although not the cheeriest subject, this is the first Clear Digital Digest since we went into a second lockdown on 5th November.  

BLACK FRIDAY: ONE WEEK TO GO

As well as the lockdown, online sales in November will be further boosted to some degree by Black Friday next week.  

DELIVERY: SANTA WILL BE INCREASINGLY BUSY THIS YEAR

One topic that we will likely hear more about in the coming weeks is the problems caused by these inflated online sales when it comes to actually delivering the orders.

CHRISTMAS ADVERTISING

Of course, to many it wouldn’t feel like Christmas without the high prestige TV led campaigns we are now accustomed to expect, which have really increased in profile over the last week with the launch of both the John Lewis ad plus a new series of ITV ratings winner “I’m A Celebrity Get Me Out Of Here”.

• Despite the general downturn in advertising this Christmas for obvious Covid related reasons, ITV are actually expecting revenues for the last 3 months of 2020 to beat those recorded last year.
• We highlighted last month that overall ad revenue for Q4 this year was forecast to decline by 10.5%/£724m – but within that TV was estimated to fall by only 2.7% year on year, compared to the likes of cinema (-66%) and outdoor (-20%).
• With regards to the TV ads themselves, this has undoubtedly been the most challenging year for both ad agencies and brand owners to strike the right tone creatively.  That said, I can’t help but feel somewhat underwhelmed by all the large retail campaigns I’ve seen so far, with no clear stand-outs.  That may be unfair as perhaps I’m just a little jaded by the increasing hysteria from certain quarters about the need to have a “normal Christmas” this year (spoiler alert: it won’t be).  In any case, this year’s effectiveness research will no doubt be intriguing for brand owners as it comes in.
• After a slightly negative note there, I’ll highlight an excellent (and cheeky) campaign by Sony to promote this week’s launch of their new PS5 console, where they have replaced the traditional London Underground roundels outside Oxford Circus tube station with the iconic four shapes that have featured on all PlayStation controllers.

AND FINALLY…

As alluded to above, forecasting accurately for 2021 is going to pose more challenges than for any year in living memory.  So I liked this take on strategic planning from Tom Fishburne, the ever entertaining Marketoonist…

Today’s Clear Digital Digest looks at some recent stories regarding Pret A Manger and Amazon, reviews today’s new ONS retail data and learns how the data revolution is transforming the world of cricket.

• Pret A Manger’s new subscription service
• How Amazon’s ads service is driving its profits
• Hot off the press: today’s ONS retail sales update for August
• And finally…the cricket data revolution

AMAZON’S PROFITABILITY: INCREASINGLY DRIVEN BY ITS ADVERTISING

​Well worth a read is this fascinating article about Amazon and its profitability, courtesy of Ben Evans.

• The article firstly challenges the initially previously received wisdom that “Amazon doesn’t make a profit”, perhaps true in years gone by, but profits jumped especially in 2018 and 2019, reaching $22bn last year.
• More recently, the conversation has shifted a little to state “ah but all the profits come from AWS” – ie Amazon Web Services, Amazon’s highly successful cloud computing service.  Again, while this may historically have been true, the case is made that it’s now Amazon’s ad services that are really gaining in profitability, having grown hugely in revenue over the last 5 years as the graph below shows…

RELEASED TODAY: ONS RETAIL SALES UPDATE FOR AUGUST

The Office for National Statistics (ONS) have today released their latest retail sales figures for August.  We reviewed July’s data in a Digital Digest last month, so here’s a quick update, one month on…

• Overall retail sales increased slightly in August, up 0.7% against the previous month, but more pertinently, up 1.7% on the previous year (August 2019).
• Internet sales accounted for 26.6% of all retail sales in August, the second full month since all physical stores were able to trade.  This share fell back slightly from the 28% recorded in July, but is still significantly higher than the 18.1% recorded in August 2019.  
• With the current volatility surrounding Covid, it is difficult to make any predictions about how much of this shift to online shopping will remain in the medium/long term, but it is certainly interesting to continue tracking this share.

AND FINALLY...

When my subscription copy dropped through my letterbox this week, I was surprised to see The Cricketer magazine (now in its centenary year) highlighting “The Data Decade” on its front page. 

​With the relevant articles exploring how increasing use of digitised data has fundamentally changed recent cricket coverage and some future predictions on how this may evolve, it’s a timely reminder than even such a traditional pastime as cricket is experiencing unprecedented change with its own digital/data revolution. 
But this also demonstrates that there is still a place for more traditional media…yes I do still read some print magazines as well…

Today’s Clear Digital Digest round-up looks at:

• This week’s big ecommerce story: the new Ocado/M&S partnership that launched this Tuesday.
• Some updates from the marketplace sector, with a growth in sales of vintage products from both eBay and music specialist Discogs.
• Netflix’s trial move into the freemium sector.
• Memories of another Argentinian football genius.

Ocado launched their much publicised partnership with Marks & Spencer on Tuesday (Percy Pig branded vans et al) and with such a highly anticipated launch, perhaps unsurprisingly there were teething troubles as some disgruntled customers were not happy that their day one orders were cancelled.  Those of us who have been around the block won’t be surprised that there were one or two problems with a new service launch, and time will tell how short-term or significant these issues were.

However, Ocado chief executive Tim Steiner was perhaps bullishly tempting fate the weekend before when he told the Sunday Times: “They [Waitrose] have done an advert saying ‘we’ll take it from here’ or something.  Well, they can’t take it from here because they don’t have the technology, the infrastructure or the systems.”

“Taking it from here” referred to the fact that previous Ocado partners Waitrose were already running their own parallel Waitrose.com delivery service, generally despatched from local Waitrose stores rather than Ocado’s regional distribution hubs.  Waitrose also recently announced plans for a 12 week trial with Deliveroo, joining brands such as Morrisons and the Co-Op already on the platform in selected locations.  
Sainsburys also continue to expand and promote their similar new ChopChop service, as the choice and variety of grocery home delivery options expands to keep up with this year’s step change in customer demand. 

​VINTAGE/USED ITEMS CONTINUE TO DRIVE SALES ON EBAY AND DISCOGS

There were two updates from key marketplaces this week, both showing the increasing appetite for vintage/second hand items, a trend we explored in much more depth in our recent deep dive on “The UK Marketplace Sector – And The Role Of Community”.

eBay UK have stated that sales of used goods jumped 30% between March and June this year leading to an overall 10% rise in the first half of 2020 compared with last year.  Secondhand and vintage fashion is by far their biggest category, but sales of secondhand chairs, sofas and TVs also shot up by 41%, 30% and 17% respectively during June and July compared with February and March.

Music community Discogs (the 10th most visited marketplace in the UK) have also released their mid-year report this week.  In the first six months of 2020, 4.3m orders were placed globally through the Discogs marketplace (+30% year on year) for a total of 7.7m items (+34% YOY).  Vinyl records remain by far the largest sellers for Discogs, with 5.8m sold (+34% YOY) although CD sales also grew by a similar amount, with 31% YOY growth for the 1.7m sold.

As the chart above shows, Discogs sales growth really accelerated as lockdown fully kicked in around the world, although January and February were already showing healthy sales growth.  This is in line with more recent trends for Discogs, who sold a total of 14.6m records in 2019, growing by 34% on 2018.  We explored the Discogs marketplace – and the community that underpins it – in more detail in our recent deep dive “Discogs: The Digital Success Story Of The Vinyl Revival”.  

Netflix this week revealed plans to offer some of its original movies and shows to non-subscribers.  Free films available include Bird Box and The Two Popes, while original series include Stranger Things and Our Planet.  The real hook to this new initiative is the fact that it’s only the first episode of each show that is available, although Netflix newbies can still get a month’s free trial to then continue watching. 

This type of freemium model seems to make perfect sense for a lower risk trial for anyone that hasn’t yet succumbed to Netflix’s charms; as we reported last month, 43% of UK households currently subscribe to Netflix, ahead of Amazon Prime Video’s 35%.  A full list of “free” Netflix shows and movies is available here.

AND FINALLY...

In a week when the future of another certain Argentinian footballing genius remains up in the air, this tweet raised a chuckle (and makes perfect sense with the final touch)…

Today’s Clear Digital Digest reviews a recent Ofcom report about our changing TV and video viewing habits since lockdown.  We also take a look at changes in the ecommerce world, covering both shopper attitudes plus news from Amazon, Aldi and the mooted return of a familiar old retail brand, Comet… 

CHANGING VIEWING HABITS
Ofcom have just released their latest annual Media Nations research report, examining how we consume TV, video, radio and audio content.  This year’s events have unsurprisingly seen quite significant changes since March, so Ofcom have added two chapters to their report examining Covid-19 related trends.   Some key highlights from this are:

• Total amount time spent using a screen (for TV/online video/gaming etc) jumped by an hour and a half from an average of just under five hours during 2019 to just under six and a half hours in April 2019. 
• This increase was driven by more traditional live/broadcast TV well as Streaming Video on Demand (Netflix, Amazon etc) as we turned to familiar trusted sources such as the BBC and C4 for news updates as well as looking for Netflix escapism.

CHANGING SHOPPING HABITS
As well as changing our viewing habits, Covid19 has also fundamentally changed our shopping habits with the well documented growth in online shopping.   eMarketer have taken a look at what these shifts may mean in the longer term.

• A McKinsey report has found that more UK adults expected their digital shopping habits for grocery and non-grocery to either increase or stay the same post-pandemic, compared with those who anticipated declines. 

​Looking at other ecommerce stories, a week never seems to go by without some significant Amazon news and the last seven days are no exception.

• It has been reported that Amazon are planning to open 10 of their check-out free Amazon Go stores in the UK, with talks also advancing for a further 20 after that.  The first site is thought to be opening in London later this year, with Notting Hill a likely location.
• And the concept of check-out free stores in the UK may become increasingly familiar, as Aldi has also announced that it is developing its own cashier free rival to Amazon Go.
• Some final ecommerce news is that Comet is set to make an unlikely comeback as an online only brand, nearly a decade after falling into administration.  As well as this possibly unexpected news, what was really surprising to me was that Comet disappeared in 2012, it certainly doesn’t seem that long ago…!

​AND FINALLY…
I did like the latest Marketoonist cartoon from the ever excellent Tom Fishburne…

Today’s Clear Digital Digest starts with a look back at the beloved Argos catalogue before looking forward to the growing impact of another Argos innovation in Click & Collect, as well as other retail partnerships.  Then we turn our attentions Stateside to review Q2 updates from Amazon, Facebook and Google plus the latest digital innovation in sports watching…

END OF AN ERA – GOODBYE ARGOS CATALOGUE
So RIP the Argos catalogue – as one wag noted, much easier to say than to actually do.  As was widely reported on Thursday, Argos have stopped producing their twice yearly catalogue, meaning that January’s Spring/Summer 2020 edition will be its final print version.  Argos now say that online shopping offers “greater convenience” than flicking through a catalogue, part of the continuing wider shift to ecommerce sales. 
Having previously spent 8 years in various roles within Argos’ ecommerce operation, during which time the catalogue’s ubiquity (estimated to have been in approx. 75% of British homes at one time) certainly helped to mutually drive web sales, there’s definitely a sense of nostalgic regret to see the “laminated book of dreams” bid farewell.  

However, it appears that less and less were being printed, with 3.9m of the last edition down from a peak of over 10m a decade ago.  And with each catalogue costing roughly £3 to produce back when I was working there, changing shopping habits will have made ceasing production an increasingly attractive option for the huge potential cost savings; something that has been frequently reviewed over the years. 
Nostalgia for kids being able to choose their favoured Christmas presents will be partly assuaged by the news that Argos plans to continue to print its Christmas Gift Guide, still generally a sturdy 300 pages or so, albeit well down on the 1800 page behemoth that was the main catalogue.  
Before then, for anyone after a quick nostalgic fix, the Guardian pulled together a selection of vintage covers and catalogue pages, count me in for 1976’s Home Stereo Disco Unit (item 7 below…)

CLICK AND COLLECT/RETAIL PARTNERSHIPS
Of course, there are other retail channels that Argos pioneered which remain highly relevant and continue to grow in popularity, none more so than Click & Collect.  In line with all ecommerce sales, Click & Collect orders have been growing rapidly since the start of lockdown, with more and more brands partnering together for mutual benefit. 
​Argos have offered a collection service for selected eBay customers since 2014, while the introduction of Argos collection points into many Sainsburys stores since being bought by the grocer in 2016 meant that Argos was able to continue offering C&C services throughout lockdown.

​Amazon entered into a similar partnership with Next last year with their Amazon Counter initiative, while John Lewis have recently announced plans to extend their C&C tie-up with the Co-op to over 500 stores. 
John Lewis have also just stated that they expect 60% of their sales to be online, up from 40% pre-Covid.  In an update to all John Lewis partners, chair Sharon White said “We have two of the best loved and trusted brands in the UK, rated highly for our personal service and expert, impartial advice. Customers are, however, shopping in very different ways – younger people especially – with the pandemic accelerating the importance of digital. We expect John Lewis to be a 60% online retailer, from 40% pre-Covid-19, and Waitrose to rise above 20%, from 5%.”
Such uncertain times do certainly seem to be leading to a much wider array of complementary brands working together, with another recent example seeing Sainsburys starting to provide a range of 3000 products to the garden centre retailer Dobbies.

Q2 UPDATES: AMAZON, FACEBOOK, GOOGLE
Three of the tech giants have provided their latest global Q2 updates in the last few days, with varying results.  Of course, Q2 2020 is the first quarter since the world has been in lockdown, so one would certainly not expect standard trends from these updates.

• Amazon leads the way, with global sales growing by 40% to $88.9bn (£68.2bn) in what Jeff Bezos described as a “highly unusual quarter”.   Operating income increased to $5.8bn (£4.5bn) during the three months to 30 June, up from $3.1bn (£2.4bn) in 2019.  Interestingly, third-party sales grew faster during the quarter than Amazon’s first-party sales as Amazon Marketplace continues to stamps its dominance; something I explored in further depth recently in my “The UK marketplace sector” deeper dive.

 

• Perhaps more surprisingly, Facebook ad revenue grew by 10% to $18.3bn (£14bn) in the second quarter of 2020, defying the impact of the global coronavirus pandemic.  During the three months to 30 June, the social media company grew its total revenue by 11% to $18.7bn (£14.4bn), increasing its daily active user base by 12% to 1.79 billion and monthly active users to 2.7 billion, also up 12%.

 

• Facebook’s growth is even more notable when compared with Google’s Q2 update.  Revenues at the search giant fell by 2% during the second quarter of 2020 to $38.3bn (£29.4bn), the first year-on-year decline in quarterly revenue since Google became a publicly-listed company in 2004.  Revenue generated by Google Search fell to $21.3bn (£16.4bn) during the three months to 30 June, from $23.6bn (£18.1bn) in the same period last year.   Overall, Google ad revenue declined from £32.5bn (£24.9bn) in the second quarter of 2019, to $29.9bn (£23bn), although YouTube ad revenue rose to $3.8bn (£2.9bn) from $3.6bn (£2.8bn).

AND FINALLY…
In a week when it was announced at the last minute that planned pilot sporting events were not allowed to admit limited spectators as originally planned, technology continues to serve up increasingly sinister options instead.  After previously highlighting Japanese robotic baseball fans last month, MLS in the US have now seemingly opened applications for the world’s next supervillain…