A slump in sales for the UK's retail heavyweights
Unseasonably warm weather dented retailers’ sales in December. Retail sales contracted 0.9% from November. That’s the worst December showing since 2010.
Year-on-year sales – including fuel – are up by 2.6% from 2014 to 2015 but that’s much lower than the 4.4% growth that was expected.
So many factors are being blamed for the slump towards the end of last year. The weather, aggressive online sales, and terrorist attacks in Paris all dampened shoppers’ enthusiasm.
Marks and Spencer was one of the worst hit with its clothing sales dropping by 5.8% - much worse than was evene expected for the company. The food arm, however, did well with an interesting array of food that drew shoppers in.
Clothing retailer Next is also blaming the warm weather for a drop in sales over the festive period.
Sainsbury’s also posted a 0.4% fall in like-for-like retail sales for the third quarter, slightly ahead of analyst estimates of 0.7%.
Justin Anderson, VP Sales, CRM and HCM at Appirio, has some advice for retailers. He said: “The latest end of year sales figures have proved disappointing for some of the UK’s retail heavyweights as many have seen a decline on year-on-year sales. Reports have pointed to external weather conditions and tragic events throughout November and December as contributing factors. While these are points to remember there is a lot to be said and done internally so that retailers can begin to explain their numbers regardless of these factors.
“What is really key is understanding customers. Finding out what they want and figuring out how to give them exactly that — whether it’s a product or service — is the holy grail of successful business, and retail is no different. In order to achieve both, they need to be able to anticipate customers’ needs and desires through digital technology like mobile apps, responsive web properties, and customer communities.
“Targeted, personalised marketing is also essential. One of the main issues for a number of retailers is that they often try to reach all potential shoppers, instead of creating unique offerings for their true customers, which makes it extremely difficult for them to consolidate loyalty. To provide a personalised, consistent customer experience that will in turn help establish loyalty, retailers need to fully understand who their customers are — their pain points, their motivations, or what it takes to turn them into repeat customers and then market to them. To make this customer experience as successful as possible, retailers need to create an incredible worker experience. Ensuring employees are happy and can quickly and easily access the information they need will have a positive impact on how they deal with customers.
“Retailers can’t necessarily prevent the external factors impacting on sales figures and nor should they need to. By improving the worker experience and understanding customers, retailers can continue to deliver the best possible service which will in turn be reflected in the numbers.”
More than half of FTSE 100 execs suffer pay cuts, freezes
Pay increases for many executives at the largest UK firms have been put on hold since the start of the pandemic with more than half of the FTSE 100 CEOs having had their salaries frozen in 2021, according to new research from PwC.
The research, based on PwC’s analysis of the first 50 FTSE 100 firms to publish their 2021 annual remuneration reports, reveals that 53% of CEOs and 52% of CFOs have had their pay reviews put on hold, compared to 35% and 30%, respectively, last year, pointing to the pandemic as the main reason.
According to Phillippa O’Connor, reward and employment leader at PwC, the current environment and impact of the pandemic has clearly led shareholders to sharpen their pencils when reviewing executive pay levels this year.
“It is clear from the pay outcomes we have seen to date in the FTSE 100 that companies have exercised restraint when it comes to both determining outcomes for the 2020 performance year and settling pay on a forward-looking basis for 2021,” says O’Conoor.
Bonuses, grants and pensions also affected
But that’s not all. Around a third (31%) of companies either waived, cancelled or reduced their 2020 annual bonuses, with the average payout dropping from just uhnder £1.1m to £843,000.
When it comes 2021 long-term incentive plan (LTIP) grants, these have also been revised in light of the economic impact of the pandemic with 45% of firms making some adjustment to their award, including retaining discretion to adjust outcomes at vesting in respect of windfall gains, reducing grant size, delaying the grant, and even canceling the award altogether.
The study shows that pension levels for incumbent CEOs remain at 15% of their salary, falling to 10% for new hires, bringing them in line with the wider workforce. Eight out of 10 FTSE 100 companies will have aligned incumbent pension levels with those for the wider workforce by the end of 2022.
O’Connor warns that moving forward into AGM season, there is likely to be added scrutiny around any pay rises that are greater than those for the wider workforce and on incentive outcomes that are “either not aligned with business performance or do not take into account the company’s approach towards matters such as diviends and government support”.
What announcements did UK's big firms make?
Back in April 2020, as the pandemic was just getting started, a number of UK companies, mainly insurance and banking stepped forward to review remuneration packages in response to the economic implications of the COVID-19 crisis.
British insurance giant Aviva announced that basic pay increases for its executive directors and the Aviva leadership team would be paused, while the executive directors of Prudential offered that their salaries be reduced and RSA confirmed its exec directors and executive committee would not be receiving cash bonuses for the current year.
The same was true in banking and finance with TSB announcing that its 10-strong executive committee would give up their bonuses in 2020, while Barclays said its chief executive, finance director and chairman would each give a third of their fixed pay for the next six months to charities. Lloyds cancelled its bonus payments and pay reviews in 2020
Other big UK firms including Ryanair, Taylor Wimpey and Rentokil all committed to reducing their executives pay packages.