Amazon To Open Giant London Headquarters

Amazon has announced that it will move its main office in the UK to central London later this year to help attract new talent.

The Slough, west London-based firm said its new office would be at 60 Holborn Viaduct overlooking Smithfield Market. The 12 story office will accommodate 1,600 staff when complete across 210,000 sq ft. Several hundred will move across between September, when work on the building is complete, and the end of the year.

Last year Amazon opened a 47,000 sq ft Development Centre near Barbican tube to house its Pushbutton and Lovefilm teams. The new London headquarters is likely to make it easier for Amazon to recruit new talent. But the firm is keen also to use the move to help illustrate its contribution to the UK economy after being mired in criticism over its tax planning.

Christopher North, Managing Director of Amazon UK, said: ‘This new office location will provide the space we require for hundreds of our existing employees as well as many more that we will hire in the future.’

He said: ‘Amazon has over 6,000 permanent employees in the UK and we will continue to create thousands of jobs in the coming years across the UK. We look forward to drawing from the capital’s strong pool of talent as we continue to innovate and enhance our service for the benefit of all our customers.’

London Mayor Boris Johnson said: ‘I am delighted that Amazon is once again choosing London for its ambitious expansion plans. This is excellent news for London’s continued growth as a leading global hub for tech talent. Whether a giant or an exciting new start-up, London is proving time and time again that we have the right places and people to support this vibrant sector, which is a significant contributor to our city’s economy supporting tens of thousands of jobs.’

Screwfix Sales Rise Despite Poor DIY Market

Online and catalogue retailer Screwfix, which is owned by DIY giant Kingfisher, has increased sales by 12.6 per cent to £155 million despite a tough home improvement market beset by poor weather.

In the 13 weeks to May 4 comparable sales at the business increased 1.7 per cent. Total sales at Kingfisher, which also owns B&Q and has stores in France and Poland, fell 0.4 per cent to £2.62 billion. Comparable sales at the group, excluding the effect of opening new outlets, fell 4.2 per cent and profit declined 28 per cent to £114 million. .

‘Screwfix grew sales in an improving smaller tradesman market benefiting from new ranges, such as paint and power tool accessories, the continued roll-out of new outlets and the successful introduction of a mobile ‘click, pay & collect’ offer last year,’ the group said in a statement.

Eight Screwfix outlets, which are similar to Argos stores using a catalogue-based shopping system, were opened during the 13 weeks, taking the total to 283.

Ocado Plans To Launch A Series Of Ecommerce Sites

Food delivery firm Ocado plans to launch a series of targeted ecommerce sites  as part of a plan to broaden its appeal.

The first to launch will be a transactional pet products web site called Fetch next month. That will be followed by dedicated baby, toys, kitchen and homewares, health and beauty, and gardening sites.

The retailer has been increasing its ranges in these areas ahead of the site launches which are being led by non-food director James Matthews.  It hopes product ranges the new sites will be large enough to rival out-of-town 'category-killing,' specialist stores. 

Fetch will launch with 5,000 product lines and has hired qualified staff to provide specialist knowledge and veterinary information, according to trade magazine Retail Week's web site. Customers can chose to have their orders delivered with their Ocado shopping or separately.

Ocado recently announced a partnership deal with Morrisons which drew criticism from its long-term supplier Waitrose.

Royal Mail To Launch Post Office ‘Click and Collect’ Service

The Royal Mail plans to introduce a ‘click and collect’ service later this year that will allow internet shoppers to pick up orders from their local Post Office.

The organisation said it will be the UK’s largest click and collect network and would provide ‘convenient, secure parcel collection facilities.’ Details of the plan have emerged as the Government finalises plans to sell off the Royal Mail for £2.5 billion in a potential stock market listing this autumn.

Royal Mail said there are 10,900 Post Office branches that will take part and many could stay open later to help make it easier for shoppers to collect parcels. About 4,000 will offer a collection service outside of normal Post Office hours.

It said 99 per cent of the population lives within three miles of a Post Office. Royal Mail cited a recent survey in which 76 per cent of people in the UK said they would be more likely to use an online retailer again if it delivered through Royal Mail, which it said made it ‘the most trusted delivery firm in the UK.’

‘Royal Mail is a key partner for online retailers and we are well placed to benefit from the growth in e-retailing. Home shoppers already love our services. The click and collect initiative will help online retailers give shoppers even greater control over the delivery of their items. We are committed to developing services to ensure we meet the changing demands of online retailers and their customers,’ said Nick Landon, Managing Director of Royal Mail Parcels.

Online sales increased by 14.9 per cent to £31.1 billion in 2012, representing 10.6 per cent of total retail sales. By 2017 online will account for around £50 billion or 15 per cent of all retail expenditure, according to market research firm Verdict.

Amazon Faces Wave Of Strikes In Germany

Amazon workers in Germany have staged a second strike in two weeks over pay and benefits. 

The strike began on Monday morning with an estimated 250 warehouse workers in Leipzig, Saxony and more staff joined through the day, according to trade union Verdi. 

Earlier this month about 900 workers in Leipzig and Bad Hersfield held a strike over the same issues. They want a pay rise from €9.30 (£8) to €10.66 and better pay for night shifts and weekends.

Amazon employs 9,000 workers in Germany and claims it pays a higher rate than other firms.

However, unions bosses say workers should be paid in line with retail workers, which are normally paid more than warehouse employees.

Amazon says it will talk to unions but does not plan to shift its stance on the issue. It says deliveries were not affected by the last strike but analysts say the long-term impact on customer relations could be damaging. It also faces criticism across Europe on its tax arrangements.

Retailers To Invest £5 Billion In 'Omni-Channel' Over Five Years, Says Report

General merchandise retailers are predicted to invest £5 billion over the next five years to facilitate the transition to 'omni-channel'. 

A study found that retail executives regard the emergence of the multi-channel world as 'a revolution which is now accelerating'. It said traditional retailers in the non-food sector are spending about 3 per cent of annual turnover on meeting the challenges of that change. 

The report, Retail Supply Chain Management: The Omni-Channel Revolution by LCP Consulting, indicates that board level directors see the changes as urgent and requiring the re-engineering of traditional retail business operating models. But it said that directors are not clear on the returns they might make on investments and instead are investing mainly to compete with rivals and to cope with the tide of events.

The study suggests that there are few reliable ways to confidently predict and measure return on investment over time because of the 'relative immaturity' of the omni-channel model and the changing behaviour of customers. It said, for example, that retailers see the speed of fulfilment as being a key benchmark and something that is aggressively pursued among while customers place greater emphasis on convenience and consistency. 

Major benefits cited by retailers in moving to an omni-channel model were designing and setting up a better business model as much as improving sales and margins. 

LCP retail partner Phil Streatfield said: 'In our experience, regardless of cost, omni-channel is becoming the 'need to have' model for the retail industry. It has almost reached the tipping point of change or fail.' 

The report interviewed directors including Argos supply chain director Graham Barnes, John Lewis operations director Dino Rocos, Neil Ashworth, chief executive officer at Coolect+ and former Halfords chief executive David Wild.  

Wild said: 'I think that retailers are some way off completing the omni-channel revolution, but no sector is there yet. Change is continuing because technology is evolving so quickly and customers' habits are adjusting still.'

Fashion Chain Reiss Loses Ecommerce Director

Reiss ecommerce director Dan Lumb has left the retailer after overseeing a surge in online sales. 

Lumb joined in August 2011 and last year Reiss said online sales jumped 82 per cent. He is understood to have left to join a private equity firm but it is not yet clear which. Ross Loughlin has been promoted from ecommerce projects manager to head of ecommerce. 

Reiss told trade magazine Drapers that, under Lumb, it had 'achieved substantial digital growth over the past two years with a fully established in-house team who will continue to drive this momentum.'

His departure coincides with that of brand director Andy Rogers who is leaving to join Fred Perry after five years at Reiss. Commercial director Sanjay Sharma and trading director Gwynn Jones have also left recently.

Comment: Online Shopping Becomes Focus Of Government Inquiry

We said a few weeks ago that we thought a Business Innovation and Skills Select Committee inquiry into the retail sector would centre on the impact of the internet and online shopping.

Last week MPs quizzed representatives from the British Retail Consortium and the British Council of Shopping Centres on various subject but gave particular attention to the internet.

Topics covered included considering how the Government could push Britain's expertise in ecommerce; encourage overseas growth; whether ecommerce could boost UK retail sector employment rather than hamper it and the near-term impact of a shift to online on shops and town centres.

We'll be bringing you thoughts on that over the next few days alongside details of the committee meeting. But, also, keep an eye out for the updates over the coming weeks - with the next meeting expected to take place on June 6.

JustFab Buckles Up For European Growth With The Fab Shoes Acquisition

US-based Shoes and accessories site JustFab has acquired European rival The Fab Shoes.

The Fab Shoes operates in France and Spain and will give US-based JustFab, which has a European headquarters in Germany and a UK operation, greater access to the mainland European market.

JustFab raised $76 million (£50 million) funding last year and $33 million in 2011 to spend on acquisitions and development. That took total funds raised by parent Intelligent Beauty to $139 million since the site's launch in 2010.

The Fab Shoes has more than 500,000 users in France and Spain and JustFab has 1.5 million in Germany and the UK. JustFab's European sales were $2 million in 2012 but it told Techcrunch.com that growth and acquisitions would take sales this year to more than $30 million.

Co-founder and co-chief executive Adam Goldenburg said JustFab has 15 million members worldwide and expects to turnover $250 million globally this year.

Earlier this year JustFab, which sells shoes, denim and accessories, bought childrenswear e-tailer FabKids, which offers a personalised shopping service based on customer preferences. JustFab is focused on acquiring businesses which are based on its own subscription model.

Sunday Tip: How To Cut Returns Part 2

This is the second and final part of our Sunday Tips advice for online retailers who want to reduce the number of products returned by shoppers.

We've already looked at the importance of making your terms and conditions easy, friendly and clear; making them generous, including offering extended return periods; providing as much product information as possible; offering free returns and being clear on the FAQs (How To Cut Returns Part 1, April 28).

We'll be providing updates and perhaps focusing on some key product areas in the coming months. But, here, we concentrate on making your site and your business as easy communicate and interact with as possible.

1. Building a relationship - make yourself accessible

Smaller retailers have a distinct advantage here but there is no reason bigger retailers couldn't do something similar. Larger firms must have a detailed tracking system and a customer service team that has access to a single system. The more adept and personal your communications the more likely you are to get the order right first time and to get feedback on the process. When starting out, send individual emails and promote the use of the phone if that's what customers would prefer to do. Use opportunities to get to know your customers by asking questions about what they want and need. Not everyone is content to carry out a conversation electronically when they are ironing out issues or simply putting their mind at rest about information that isn't already there.

If your selling something technical or that might be unfamiliar you will also be acting as an adviser - so be prepared to be responsive, frank and upfront. Pumpsformums.co.uk, for example, is a great example of a site that offers all the information you need - with pictures - but recognises that new parents at their wits end, surviving on a few hours sleep a night, a phone number could be a lifesaver. The site even includes a mobile phone number with the person sunning the site at the other end with all the answers! 

Pumpsformums.co.uk homepage

Birmingham-based pumpsformums.co.uk prominently
advertises its office and mobile phone number

From first contact keep in touch about the order by email even if you have taken details over the phone. It gives the customer a record of your firm for future reference and allows you and them to track the order.

2. Free Home Trials

The list of products that require a free home trial is endless but its interesting to see which retailers actively promote them. Glasses Direct is top of a Google search for 'Free Home Trials' offering a 7-day free test. Arguably this could be extended to 14 days as returning products in as short a period as 7 days may prove problematic for some shoppers.

More awkward is Sleepcheaper's 60 day 'free' trial. It includes all mattresses on its site and rightly restricts shoppers to one test at a time. Its a great offer since mattresses, like underwear, appear on lists of things that some high street retailers won't accept back - and certainly not after two months. But the small print explains that the product has to be paid for upfront and the fixed delivery charge, which is included in the product price, is also deducted if you send the mattress back. In the 'terms' section the delivery charge is listed as £99 and there is also a implied cost of up to £49 for repackaging.

Sleepcheaper's trial offer

The small print

Payment of the fixed delivery charge - clause IX

The trial is also offered once only. Why? The mattress has been paid for and surely it would be a rare customer who sent more than one or two mattresses back? In reality, though, few shoppers are likely to return after they have spent £99 on a mattress testing out a mattress they didn't want and had initially been told was free. In fact, use of the word 'free' in this case is debatable because of the £99 return fee. Customers faced with that might worry there might be more devil in the detail as things progress even if they have thoroughly read the terms and conditions.

To argue its a delivery charge is neither here nor there. As a shopper, I'm not interested in how the product price breaks down. I am interested in how easy it is to return if things aren't to my liking.

3. Painless Returns - Ripping off the Plaster

As we can see from the above example, customers worried whether they have got the right product need to know they can return it as quickly and as painlessly as possible. Include full details of how this can be done in the terms and conditions, the FAQs or anywhere else. Try not to look like returns are something that you are not keen to discuss as some shoppers will assume that returning might be tricky if conditions aren't clear.

Include names of delivery firms, telephone numbers, extra packaging or even tape to reseal containers if  you think it might help. There are reusable boxes available and a clear sign on the top would help most customers remember not to tear packaging to shreds when it arrives. Not everyone is a professional internet shopping returner. Explain the process like you would explain making a cup of tea to an alien who had arrived on your doorstep this morning (we're assuming the first thing you would do is introduce him to the joys of making tea).

Include returns details with the receipt as well as on the email. Its all part of the transaction and if you are too worried about returns it may mean you are not doing enough in the first place to reduce the amount of product flying its way back to you.

Finally, regard returns in the same way as you do sales - something you'll deal with just as quickly and with the same enthusiasm - even if you don't feel it. If you take the money out of someone's account on the day of the order, why not refund it as soon as the product is returned? No one wants to sit around monitoring their account for 30 days in the hope you remember to return their money.

The faster it's dealt with the faster you can stop worrying about it and get on with the next job. The more pain-free the process, the more inclined the shopper will be to come back and the more smoothly your business will run.

4. Multichannel returns

Hopefully this goes without saying, but it is simply not acceptable any more to restrict returns to one channel or another. If it plays havoc with your accounting then add finding a solution to the to-do list. Online orders must be returnable to stores. For online-only firms, head offices must have a mechanism for people dropping by to return product and even warehouses. Why not?

Every block you put in the way of a return could leave your customer feeling you are trying to get something for nothing. For long-term customer retention, readily accepting returns and possibly taking a hit for something you cannot resell is a must. It is the way the online selling community is heading so you might as well be ahead of the game rather than catching up. Remember: leaving the customer out of pocket for a product they can't use is a big risk to you.

5. Maintain Contact - Feedback Time

Positive feedback is always good but its the negative feedback that will make you money in the long run. If you have done everything you can, you can expect your customer to do the same. Don't assume you know the reason that something was returned. Always ask for an appraisal and try to keep the process as simple as possible - allowing responses by return of email if necessary.

6. Reflect and Correct

Keep track of other sites and make reading other people's 'Terms and Conditions' a bit of bed time reading. If there is a site that people seem to talk a lot about there is probably more to the service than just great product and remember that ease of use is as much the key to success as having a nice homepage. If you're not sure you can make something work then try testing the idea before you announce it in black and white. Free returns could prove less painful than you think or they might expose other issues such as a lack of clear detail about the product. You might have to solve one set of issues before you plunge headlong into others.

As we said before, we'll be posting other ideas from time to time to fill in some gaps so keep an eye on the site. In the meantime, happy retailing and remember that a returned order doesn't mean the customer won't be back again. If you're doing the right things, quite the opposite. 

London Meet Up For Online Retailers

We introduced you to Tictail a few weeks ago as the handy starter kit internet shop you can set up in minutes. Actually it took us 13 minutes in total, so plenty of time in a day after that to load up all your product details and photographs and set about the task of spreading the word about your site.

Tictail has begun setting up Tictail Store Hangouts for its intrepid shopkeepers to swap experiences and exchange ideas. The next meeting is this Thursday (the 30th) from 5:30pm - 7:30pm at the Shaston Arms Pub in Ganton Street just off Regent Street. We've not been to one yet but we can see this type of thing being incredibly useful so plan to pop along to get the low down once we escape the office.

We're not sure if you need to have a site to attend but we're assuming they wouldn't mind prospective Tictailers turning up to get the low-down and share in the atmosphere...

One in 10 Items Purchased Online Amid Freezing Conditions

Freezing weather last month pushed the number of items purchased online to 10 per cent of retail spending, according to the Office of National Statistics. 

Spending online in April rose 13.2 per cent compared to April last year as shoppers looked for ways to avoid braving the cold weather. Total weekly spending online during April was £571.7 million.

'Feedback from large retailers suggested that during the continued cold weather consumers purchased from their online sites rather than in store,' the ONS said. 

The increase compared to a 1.3 per cent rise in total retail spending as shoppers cut back on food spending and because of the shifting timing of Easter - which fell during April in 2012 but was in March in 2013. 

Total food spending fell 0.2 per cent in April compared to a year earlier. The ONS said this was the 'largest contraction on record'. It said one possible explanation was that consumers had begun to trade down in a reaction to continued food price inflation. It is also likely that heating bills have forced consumers to divert spending to pay for gas and electricity bills. 

Online food spending increased 5.9 per cent and accounts for 17.3 per cent of retail spending on the internet. Online spending in non-food stores increased 7.1 per cent accounting for 41.4 per cent of online spending. Spending at non-store retailers - which includes catalogues and firms which mainly sell online - increased 21.2 per cent accounting for 41.3 of online spending.

The ONS said that non-store retailing (see below for a more detailed breakdown of store versus non-store retailing) accounted for more than half the total growth in internet sales. 

At non-food stores (ie mainly clothing and home), textile, clothing and footwear sales increased 17.4 per cent, department store sales increased 16.4 per cent and household goods - which would include weather and Easter-sensitive home improvement sector - fell 15.8 per cent. 

Demand for clothing lifted towards the end of the month both online and on the high street as temperatures began to lift. 

The ONS says that , for every pound spend on retail in Britain, 41 pence is spent in food stores, 42 pence in non-food stores, 5 pence in non-store retailing (stalls, markets, mail order and those retailers that mainly sell online) and 12 pence on petrol. April's data shows that 66.6 per cent of non-store retailing was via the internet. 

ONS data shows the amount spent in the retail sector has barely changed since 2008 (see below). 

Office of National Statistics Retail Spend Index

Mothercare's Online Sales Edge Up 4%

Struggling mother and baby retailer Mothercare said online sales increased 4 per cent on a comparable basis helping resist a decline in sales at its overall business. 

The rise in Direct to Home sales, orders made over the internet by customers at home, reached £93.8 million - more than a fifth of total retail sales at its UK business of £468 million. 

However, its Direct to Store sales, where shoppers use in-store internet terminals to order deliveries to their home, fell 11.5 per cent to £33.9 million. 

Total direct sales dropped 1.8 per cent to £127 million. The retailer is reducing the number of stores in Britain to focus on international and online growth. UK sales dropped 11 per cent to £500 million. The group loss was £21.7 million compared to a £24.7 million loss the previous year.

During the year Mothercare moved its online operation to a new platform with 'improved in navigation, content and delivery options which has delivered good results,' it said.

In May it extended a next-day click and collect service to include all stores. Its iPhone mobile app has been downloaded 140,000 times since its introduction in November and was voted Best Mobile App 2013 by Mobile Retail Awards, Mothercare said. An android app is planned. 

Halfords Overhauls Strategy Despite Online Sales Rise

Bike and car parts retailer Halfords said online revenue rose 15.9 per cent as it announced a three-year turnaround plan to revive sales.

Online and mobile sales reached 10.3 per cent of retail sales. Total sales at the retailer, which also owns car repair outlets Autocentres, edged up 1 per cent to £871 million. Profit fell 22 per cent to £72 million. The retailer introduced new site search capabilities during the year and has a 24 hour click and collect service.

The firm's shares plummeted after it said it would cut its dividend by 35 per cent and invest £100 million to revive sales by 2016.

The money will be used to refurbish stores, train staff, improve the supply chain and upgrade the web site. New chief executive Matt Davies wants to improve the retailer's ability to compete with supermarkets and online shops.

He said that younger customers are spending less on cars because of the rising cost of insurance. He is also concerned that 20 per cent of staff leave within three months and wants to halve that number.

Boomerang Fashions: Are Clothing Returns The Scourge of The Online Shop?

Two venerable British retailers emerged with figures this week suggesting that, while not exactly market leading, they are at least hurrying to get ahead of the online shopping phenomenon.

House of Fraser yesterday said online sales increased 53 per cent to 10.9 per cent of total sales - roughly £110 million, we calculate, of its £1.2 billion sales. Meanwhile, Marks & Spencer said on Tuesday that online sales increased 16.6 per cent to 13 per cent of its general merchandise sales. Again, we're calculating, because it does not break out precise general merchandise sales - clothing and home and excluding food - until the Annual Report in a few week's time, but that works out at £546 million of an estimated £4.2 billion of general merchandise sales and against total sales of £10 billion.

We say in the opening paragraph that this is not exactly market leading because clothing retailer Next's Directory and internet sales are about a third of total sales and department store John Lewis online sales are about a quarter.

But the thorny question, which does not seem to have been raised yet amid all the hyperbole, is how much of these sales are fashions returning like the proverbial boomerang? How much does it cost to deal with?

People have always returned clothing when buying from catalogues. Ordering four or five items - two or three sizes in different styles or colours - is not unusual. A consultant we spoke with recently said that could account for at least a quarter of total clothing sales at some businesses. 

We do not think this is such an issue for the likes of Next, which has a slick distance-selling model ingrained in its business, or catalogue giants like N Brown and Shop Direct turning their hands to online retailing. These firms have for years had mechanisms for dealing with returns built in to their systems. We also think that for John Lewis it may not be so much of an issue - it has been selling online for much longer than other department stores and, what is more, a large proportion of its sales are home and electrical goods rather than clothing.

However, our sources suggest that for others the growing problem of returns is hidden and often becomes a burden on stores where people feel as happy 'clicking and returning' as they do clicking and collecting. So the returns often go against the stores sales because many operating models cannot account for returned stock in a more sophisticated way that would allow staff to mark it against the internet division. 

And anyway, in this new multichannel or omnichannel world - who cares, right? It also allows firms to tell their investors and the media that online sales are booming while brushing the problem under the carpet. 

So what is happening to all the returned stock that for a business like Marks & Spencer or House of Fraser must account for tens of millions of pounds worth of the best selling items? Does not make it back into the online distribution warehouse in a hurry or the racks of the shop floor where it was returned? We suspect probably not. Does it end up in their burgeoning Outlet chain of stores in discount shopping villages? How is it accounted for on the balance sheet? 

Over the next few weeks and months we plan to have a look at this in more detail and consider the true scale of the problem, how firms currently handle returns and what they plan to do about the issue as it no doubt begins to weigh heavily on their businesses.

Marks & Spencer Loses Google Battle With Interflora

Marks & Spencer has been told that using the Interflora name to advertise its flowers and gift service on Google is trademark infringement.

The retailer has been buying advertising space on Google Adwords that means a link to its web site appears above that of Interflora when users search for 'Interflora'. But the ruling means it will be prohibited from doing so in future. 

A judge in the High Court in London ruled in favour of Interflora and its UK subsidiary when it said that the use of the Interflora name alongside Marks & Spencer's name in Google advertising would leave internet browsers confused. He said the arrangement did not allow 'reasonably well informed and reasonably attentive internet users to ascertain whether the service referred to in the advertisements' originated from Interflora or Marks & Spencer. 

'On the contrary, as at 6 May 2008, a significant proportion of the consumers who searched for 'Interflora' and the other signs and then clicked on Marks & Spencer's advertisements displayed in reponse to those searches, were led to believe, incorrectly, that Marks & Spencer's flower delivery service was part of the Interflora network,' the ruling said.

Last night, www.marksandspencer.com/flowers was listed third of three results in the yellow-highlighted sponsored link at the top of a Google search for 'Interflora' - after interflora.co.uk and interfloraflowers.com. 

UK president of Interflora Rhys Hughes said: 'This ruling helps ensure that, when consumers search on the internet for Interflora, they can be confident in knowing that the flowers brought online come from a member of the Interflora network. Keyword advertising is a very powerful tool and so it is vital for consumer protection that internet search results take consumers directly to the brands they are looking for. The Interflora brand stands for quality and service - a reputation we have been building with our network of independent florists since 1923.'

Marks & Spencer Drawn Into Online Shopping Tax Row

Marks & Spencer has become the latest retailer to face questions over the tax arrangements of its online operation.

According to the Guardian newspaper, tax campaigners say the retailer has organised customer billing and delivery via European web site marksandspencer.eu in a similar way to Amazon.

The retailer ships goods to France, Germany, Ireland and other countries from the UK. But it invoices the transaction to Irish subsidiary Marks & Spencer (Ireland) Limited, the Guardian says, citing internal Marks & Spencer documents it has seen. Ireland has the corporation tax rates of 12.5 per cent, the lowest in Europe.

It says Marks & Spencer Ireland pays a wholesale price for the goods, subject to UK tax laws, but the rest of the retail price - which is often more than 50 per cent on clothing and home wares - is paid against Irish tax rates. The process is known as transfer pricing.

The Guardian described how an internal email earlier this year questioned the need for the arrangement as UK tax rates fall and raised concerns over potential 'reputational damage' to Marks & Spencer should details of the arrangement leak to the media.

Online Shoppers Shift To Internet-Only Stores, Says IMRG

Internet shoppers have migrated to pure-play online retailers following a shift to traditional retailers over Christmas, research shows. 

Online spending increased 16 per cent in April, according to the IMRG Capgemini e-Retail Sales Index. That concealed a shift to online-only outlets which increased 20 per cent in the month compared to multi-channel retailers which increased 14 per cent, the research indicated.

The research shows that the shift is similar to a pattern last year that showed a move back to online-only shopping after Christmas. It suggests shoppers rely more on traditional high street stores in the Christmas period, it said.

'The figures reveal a continuing trend between online-only retailers and those who have both an online and physical presence on the high street,' the IMRG said. 

'Similar to what happened in 2012, the performance of online and multi-channel retailers converged during the Christmas period, but have since diverged with online outperforming their multi-channel counterparts. This suggests that shoppers are becoming more confident in the internet as a transaction medium, and a result of the increased adoption of new technologies and services - mobile devices, social media etc - introduced by online only retailers,' it said. 

The research also indicated a 'natural' slow-down in sales of sales to mobile devices from 243 per cent in March to 131 per cent in April compared to a year earlier. 

But the IMRG said the overall growth of retail sales in April, which has resulted in an overall 15 per cent growth in the year to date, was ahead of the 12 per cent forecast in 2013. 

'We expect UK.com to continue to dominate the retail picture as the recovery gathers greater momentum,' said a spokesman.

Morrisons 25-Year Ocado Deal Sparks Trouble

Morrisons has signed a 25-year partnership with Ocado to launch an online grocery delivery service next year.

But the move has drawn the ire of rival Waitrose. Executives at Waitrose including managing director Mark Price have demanded to see the terms of the deal over concerns Ocado has breached its contract.

Ocado launched in 2000 with Waitrose as its main supplier. However, relations have become increasingly frayed over the past few years as Waitrose launched its own foot delivery service Waitrose.com and Ocado began selling groceries in its own branded packaging.

It emerged recently that former Morrisons chief executive Marc Bolland, now chief executive at Marks & Spencer, approached Mark Price four years ago to test the water over a possible deal with Ocado. Price said he told Bolland that he would block any deal and Bolland walked away.

The spat between Waitrose and Ocado has overshadowed the historic deal with Morrisons that has seen it become that last one of the 'big four' supermarkets in the UK - including Tesco, Sainsbury's and Wal-Mart-owned Asda - to launch such a service.

Morrisons chief executive Dalton Philips has been notoriously dubious of the merits of online food delivery. He agreed a £32 million minority stake in New York grocery delivery chain Fresh Direct in March 2011 to test the water. According to the terms of that deal Fresh Direct would take a minority stake in any UK online venture established by Morrisons.
The agreement with Morrisons will see the Bradford-based supermarket take control of Ocado's brand new mechanised delivery warehouse in Dordon, Warwickshire, and it will deliver only its own food with its own branded vans. Waitrose food is delivered in Ocado vans with Waitrose name mentioned in smaller graphics.

Morrisons is paying £170 million for the distribution centre and will lease it back to Ocado. A further £46 million will be invested in the Dordon centre. Among the detail of the contract is an agreement that Morrisons will pay £46 million to license Ocado technology, an annual payment of 1 per cent of revenue to cover IT costs, 50 per cent of fixed costs and a 4 per cent management fee linked to operating costs. It will also pay Ocado up to £8 million a year in research contributions and an incentive scheme paying 25 per cent of operating profit which rises to 50 per cent if profit increases beyond 6.6 per cent.

Waitrose is thought to be unhappy that Ocado has introduced another competitor into the market. It has asked for details of the contract with Morrisons so it can examine the consequences of the deal to its relationship with Ocado - and assess whether the terms of their partnerhship have been broken.

Ocado chief executive Tim Steiner has insisted the agreements do not conflict. An Ocado insider told us: 'When the dust settles, Waitrose will see that this deal benefits everyone. Not only is the Morrisons operations entirely separate, but the extra investment it has provided will allow Ocado to invest and enhance its service.'

Morrisons boss Dalton Philips said Morrisons is merely acquring technology rights and expertise from Ocado. Analysts believe it has struggled in part because it does not allow customers to order to their homes. Sainsbury's chief executive Justin King said the service has made shoppers more loyal and means indivudual families that use the service and shop at its stores spend more money overall.

But some experts feel that Philips' previous concerns were justified. One UK analyst, Dr Clive Black at Shore Capital, has calculated that delivering bags of shopping for free to UK households costs supermarkets £15 a time. No supermarkets are transparent about the profit margins involved in online delivery and Ocado last year did not make a profit on sales of £679 million.

However, many agree that online ordering and food delivery has become key to customer loyalty. Most so far agree that Ocado will benefit more than Morrisons from the deal. Ocado shares went up by a third while Morrisons shares climbed only marginally.

Waitrose.com is estimated by our sources to turn over about £250 to £300 million. Sainsury's, which is more than four times the size of Waitrose, said last week its online delivery service had reached almost £1 billion last year.

Johnnie Boden Says Catalogue is Still Key

Catalogue and online clothing retailer Boden will continue to distribute hard copies of the catalogue despite the vast majority of its orders being taken online.

Majority owner Johnnie Boden said the catalogue remains vital to the process because people like to browse them before switching to the internet to order. Boden, who owns 60 per cent of the shares, told the Independent newspaper when the firm had launched web only products they 'did not work very well.' Nine out of ten orders are now made online. 

The firm distributes 50 million catalogues a year and he admitted that cutting back on distribution would save the company money. Last week it said international sales had overtaken the UK for the first time in the past few months and that the US accounts for $200 million sales. It also delivers to Germany, Japan and India.

At home, the first part of the year has been difficult but sales saw improvement in April. Boden also said he had no plans to sell the business baring 'an amazing corporate deal that falls into our lap'. 

The most recent accounts for Boden show sales in the year to December 2011 increased 6 per cent to £246 million. However, profit plunged 45 per cent to £18 million.

Amazon Under Fire Over Tax - Again...

Online retail giant Amazon has received a barrage of criticism over revelations that money received in Government grants last year exceeded corporation tax payments. 

The retailer has filed accounts at Companies House that show it paid £2.4 million in corporation tax on annual sales of £4.3 billion. The tax paid was eclipsed by a cheque handed to the firm by the UK Government for £2.5 million in grants. 

The company is domiciled in Luxembourg and therefore pays less tax. It argues that it pays all the taxes due in the countries where it operates despite its tax efficient financial arrangements. But Labour MP Nick Smith described the payment as 'pathetic'.

Amazon and other large US corporations including Google and Starbucks have found themselves at the centre of a tax avoidance row in the UK. Amazon's low tax liabilities have prompted calls from bricks and mortar firms including Sainsbury's, John Lewis and Dixons asking the Government to address the issue and create a 'level playing field'. 

MPs yesterday questioned Google's European chief Matt Britten and accused him of employing 'devious, calculated and unethical' methods to reduce its tax liabilities.

Health and beauty retailer Boots is poised to launch a major international expansion for its online business.

Boots will launch a new site called International.Boots.com in Europe with 23,000 products. The strategy will begin next month with a site in Ireland and then progress to other countries in mainland Europe. 

The Irish site will act as a trial for the roll-out, said Alex Gourlay, chief executive of health and beauty at the group's UK business. 

Yesterday the the retailer's owner Alliance Boots said trading profit increased 6.1 per cent to £1.27 billion and total group sales fell 2.6 per cent to £22.4 billion. Alliance Boots, which last year agreed a merger with US giant Walgreens, has begun to launch products in newly opened Walgreens stores. The US drug store also has a Boots area on its web site with about 300 products.

Like-for-like sales at its Boots business fell 0.7 per cent while trading profit at the UK increased 8.8 per cent to £813 million. Online sales increased 17 per cent. Mobile accounted for 25 per cent of visits and 45 per cent of orders were click and collect.

US Shoppers Reject Online Tax

A survey of more than a thousand US citizens has indicated that 61 per cent have rejected plans to impose an online sales tax.

The effects of the tax are expected to hit British retailers (see our post on May 6) because companies will have to facilitate collecting the tax and sending funds to individual states. That could mean filling dozens of tax returns every month. 

The US senate last week supported the Marketplace Fairness Act by 69 votes to 27 but, perhaps unsurprisingly, US shoppers are less enamoured. It will need to be approved by the House of Representatives before it becomes law. 

In the survey, by postal firm Endicia, 61 per cent said they didn't support the tax, 44 per cent of respondents said they would buy fewer products online if it came into force and 12 per cent said they would buy more products at traditional stores near their homes. However, 40 per cent said it would make no difference to their shopping habits.

A total of 74 per cent of the 1,095 respondents had heard of the legislation, 60 per cent said the changes would be bad for the US economy, 39 per cent approved the bill and one third of those who approved said it would bring a level playing field for traditional bricks and mortar retailers who cannot avoid sales taxes. 

At present responsibility for declaring the tax is on the individual shopper who then should fill in a state tax return. However, few do. The proposed legislation will shift responsibility to retailers according to the state where the purchaser lives.

Online retailers with less than $1 million in annual internet sales would be exempt from collecting taxes.

Small Orders Make Online Less Profitable, Says Officeworks

The managing director of Australian office supplies retailer Officeworks said it is more difficult to make money online because orders are smaller.

Speaking at the Retail World conference in Melbourne, Mark Ward said his firm made 13 per cent of its sales online but less than 10 per cent of its profits despite lower staff and rental costs, according to The Australian newspaper. 

'We are selling more online than we ever were before. But we are selling them for less as basket sizes have come down because we have made life so convenient for the customer,' he said. 

He said it was not so much a problem as an issue for the firms supply chain because of the larger number of transactions and the lower profitability in the future. 

Myer managing director Bernie Brookes said online was 'potentially' more profitable but wasn't today. However, he said over the past 18 months Australian retailers have got 'fully in the game and understand the opportunity' presented by the internet. 

He pointed to Britain and the US where he said 15 of the top 20 retailers were tradtional bricks and mortar retailers.

Ocado 'Playing With Fire' Over Waitrose Contract

Grocery delivery firm Ocado may have irreparably damaged its relationship with Waitrose as talks with Morrisons turn into a 'soap opera,' a leading analyst has warned. 

Stockbroker Shore Capital also estimated that if Ocado's partnership with Waitrose were to collapse it could lose 75-80 per cent of sales overnight. 

Waitrose, owned by the John Lewis Partnership, has reacted badly to Ocado's recent talks to offer its delivery service to Morrisons. Waitose says its name is painted on the side of Ocado's vans and a tie up with Morrisons would be damaging. 

Waitrose managing director Mark Price said this weekend he would seek to block any deal. He also revealed that he told that to former Morrisons chief executive Marc Bolland when he approached Price to seek his reaction to a possible tie up between the Bradford-based Morrisons and Ocado four years ago. Morrisons is now run by chief executive Dalton Philips while Bolland is at Marks & Spencer. 

Waitrose with Ocado contract runs to 2020 but small print in the deal allows the supermarket an opportunity to break away in 2017. 

Shore Capital analyst Dr Clive Black said in a report released to investors this morning: 'Whilst Ocado states that any agreement with Morrison's would not be a conflict with Waitrose, we see the mood of Mr. Price & Co, as being deadly serious. As such, Ocado may have irreparably polluted a commercial relationship upon which it is dependent and it must lead to a greater chance of a break in 2017 in our view.'

He continued: 'Indeed, the tie-up with Morrison and Ocado may be taking on a soap opera feel, something that we cannot believe that Dalton Philips' and the Board of profitable Morrison welcome. That said it is just another episode in a series that we deem to have a very poor story line.'

Morrisons has said that, while talks with Ocado continue, it has other options that will still allow it to launch an online food delivery service. Ocado has said the talks with Morrisons do not include the possibility a takeover by the supermarket. 

Black said: 'We believe that Ocado is 'playing with fire' in speaking to another British supermarket group, as it tries to utilise its substantially greater fulfilment capacity, because the group's umbilical cord to Waitrose may be cut sooner than we anticipated and Ocado cannot exist as a commercial entity without Waitrose in our view.'

In Early trading Ocado's shares fell more than 8 per cent to £2.04 which values the retailer at £1.3 billion according to lse.co.uk. 

Marks & Spencer, Morrisons and Waitrose have been linked to a possible acquisition of Ocado but Black said he could not see a buyer paying for the firm at this level of valuation.

Key Boden Executive Leaves

One of catalogue and online firm Boden's key executives Cathy Carrington-Birch has left the company.

Carrington-Birch was buying and merchandising director across women's, men's and Mini Boden. She has been with firm for more than 13 years and is understood to be on gardening leave. 

It is not yet clear where Carrington-Birch is headed next but a number of larger retailers including Marks & Spencer are recruiting talent to help better connect with shoppers and also drive their online businesses.  

She started at Boden in 1999 as merchandising director and is understood to have contributed heavily to the success of the catalogue and online retailer. 

The most recently available figures show the retailer's sales increased 6 per cent to £246 million. However, profit plunged 45 per cent to £18 million. Chief executive Julian Granville blamed the slump on rising cotton prices and insisted the retailer would not compromise on quality for short-term profit gain.

Wiggle.com Signs up to Click & Collect

Online cycling retailer Wiggle.com has signed a deal with CollectPlus to offer its customers a click and collect service. 


The web site has used the CollectPlus returns service for the past two years and this will extend the partnership to deliveries.

The deal will give Wiggle access to 5,000 shops and convenience stores which are part of the CollectPlus delivery scheme. CollectPlus estimates the network serves about 87 per cent of the UK's urban population live within a mile of a collection point and 88 per cent of the rural population live within 5 miles.

CollectPlus also works with brands including Asos, Superdry, House of Fraser, Karen Millen, Littlewoods and Arcadia brands including Miss Selfridge and Evans.

'As a retailer with a rapidly growing customer base, we are always looking for ways to simplify the delivery journey, and this partnership does exactly that. This new option alongside our existing returns offer with CollectPlus is helping us to develop and sustain a more seamless offer for our customers,' said Nicholas Pink, Wiggle operations & programme director.

Comment: the Ocado Debacle

Falling out with your one and only business partner, as Ocado seems to have done, looks like a suicide mission.

Worse still, its discussions with Morrisons are on the verge of descending into fiasco.

Last week it insisted that any deal with Morrisons would not affect its long standing partner Waitrose. Then yesterday Waitrose boss Mark Price spoke out threatening to block any deal.

In the meantime, negotiations with Bradford-based Morrisons have dragged on and only a few days ago Morrisons finance director Trevor Stain said: 'We are not dependent on Ocado to go online. We may or may not work with them.'

Amid all this Ocado's share price has rocketed since February not far off doubling the price to over £1.3 billion. Last year it made a pre-tax loss of £600,000. 

So, what is going on? Waitrose managing director Mark Price said yesterday: 'I would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor. We have moved to defcon one [to find more of our own warehouses] because we don’t know where this is going to end up and we are now working on adding considerable extra capacity to Waitrose.com,' he told the Sunday Telegraph.

It sounds a little like Waitrose is worried it might end up getting edged out for a bigger and more lucrative partner.

Price also revealed that former Morrisons boss Marc Bolland, now chief executive at Marks & Spencer, had approached him four years ago over a possible partnership with Ocado and he had told him the same thing. 

We have also heard that Waitrose has its eye on two sites as possible distribution centres as it tries to rebalance in anticipation of nay further falling out with Ocado. 

We have been told that Waitrose.com currently makes about £300 million sales a year on an annualised basis. Its Acton distribution centre accounts for about £50 million. If we assume its business with Ocado is more than twice its own sales it has a long way to go before being self-sufficient. 

Meanwhile, the Telegraph says Price will ask his lawyers to examine any deal between Ocado and Morrisons to ensure there is no breach of contract. 

Ocado seems to be caught between a rock and a hard place. Its chief executive Tim Steiner, which has the Waitrose name on its vans, still insists there would be no conflict of interests. 

So what is Ocado playing at?

This is a company that, to outsiders at least, has always deftly walked the line between raising new money from loyal investors and running a business whose future has always been more golden than its present. 

It has done a good job of convincing investors that its worth more than its balance sheet would suggest. It talks about the value of its intellectual property and taking the model - a highly automated warehouse that undoubtedly makes filling bags more efficient (if far more expensive) than getting staff to do it in supermarkets or 'dark' stores. It's also a company not known for its humility and it could be argued that has been a big factor in bringing it this far since the dark days of the post-dot.com boom. 

But it seems to be playing a game of blink with Waitrose - with far more risk on its side of the table than that of the John Lewis Partnership-owned Waitrose. What is more, upsetting the fine balance it has achieved between breaking even, finding new investment and paying the bills could be disastrous.

Comment: Online Retail Taxes?

This is turning out to be a year of change for the online retailing in the UK.

Major bricks and mortar retailers beyond the usual names are starting to wise up to the phenomenon and finally getting a grip. But so are Governments.

First in the US (see our blogs over the last few weeks on how it might affect UK retailers) and, soon, back home in Britain. This week Sainsbury's boss Justin King complained there was no 'level playing field' on tax and that the burden unfairly fell more heavily on bricks and mortar retailers than those online.

Its the long running debate over the burden of business rates finally taken to its logical conclusion. Why should a shop pay more tax on its property when its sales and profit are falling? Why not base taxes more squarely on sales and profit? Whether you agree with King or not, his comments come at a sensitive time. Next week the Government will begin releasing submissions they have received from interested parties ahead of yet another major inquiry into the retail sector. 

The Business, Innovation and Skills Select Committee will then begin holding public meetings in Parliament later this month and online retailing will be a key theme. So will tax - thanks to the raging debates over rising business rates in a collapsing high street and taxes paid - or rather not paid - by large multinational online retailers like Amazon.

King has a point. He says: 'Clearly that is not a level playing field and the Government is going have to think hard about how it rebalances that tax take. There is a difference between bricks and mortar retailers - who pay rates, National Insurance and all the other domestic taxes that are due - and online retailers who by virtue of their lack of physical presence in the high street don’t contribute in the same way.'

Supermarket boss wants a 'level playing field' on tax

Supermarkets are big tax payers - largely because they employ lots of people, own or lease lots of property and, let's be honest, because they are firmly based in the UK find it difficult to escape paying their due like others can.

The irony that their race to take shoppers out of town centres has decimated high streets will not be lost on politicians (and any argument that their convenience stores are now helping rebalance that - and believe me, they do make those arguments - must be taken with a giant pinch of salt). But that doesn't mean to say other points they make aren't valid.

So the twists and turns of the debate over the next two or three months will be fascinating to follow. Is it fair to have a local property-based tax? Is it time to put an end to unfettered out of town development and boost towns? Is it right for the Government to level the playing field just because one part of the industry is more successful and bring everyone down to the same, tax-burdened level? 

We get the feeling that this is one Government review of the retail sector that will not sit collecting dust for the next two years as the Mary Portas one has done. 

As a journalist friend of mine said recently: parliamentary committees do a lot of things but one thing they never do is nothing.