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What’s been happening in the commercial world over the last two weeks? Read on to find out!
This week, British coffee brand Caffè Nero announced that it would be launching a Company Voluntary Arrangement with administrators KPMG. A CVA is a procedure that allows a company to continue operating by paying only a proportion of the amount that it owes to creditors.
Caffè Nero employs over 6,000 people across its 800 UK and 200 overseas sites. During the first lockdown, many of these had been converted to provide only takeaway services. However, a sustained drop in city centre footfall throughout the latter months of the year and looking forward to 2021 has dealt a heavy blow to the coffee shop. It is unclear what the terms of the CVA will be but CEO Gerry Ford hopes store closures will be minimal. This news follows the wider trend in the fast casual restaurant industry after Pret a Manger and Costa Coffee cut 3,000 and 1,650 jobs in August and September respectively.
Bakery chain Greggs is also set to cut 800 of its 22,000-strong workforce. Although September 2020 saw 76.1% of 2019’s levels and the company return to a net cash positive position, the FTSE 250 company remains concerned about the effects of England’s second lockdown.
Talking point: What are the pros and cons of companies using a CVA?
Read more: How has COVID-19 Affected the Hospitality Industry?
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Facebook-owned messaging service WhatsApp will roll out its UPI-powered digital payments services across the whole of India in stages. There are currently 400m WhatsApp users across the country. WhatsApp hopes it will be able to compete against GooglePay, PhonePe and Amazon Pay in a growing and increasingly competitive mobile payments market. This is estimated to reach $1trillion by 2023. Currently, Google and Walmart command 80% of the UPI market share. It is interesting to note that Alibaba-backed Paytm has declined in popularity, largely because it doesn’t use UPI.
WhatsApp is currently working with five of India’s leading banks: Axis Bank, HDFC Bank, ICICI Bank, Jio Payments Bank and the State Bank of India. The move comes partly in response to New Dehli’s 2016 plan to invalidate at least 85% of the paper cash circulation. COVID-19 has accelerated this trend given many retailers no longer accept cash due to health and safety concerns.
This is good news for WhatsApp after a colossal failure back in June this year. The American technology company sought to roll out its digital payments in Brazil but was quickly ordered to suspend the service by the Central Bank of Brazil.
Talking point: What are the risks of a world where the majority of transactions are carried out digitally?
After a long-term trend of rising house prices, late 2020 has seen a dip. This can be attributed to a rush of sales as house sellers seek to avoid stamp duty under the Chancellor’s new coronavirus financial assistance measures. In July, Rishi Sunak increased the stamp duty threshold on residential properties sold in England and Northern Ireland which has so far fulfilled its aim of stoking a recovery in the market. Sky News reported that the housing market is actually ‘well up on the same month a year ago’.
However, the rush to sell has had an impact on property prices, with online real estate portal and property company Rightmove declaring a 0.5% decrease in the average house price. Estate agent Savills argues the drop has been partially caused by an increase in auction sales. This year Savills has sold over £240m worth at auction.
Analysts have predicted a slowdown in 2021 after the stamp duty holiday ends in March and unemployment is expected to rise further.
Talking point: What do you think the rest of 2020 holds for the housing market?
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