The retail industry has experienced many twists and turns this year. Retail Week picks nine truly jaw-dropping moments from 2019.

Sainsbury’s and Asda £13bn mega merger blocked

Competition watchdog the CMA put the kibosh on Sainsbury’s and Asda’s merger in April.

The deal would have created a £13bn grocery supergroup that would eclipse Tesco as the UK’s largest supermarket business.

To rub salt into the wound, the CMA also barred the pair from taking stakes in the other for the next 10 years.

Sainsburys-Asda-2

The watchdog said the proposed merger could lead to a “substantial lessening of competition” and was “more likely to lead to price rises than price cuts”. That was despite the grocers vowing to plough £1bn into price cuts.

Sainsbury’s chief executive Mike Coupe accused the CMA of “taking £1bn out of customers’ pockets”.

Since the CMA put paid to the mega merger, Walmart’s international boss has revealed an IPO of Asda is now on the cards.

Sainsbury’s, meanwhile, is focusing on its existing strategy. However, pre-tax profits fell 15% in its half-year to September 21.

Debenhams bosses ousted

Jaws dropped in January when Mike Ashley spectacularly engineered a boardroom coup, ousting Debenhams chairman Sir Ian Cheshire and chief executive Sergio Bucher.

Sir Ian Cheshire

Sir Ian Cheshire

Disgruntled Ashley, whose Sports Direct business owned 30% of Debenhams shares at the time, worked with another major shareholder, Dubai-based Landmark, led by Micky Jagtiani, to pull off the defenestration.

Cheshire, a retail veteran who also chairs Barclays Bank, stood down from the company immediately, while Bucher stayed as chief executive initially but lost his seat on the board.

Many speculated that the move would pave the way for Ashley to pounce and take over Debenhams. However, he was ultimately thwarted when, following Debenhams’ administration in April the department store group was rescued by its lenders, leaving Ashley empty-handed.

Mike Ashley lashes out again (and again)

The Debenhams boardroom coup was just one of an array of dumbfounding moments that Mike Ashley was responsible for in retail this year.

The pre-pack administration of Debenhams, which resulted in his equity being wiped out, caused much ire. He accused Debs executives of “a sustained programme of falsehoods and denials” and even demanded they take lie detector tests.

Blower cartoon 12 April 2019

He also lashed out at Debenhams’ advisors, saying: “If there were any justice in the world the majority of the advisors would be put in prison.”

Ashley also funded a landlord’s legal challenge of Debenhams’ CVA and implored the government to investigate its demise.

It was not the only investigation Ashley called for during the year. He also urged an inquiry into the dominance of sportswear brands Nike and Adidas.

After Adidas blocked Sports Direct from selling some of its products, the company said in a statement: “Sports Direct believes that the industry as a whole would benefit from a wide market review by the appropriate authorities in both the UK and Europe.

“The sports industry has long been dominated by the must-have brands such as Adidas. These brands hold an extremely strong bargaining position vis-à-vis the retailers within their supply networks and use their market power to implement market-wide practices aimed at controlling the supply and, ultimately, the pricing of their products.”

There has also been much drama within Sports Direct. The retailer was labelled “an embarrassment to UK corporate governance” by Pirc after it delayed its annual results in July and then revealed it was facing a €674m tax bill from the Belgian authorities.

In Sports Direct’s results statement, Ashley also revealed that problems at House of Fraser could be “terminal” and indicated he regretted buying the department store chain last year, and bizarrely claimed that the chief executives and finance directors of listed companies should have voluntary drug tests so as to avoid blackmail.

When auditor Grant Thornton resisgned not long after the chaotic market update, Sports Direct narrowly avoided Government intervention after it became the first big listed business to be without an auditor, in breach of stock market rules. Leading auditors EY, PwC, KPMG and Deloitte all declined the appointment, but Sports Direct eventually appointed RSM.

Superdry founder stages coup

Debenhams was not the only retail coup this year as Superdry founder Julian Dunkerton fought his way back into the fashion retailer in a fierce battle.

Dunkerton, a vocal critic of Superdry’s management after leaving in 2018, forced an emergency general meeting earlier this year, following poor performance at the fashion retailer, and campaigned to be reappointed to the board.

Blower Superdry cartoon April 2019

He set up the website SaveSuperdry.com and lined up former Boohoo chair Peter Williams to take up the same role at the fashion retailer.

Dunkerton managed to muster enough shareholder support to narrowly win the vote.

Almost the entire board of Superdry – including chief executive Euan Sutherland, chair Peter Bamford and chief financial officer Ed Barker - resigned or handed in their notice following Dunkerton’s re-election.

Dunkerton was named interim chief executive in the immediate aftermath and that position was made permanent in October.

He and Williams have a big job ahead of them as Superdry’s latest results showed.

Superdry swung to a £4.2m pre-tax loss, compared to a profit of £26.4m in the comparable period of the prior year.

Julian Richer hands his business to staff

Richer Sounds entrepreneur Julian Richer showed retail in its best light when he gifted control of his electricals business to his staff.

Richer, who is known for his people-centric approach to retail, has transferred 60% of his shares to his employees to create a John Lewis-style partnership.

Julian Richer

Source: Peter Searle

The business paid Richer £9.2m for his stake but he has chosen to give £3.5m of that sum back to employees, who receive £1,000 for every year they have worked for the retailer.

With the average length of employment at Richer Sounds sitting at eight years some employees received sizeable bonuses, including 39 who were in line to receive bonuses of £20,000 or more.

Richer will remaininvolved with the retailer but has left day-to-day operations to the management board.

The employee ownership trust will operate according to a set of principles designed to make sure the business continues to run as it has previously and is based on “honesty, commitment, trust and respect”.

M&S buys 50% stake in Ocado

Many have waited a long time for M&S to launch a full online grocery offer but few would have expected the retailer to make such as dramatic move as buying a 50% stake in Ocado’s grocery business.

Ocado van

The pair revealed they were teaming up in February in a bid to “transform online grocery shopping in the UK”, with M&S paying £750m for the stake.

M&S boss Steve Rowe said the joint venture enabled M&S to estabish an “immediately profitable, scalable and sustainable” online food business.

The deal meant that Ocado’s longstanding partnership with Waitrose would come to an end as M&S would start selling food through Ocado from September 2020.

The joint venture will continue to trade as Ocado.com and will offer 50,000 SKUs, including M&S own-brand food lines.

Rowe said: “I have always believed that M&S Food could and should be online.

“Combining the magic of M&S Food with Ocado’s leadership in online technology allows us to transform UK online grocery shopping offering customers the broadest, most innovative and relevant range in UK food retail with award-winning service.

“This is a transformational step forward in shaping the future of M&S and in becoming a truly digital first retailer with at least a third of the business online.”

Waitrose strikes back with deal with Ocado co-founder…then makes dramatic u-turn

Waitrose came out fighting after being dumped by Ocado, teaming up with Ocado co-founder Jonathan Faiman who had set up a rival online grocery tech start-up.

When he unveiled the new partnership with the untested business - which was not even registered on Companies House when the deal was announced - Waitrose boss Rob Collins said it planned to treble its online sales to £1bn within three years.

Waitrose Banbury

All looked set for a monster battle to win online grocery spend but just a few months later Waitrose revealed it had “decided not to pursue” the partnership with TDP.

The debacle continues because Ocado is now suing TDP and alleges that Faiman recruited a senior Ocado employee to provide him with confidential information.

Ocado said in September: “We commenced legal proceedings for breach of confidence and unlawful means conspiracy. We are completely confident that we will win at trial. The defendants and other individuals were in possession of a substantial amount of Ocado confidential information, that they were using in their business.

TDP launched a counter-claim against Ocado said to be worth hundreds of millions of pounds, blaming it for the loss of the Waitrose contract.

It has been alleged that sensitivities about M&S’s deal with Ocado prompted M&S chair Archie Norman and chief executive Steve Rowe to obtain “burner” pay-as-you-go mobile phones to keep everything under wraps.

M&S has rejected the burner phone allegations.

Ted Baker implodes as founder Kelvin departs

Fashion retailer Ted Baker, which has been one of retail’s strongest performers of the past decade, fell from grace in dramatic style this year.

Following allegations of misconduct and “forced hugs” that emerged late last year, Ted Baker founder Ray Kelvin – who denies the allegations - stepped down from his role as chief executive in March.

Ray kelvin ted baker

Source: Stuart McClymont

Kelvin said he resigned from the retailer that he had led for three decades, “so that the business can move forward under new leadership”.

However, Ted Baker did not move forward. Long-time chief financial officer Lindsay Page took over from Kelvin but after issuing three profit warnings during his tenure, and admitting this month that it had overstated the value of its stock by £25 million, both Page and chair David Bernstein exited the business.

Finance boss Rachel Osborne, who was appointed in late September, has been named interim chief executive.

Ted is well and truly in trouble and shares in the retailer have plunged more than 80% since January this year.

John Lewis Partnership unveils new management structure

John Lewis Partnership’s departing chair Sir Charlie Mayfield unveiled a radical restructure of the retailer’s top team that confounded many in the industry.

The partnership is merging the management of its department store and grocery businesses into a single team, meaning neither John Lewis or Waitrose has a managing director. About 75 of 225 senior management roles will go as part of the restructure.

John-Lewis-Waitrose

Departures include Waitrose boss Rob Collins, who believes there is no role that is right for him in the new structure. John Lewis managing director Paula Nickolds will take on a new role, leading a seven-person executive team, as brand director responsible for both businesses.

Eyebrows were raised further when it was revealed that not a single person from Waitrose was appointed to the new team (although two positions are yet to be filled).

That is despite substantial differences between grocery and department store businesses, and the fact that Waitrose is responsible for the bulk of sales and profits at the partnership.

Mayfield said the restructure would create a “unified” business and enable “more innovation, faster decision making and bolder steps to align our operating model with our strategy”.

Observers questioned who was responsible for the day-to-day running of Waitrose and who would be able to handle the storms that can engulf food retail, such as food safety scares such as the horsemeat scandal, or the threat of food shortages in the wake of Brexit.

While Mayfield acknowledge that the changes were bold, one retail chair that Retail Week spoke to deemed the structure “bonkers”.

Which view is correct will become clear in the years ahead.