For decades, Marks & Spencer has been a mainstay not just on British high streets, but in the FTSE 100.

The retailer was one of the founding members of the blue-chip list in 1984 – a time when Brunei had just gained independence from the UK, Ronald Reagan was in the White House and the Flying Pickets were top of the UK charts with Only You.

Thirty-five-and-a-half years later, that run has come to an end – and its relegation from the list of Britain’s biggest listed businesses is a moment in time not just for M&S, but for retail.

“Norman cannot ignore this is a symbolic moment for M&S – a sign of just how far it still needs to travel on its turnaround journey”

From an M&S perspective, you can’t say it hasn’t been coming. The business has teetered on the brink of FTSE demotion on a few occasions after what has felt like years of constant revolution, without conjuring a recipe for prolonged success.

The leadership, headed by boss Steve Rowe and chair Archie Norman, is working hard to fix the perennial problem of its clothing business and keep pace with changing fashion trends amid increasing competition, both online and off. They have struck what they believe will be a “transformational” joint venture with Ocado, shelling out £750m to acquire half of its retail business and debut an online grocery offer.

Such moves are clearly centred not on shareholder value, but the needs of the customer – undoubtedly where M&S, and retail more generally, should be focusing its energies.

In that respect, Norman was right to downplay M&S’ demotion, telling The Times: “Our eyes are on the goal, not the scoreboard.”

To a degree, he is right. Observers can often become too fixated on share prices as a measure of business success. But Norman cannot ignore that this is a symbolic moment for M&S – a sign of just how far it still needs to travel on its turnaround journey.

Reluctant to reinvent

Former Asda boss Norman, in particular, has been a breath of fresh air in attempting to break down silos and force M&S to face up to some of its failings, but that cultural and strategic change has to accelerate in a constantly evolving retail landscape.

Many commentators believe its tie-up with Ocado is an expensive gamble. That may or may not prove to be the case. Either way, Rowe and Norman must be applauded for attempting to break M&S from the shackles of its status quo as the retail and digital worlds evolve around it unrelentingly.

But such a reticence to radically reinvent is not a fault that can be laid at M&S’ door alone – other retailers have been guilty of it in the recent past, too. In that sense, the wider significance of its FTSE 100 demotion should not be underestimated.

“Ocado’s valuation is based almost entirely on how investors believe it will shape retail’s future”

Appetite for retail stock is at a low. Following M&S’ exit, just nine retailers remain in the FTSE 100 – and two of those, Primark owner Associated British Foods and online grocer-cum-tech provider Ocado, have plenty of other strings to their bow.

Ocado’s journey to join the blue-chip elite, in particular, throws into stark relief the sort of businesses that investors believe have the most prosperous futures ahead of them.

Ocado, which started as an online grocer and took 15 years to turn its first annual profit, is, at the time of writing, worth £9.4bn – 2.5-times M&S’ £3.8bn market cap.

The company hasn’t got there through churning in huge annual profits by selling ‘stuff’. It hasn’t got there through what it has achieved in the past or the present. Its valuation is based almost entirely on how investors believe it will shape retail’s future.

The company has developed in-house technology and logistics capabilities that are the envy of retailers across the globe. It is now licensing that expertise to some of the world biggest grocery’s players, including Kroger in the USA, Coles in Australia and Sobeys in Canada.

Ocado is thinking about the consumer of the future and carving out a position for itself in tomorrow’s world. Others in the FTSE 100 can say the same – think online food delivery specialist Just Eat and digital real estate platform Rightmove.

Big thinking

But businesses with more traditional roots have shown the way for the likes of M&S, too, by establishing a clear view of their customer base and combining the best of physical space with a digital infrastructure to focus relentlessly on their needs.

Next and JD Sports, two of the nine retailers remaining in the FTSE 100, show what can be achieved when the future sits top of your agenda, rather than being an afterthought.

Daniel Gebler, the chief technology officer of Dutch online supermarket Picnic, told us this week that his team spends 50% of its time on the day-to-day needs of the business, and 50% on “big thinking” that will impact the business in years to come.

M&S’ FTSE 100 relegation has emphasised the need for traditional retailers to do the same if they are to remain among the elite in the eyes of customers and shareholders.