One of the keynote speakers at Retail Week Live 2018, Steve Rowe and his chairman Archie Norman set out their vision for M&S last week.
M&S is often accused of telling the same story year after year: food up, clothing down, trimming a little fat but, arguably, not nearly enough.
Yesterday, that narrative changed.
Despite the results looking a little rocky, new chairman Archie Norman’s influence seems to have put a spring in chief executive Steve Rowe’s already dynamic step, accelerating key initiatives and encouraging the M&S lifer to be braver in his “grasping of nettles”.
He opened the results with a near presidential address on what M&S could and should be, handing plaudits aplenty to Rowe.
“When you become chairman of a company like this, what I like to do is go through a period of discovery where I go round the business and stores and warehouses, opening the cupboards, pulling the skeletons out and looking under the carpets,” he said.
“One of the things that has become completely apparent to me is that, in the last 18 months, somebody has been going round the business grasping nettles and slaughtering some sacred cows.
“There’s a real sense that some of the issues that have been left on one side for many years have been tackled, and the guy who’s done that is Steve Rowe.
“And if it weren’t for the steps that he has taken, we would not have bought ourselves the ticket for the next stage of the races.”
So, what does the next stage of the races consist of?
No more burying heads in the sand, was the message from Norman.
“It is that long since M&S really had its heyday and stood for the values and brand we know we can be”
Archie Norman, M&S
“The genesis of any turnaround starts with the recognition of the unvarnished truth and unsparing statement of where you stand today,” he said. “I am not the first chap to have stood here and talked about the transformation of M&S.
“This is a business that’s been drifting, under-fulfilling its customer promise, for not five years or 10 years but 15 years or maybe more.
“It is that long since M&S really had its heyday and stood for the values and brand we know we can be.”
Those words represent a real shift for a business that often ties itself up in bureaucracy and can be endlessly self-referential.
Despite sounding more than a little like the first chapter of a 12-step programme, this unflinching lens is exactly what M&S needs to continue its recovery.
M&S set out a schedule yesterday, outlining four stages of growth from 2016 to 2022.
“I am not shy of grasping a few nettles but [with Archie as chairman] I’ve been given the bandwidth to go faster”
Steve Rowe, M&S
“We are in step one of our transformation to make M&S special again,” Rowe said.
“We have made some tough decisions over the last 18 months. It is those decisions and those actions that will allow us to start on the next five years of the transformation plan.
“I am not shy of grasping a few nettles but [with Archie as chairman] I’ve been given the bandwidth to go faster.”
For now, M&S is currently transitioning from ‘Putting out the Fires’ to ‘Restoring the Basics’.
Mid-way through 2018, it will move into ‘Shaping the Future’, before landing in ‘Making M&S Special’ mid-way through 2020.
‘Restoring the Basics’ will centre on making M&S a digital-first business, reducing costs, modernising supply chain and recruiting and retaining talent.
‘Shaping the Future’ will focus on turning M&S into “essential clothing retailer” with the “nation’s favourite food hall”, building stores for the future and “making every moment special”.
In ‘Making M&S Special’, the business will attempt to generate one third of its sales online, ‘winning’ through data, internationalising its website and developing new hero categories, which it’s keeping quiet on for now.
At the heart of the drive to achieve online sales target, data will bring online and in-store together.
“M&S, late to the party on both loyalty cards and the power of data, has now woken up to both and plans to harness Sparks”
M&S, late to the party on both loyalty cards and the power of data, has now woken up to both and plans to harness Sparks data to personalise marketing and customer communications as well upgrading all of its sites and strengthening its search algorithms (as anyone who has ever tried to search its website will attest the need for).
Jill McDonald, formerly boss of Halfords, who was controversially appointed as clothing and home boss this year will be taking charge of this, bringing together the clothing and home arms of online and in-store.
Separately, the business will continue to explore its trial of online food delivery, offering both ‘meal for tonight’ and basket shops.
M&S clothing did relatively well this half, with full-price sales shooting up 5.3% and like-for-likes flat.
The ambition for that next phase… is to become ‘the essential clothing retailer’
That counts as a good result for a mid-market retailer in this market. Next, by comparison, saw sales shrink 1.2% over the first three quarters of its year.
The business has already cut five of nine annual Sales, slashed lines by 10%, trimmed sub-brands and lowered prices to ensure a coherent price architecture, setting the stage for the next phase.
The ambition for that next phase, as set out yesterday, is to become “the essential clothing retailer”, attracting younger customers to its clothing ranges via staple clothes such as suits and lingerie.
M&S’ food performance was, by management’s own admission, “disappointing”.
“M&S needs to be able to offer excellent quality, well-selling staples but fewer niche products”
Sales grew, driven by new stores, but margin declined.
Norman led the charge on a “recalibration” of its food business, saying that he believed it had become too specialist.
When asked whether he thought that recalibration might erode M&S’ point of difference, he replied that M&S needs to be able to offer excellent quality, well-selling staples but fewer niche products (more top-quality ham sandwiches, fewer Korean buns, for instance).
The business will also focus on inconsistencies in its price architecture (more important than ever as cost prices rise and the psychological effect of the interest rate rise begins to bite); simplifying its ranging and improving availability.
In a reversal of strategy, there will be fewer new Simply Food stores built as the business faces into a changing grocery market and a slowdown in its usually market-beating food business.
As growth has been driven by new stores, this could see M&S come under pressure from investors.
Despite that, the message yesterday was that M&S had to get its strategy spot on before pushing on with expansion.
Retail Week Live 2018
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