At a time when every multichannel retailer is relying on online sales to boost their overall like-for-like performance, at M&S it is the other way around.
At a time when every multichannel retailer is relying on online sales to boost their overall like-for-like growth performance, it is embarrassing that at M&S it is the other way around.
City analysts have become used to seeing the like-for-like sales growth of multichannel retailers inflated by pure online sales growth, even if stores and online are hard to separate in a world of click-and-collect. For example, at John Lewis, online accounts for five or six percentage points of the overall 7% to 8% like-for-like sales growth seen so far this financial year.
Unfortunately, M&S announced today yet another poor like-for-like sales performance in the UK business, for the 13 weeks to June 28, with just 0.3% overall growth, despite the weak comparables in clothing and the boost to food sales from a late Easter. And online sales were more than 8% down.
Managing the online upgrade
Now, nobody would deny that M&S needed to change its old clunky Amazon-designed web platform, but after years of investment and planning, shouldn’t this process of switching from a hired car to M&S’s own bespoke Cadillac have been better managed?
M&S’s constantly embattled chief executive Marc Bolland denies that there have been any technical issues with the new website. He said: “The new web platform has been technically resilient.” But the issue is that online sales are falling and not growing and so, the journey that M&S is on is going backwards.
“M&S breezily insists that online sales are expected to return to growth by Christmas, but that should go without saying”
Back on May 1, when M&S confidently presented the new website to analysts and the media in a detailed presentation at its head office and spoke about all the bright young IT engineers that they’d recruited, it admitted that customers had had to re-register on the new website and that this was slowing things down. M&S also said it had slowed down marketing spend to allow the new website to settle in without causing too much strain.
However, the urbane M&S marketing director, Patrick Bousquet-Chavanne, said on May 1 that his new online marketing campaign would drive more customers to the site and asserted that they would love the rich editorial content of the site when they got there, even though some people feel that there is too much editorial content.
Unfortunately, those customers visiting the M&S website have found it hard to navigate, although Marc Bolland says it’s just “a journey” and brushes aside the weak short-term sales as “settling in” problems. M&S breezily insists that online sales are expected to return to growth by Christmas, but that should go without saying.
Danger for M&S
The tragedy here is that M&S had a big opportunity this year to catch up online and exploit the fact that the fastest growing customer demographic online is the core M&S older female customer, but they appear to have muffed things.
M&S are trumpeting that womenswear sales returned to – modest – growth in the last quarter, despite the embarrassingly weak response to the online relaunch, but given the weak comparatives and the more helpful weather this season, quite apart from all the extra marketing and store revamp work, surely womenswear sales should have returned to growth in the last quarter?
And M&S made no comment on menswear or kidswear or homewares sales, which clearly pulled down the average.
Life goes on and, no doubt, the weak online sales in the first quarter will provide yet another soft comparative for M&S this time next year, as the M&S journey goes on. But the world is not standing still and the danger for M&S is that its customers have plenty of other options in terms of who they can do their shopping with, in-store or online.