Marks & Spencer is a fantastic retailer – that much is true, given its sheer longevity on the UK retail scene.
However, as a business, it is in a considerable state of flux, with a big announcement on Steve Rowe’s strategic plan for the business expected next week.
In addition to the head office staff cuts Rowe has already made, M&S needs to reduce the size of its store portfolio.
As a retailer, it performs best in large out-of-town locations, with its core shopper base preferring the convenience of a drive-to destination, coupled with a full range of products.
Conversely, many small or poorly configured high-street stores – which make up the bulk of M&S’s portfolio – contribute little to the business.
The great size of M&S’s estate in a multichannel world is also an issue. Less is most definitely more these days.
When former boss Marc Bolland was at the helm, one of his strategic initiatives was to re-enter Europe with wholly owned M&S stores, following a rather embarrassing exit to focus on the core UK business in 2001.
Since then, M&S had continued to trade franchise stores in places such as Greece and Finland, but these were a world away from full-line M&S shops.
“It was a shame that the first M&S store [in France] was too small, poorly located and badly configured, however – and also cost a huge amount to open and maintain”
It was no surprise, therefore, that Bolland chose France as the beachhead of a new M&S continental European experiment.
It was a shame that the first M&S store was too small, poorly located and badly configured, however – and also cost a huge amount to open and maintain.
The store was mainly focused on fashion, which the French did not want, whereas the limited food offer that was on display had queues out the door on a daily basis.
The fact that M&S’s international profit is down 37% is less of an issue, however, as any investment takes time to mature and, while closing the Champs-Élysées store makes sense, pulling out of Europe entirely once again would be the wrong move.
Play to its food strengths
In a sense, the flagship store had done its job in terms of building brand equity, and the other M&S stores in France – as food stores only – play to M&S’s strengths.
Their food is very popular in the French and Parisian markets, which is very similar to London in terms of the presence of single, young affluent people, who are more likely to avail themselves of M&S’s quality ready meals and ‘grab and go.’
“M&S reached maturity in the UK a long time ago and significant growth is only really achievable from international operations”
Steady and careful expansion into the rest of France and the Benelux area makes sense – with food not fashion as the focus.
With this infrastructure in place, clothing and other products could then be ‘infilled’ via other distribution channels such as the web.
Despite Brexit, we live in an increasingly connected world. M&S reached maturity in the UK a long time ago and significant growth is only really achievable from international operations.
M&S needs to play to its strengths in Europe, and if it does that, it can still win the day yet.
- Jonathan De Mello is head of retail consultancy at Harper Dennis Hobbs