Marks & Spencer has long been a tale of two halves, with grocery on a seemingly unstoppable run while clothing and home floundered.
The food arm of the ailing department store business had previously been its star performer, with sales continuing to rise even as its clothing arm sank to new depths. But that poster child came to a sudden halt in 2017 and M&S has been trying to shore it up ever since.
Major new appointments aimed at arresting failure include Stuart Machin, previously of Asda, Tesco and Sainsbury’s, as managing director of food, and Samantha Hornsby from Tesco as head of food online, who together form a strong strategic backbone to the retailer’s desire to return to profitable growth in grocery.
The addition of lauded former Sainsbury’s boss Justin King, who was responsible as boss of M&S Food for the launch of the Simply Food convenience format in the early 2000s, further strengthens the team.
“The consumer is, no matter how many price salvos the business launches, paying for more at M&S”
But the biggest news to come out of M&S in recent months has been its headline-grabbing partnership with Ocado. It will replace Waitrose as Ocado’s grocery partner of choice from September but, unlike Waitrose, has chosen to enter a joint venture – one which has cost it £750m, a price that some have deemed unwise.
The business’ share price took a hit when it unveiled the partnership – more due to the cost of the JV than the strategy behind it – but has since recovered and is now trading at 274.6p.
Whether M&S has paid too much will be difficult to tell until a few years down the line. Executives are understood to want to swell annual food sales to £12bn through the JV – which outweighs current sales across both grocery and clothing and home, which amounted to £10.7bn last year. If that is achieved, £750m will be a small price to pay.
There is debate over whether consumers will decamp to Waitrose.com and whether M&S is a destination where shoppers want to do a ‘big shop’. But given they will be able to shop across Ocado own-brand products as well as picking up ‘food for tonight’ – M&S’ long-held speciality – the strategic rationale for the partnership makes sense.
M&S does not have an online food operation of its own and to build one would cost more than £750m and take time the business may not be able to afford if the online grocery market keeps developing at rapid pace.
Lack of identity
What is more worrying is the grocer’s change of tone in recent months. It has adopted a more value-conscious stance, launching a price salvo on 500 items, and released a series of tongue-in-cheek adverts, playing on its ‘This is not just food’ tagline, which was last seen on TV in 2007.
Then there are the talking tills, voiced by the presenters of Britain’s Got Talent, which M&S now sponsors. The self-checkouts have attracted the ire of every newspaper from The Guardian to the Daily Mail.
The problem with these developments is not the reuse of an old tagline or that consumers are swearing under their breath as, after a long day at work and with a train to catch, Alesha Dixon’s voice can be heard trilling instructions from a dozen tills.
“What the customer sees is a business that is struggling to decide what it wants to be”
But the consumer is, no matter how many price salvos the business launches, paying for more at M&S. They’re treating themselves and they want to feel special, upmarket even. Britain’s Got Talent is an incredibly successful format and has made some TV producers very rich. But Evanescence cover acts and tightrope-walking dogs are not upmarket.
The irreverent use of an iconic tagline meanwhile, instead of serving to emphasise the business’ history, cheapens it and makes what was a highly effective marketing strategy seem like a gimmick.
M&S has built a great team and it has made a bold strategic decision in its tie-up with Ocado, but what the customer sees is a business that is struggling to decide what it wants to be.
This has been hugely damaging for M&S’ clothing arm – let’s hope it isn’t the same for food.