Despite Steve Rowe setting out in May plans to recover and grow Marks & Spencer’s struggling clothing division, there remains little visible improvement.
Reporting on another disappointing, albeit expected, set of numbers, the retailer announced total clothing and home sales fell 5.3% during the 26 weeks ending 1 October 2016.
Not surprisingly, the fall in sales impacted its profitability, with pre-tax profits plummeting 18.6% to £231.3m during the same period.
Once again, the British retailer’s performance signals the much-needed turnaround plan required to save clothing sales.
While this has resulted in a five-year programme to improve the productivity of its UK store estate, seeing a net reduction of around 10% clothing and home space with 60 fewer full-line stores, it is questionable whether its latest strategy is being proposed a little too late to recover its clothing sales, which have been struggling over the past four to five years.
Nevertheless, Rowe understands product is key to recovery, seeing the business focus on its price integrity over the past year or so.
While this resulted in volume improvements across its entry-price-point products, the likes of Debenhams and Next have placed focus on this over the past three years or so to compete with the rise in popularity of the value players, indicating that M&S is still playing catch-up in the fashion market.
Though it is important for the business to offer competitive entry price points to attract volume sales, the retailer will have to consider the effect of the inevitable price hike going into 2017 as the weakened sterling take its toll, with potentially having to raise these prices again if it’s unable to sacrifice margin.
M&S will also need to focus on raising average transaction values in clothing through driving sales across full-price products and higher-priced ranges.
Although the retailer is aiming to do this by eliminating the dead wood in its collections to allow it to focus on the brands which are most relevant to its core customers, it needs to make sure its offer still attracts a younger customer who, on average, has higher shopper frequency – leading to increased spend.
“Despite M&S making a smart move in managing its estate to reflect its customer’s changing shopping patterns as they migrate more to online, M&S.com only accounts for a small proportion of the retailer’s sales”
While its more fashion authoritative collections, such as Archive by Alexa Chung, present an avenue to ensure this, the retailer is synonymous for having availability issues across these ranges – an area which is at risk of weakening further as M&S plans to reduce clothing space in its stores.
As the business looks to reduce the number of clothing lines in its range to mitigate terminal stock issues, space repositioning across its store estate is logical.
However, this creates a heavier reliance on the availability and performance of its online channels to drive clothing sales.
Despite M&S making a smart move in managing its estate to reflect its customer’s changing shopping patterns as they migrate more to online, M&S.com only accounts for a small proportion of the retailer’s sales at 7.5% during its latest full year, with marginal growth of 0.3% achieved during H1 2016/17.
Online and offline challenge
Therefore, not only does M&S need to prioritise the customer experience on its online channels to drive sales through personalisation and enhanced customer interaction, such as product videos and stylist support, but the retailer must also start to understand its customer’s shopping preferences by location before it embarks on its clothing repositioning programme to ensure availability levels by brand, category and size are right.
“One thing Rowe must appreciate is that the retailer can’t forever play catch-up with the rest of the market, otherwise it will continue to lose behind them”
While there is no denial that M&S is trading in a struggling fashion market, its current state is little excuse for the retailer’s poor performance over the past four or so years, and Rowe has refreshingly realised this.
One thing Rowe must appreciate though is that the retailer can’t forever play catch-up with the rest of the market, otherwise it will continue to lose behind them.
Instead, it needs to create its own dominating factor to drive clothing sales while its store programme is under way, considering what its customer wants now, and not necessarily 18 months ago.
- Rebecca Marks is a senior analyst at Retail Week Prospect