Marks & Spencer’s half-year results again spotlighted the accelerated shift to online shopping that has accompanied the Covid-19 pandemic.

  • M&S boss Steve Rowe says new ‘MS2’ approach “flips the model” on how the business is run
  • There will be more partnerships following its first tie-up with a third-party fashion brand Nobody’s Child
  • Chair Archie Norman: “We need to liberate people to do things that in the old world would have seemed outrageous”

At Marks & Spencer, which was already moving towards a digital-first approach before the outbreak, the change in shopping habits has prompted chief executive Steve Rowe to up the pace of transformation at the core clothing and home division.

Its revival is key to any turnaround plans and today Rowe revealed how the business intends to think and act like an online pureplay as ecommerce grows in importance.

Having, at last, started selling food online through a joint venture with Ocado, which went live last month, the focus is now turning to the apparel arm.

M&S’ results were, despite its first-ever loss as coronavirus took a toll, better than expected and showed the extent of channel shift.

M&S was for a long time a digital laggard but its online performance was encouraging in the first half. Clothing and home online sales rose 34.3% and its market share increased, enabling it to claim the number two spot online behind Next.

That is the context in which the retailer is now acting to cement and build on its position, with the ambition that online will account for 40% of sales within three years.

The retailer acknowledged that its website “has been structured as the online channel of a stores retail business moving in lockstep with the rhythm of physical store-based trading, rather than competing head to head with pureplay competitors”.

‘MS2’ aims to bring together M&S’ product and digital capabilities to better reflect and cater for shoppers. Invisible to the shopper, the new way of operating will “create a single integrated online, digital and data team within clothing and home supported by our stores and a refocused product supply engine”. Although invisible to the customer, it should better serve them. 

Rowe tells Retail Week the change would alter how M&S thinks and acts.

“This flips the model,” he says. “We think about range and promotions differently, we think about end-to-end supply chain differently, we think about media spend and marketing differently. We’re seizing the momentum in M&S.com to turbocharge online growth.”

 MS2

  • MS2 will be led by clothing and home managing director Richard Price and chief strategy and transformation director Katie Bickerstaffe
  • It combines online, data and digital trading in one team adapting to an online model
  • It will herald “a step-change in online product, presentation, pricing and social marketing including recognition that the online business will need a focused range”
  • There is “a mandate” to drive for more rapid fulfilment and expansion of the Castle Donington fulfilment centre
  • There will be “maximum usage of one of the best customer databases in the UK to drive digital customer engagement and build loyalty”
  • There will be a “seamless” online ordering in-store with a new click-and-collect and digital sales experience
  • Domestic and international online will be run as one rather than separately
  • There will be more brand partnerships such as that recently struck with Nobody’s Child.

Through initiatives such as the relaunch of the Sparks loyalty programme and changes such as the deployment of in-store technology to improve productivity, M&S has begun to think much more digitally.

But as well as thinking like a pureplay can it act like one by, for instance, being able to respond to product trends spurred by influencers and Instagram demand with the speed of online specialists such as Boohoo?

Rowe believes so. He says that capability exists to some extent through the retailer’s nearside supply network and will grow, particularly through partnerships with a new generation of online brands such as that with Nobody’s Child, M&S’ first tie-up with a third-party fashion brand. Rowe said: “Nobody’s Child comes with a very, very short supply chain.”

Norman, Archie

Archie Norman: ‘You get locked into a mindset that everything online has to be in store and everything in-store has to be online’

M&S chair Archie Norman, who describes the definitive switch in emphasis as “the most important organisational change we’ve made in a couple of years”, maintains that, as a result, M&S will behave like retail’s new generation of fashion retail stars rather than a legacy business.

He told Retail Week: “We’re up against some very strong pureplay competition and they’re not constrained by stores.”

Traditionally, for instance, a promotion would require stock to be delivered to all stores, marketing and point of sale materials and labour scheduling. “Online you could do that in an afternoon,” he said. 

“You get locked into a mindset that everything online has to be in store and everything in store has to be online. Asos and Boohoo and Amazon aren’t worrying about any of that, and there’s no point attaching a ball and chain to ourselves.

“Our mindset has been too schizophrenic. We need to liberate people to do things that in the old world would have seemed outrageous.”

Similarly, it makes no sense to run international and UK online separately. “In Asos and Next, international is seen as central. In our business, it’s been run separately but it will fit into MS2,” Norman says.

Bickerstaffe told Retail Week that “our job is to modernise history” as the retailer responds to very different customer journeys than would have existed even 10 years ago.

She said that a pureplay mindset exists in “pockets” at M&S at present, but she is confident that “everybody understands how important it is” for the business to press the pedal hard on change, as the wider world changes.

She says the first question people ask about anything they do, as MS2 is initiated, is: “How does this help the digital experience of our customer?” Stores have not become redundant. She says several digital trials – “and I don’t mean touchscreens” – are underway in five pilot branches and that staff in those stores, including quite traditional branches, have become some of the biggest advocates of the shift.

As retail gears up for its most digital Christmas ever as England prepares to go into lockdown throughout November – although M&S stores will remain open because of its food business – M&S has made progress in online fashion that it can build upon.

Analyst Clive Black of Shore Capital, M&S’ house broker, says: “More is still to do around the organisation, its stores and clothing and home, but the heavy lifting feels like it has been undertaken and work in the digital sphere is leading to a more relevant and resilient business, manifested in the announcement of MS2.”

The retailer may have a long way to go in building its digital operations but the health crisis has prompted it to shift more radically and rapidly than would otherwise have been the case. Perhaps it finally stands to reap benefits from changes to which the pandemic has added momentum.