I’m an admirer of Marc Bolland. But then I am not unique in that respect because he has quite a supporters club, a club that the Marks & Spencer board has now joined.
Morrisons started the ball rolling in 2006. The grocer was presumably looking for someone with a strong understanding of Britain, perhaps specifically Yorkshire, experience in the food industry and retailing, and FTSE 100 Plc experience. It’s not clear Bolland had any of these. So maybe it just wanted someone who was the opposite of Sir Ken.
But nevertheless Marc Bolland has been a great success, leading one of the all time retail turnarounds. It is claimed that Sir Ken (for he ruled that company with an unquestioned rod of iron) messed up through a scorched earth policy of de-Safeway-isation.
However, the truth is more interesting. The two store portfolios were fundamentally different in customer demographics. Morrisons tried to make Safeway almost overnight into Morrisons. Safeway customers liked deep-cut promotions, bright fresh food, a wide range of quality products and friendly staff. Morrisons gave them fewer, less exciting promotions, but lower shelf prices. It reduced fresh range to cut waste and substituted cheap generics for premium lines.
Management then upset the loyal employees and customers exercised their right to walk away into Tesco, Sainsbury’s and Waitrose… even M&S. Morrisons then lost focus and control on Safeway’s buying terms and retrospective discounts. As a result, gross margin fell and it had to increase prices, even in the core Morrison stores. The rest is history… until this dapper Dutchman answered the call.
Maybe it was that Bolland was so different. Like Archie in that other great turnaround at Asda, he took Morrisons back to its value roots and surrounded himself with new, high-quality executives. The new team sharpened up promotions and restored basic pricing. They improved product ranges, especially at the premium end and renegotiated terms with suppliers. Investment was made to rebuild the quaint but antique supply chain.
The more Morrisons got from suppliers, the more it turned up the heat on pricing. The virtuous circle, delivered so exquisitely by Asda and Tesco in the 1990s, was exploited by Morrisons – cut price, drive like for likes, get more profit, reinvest in lower prices, and repeat.
The challenges at M&S are different. M&S is not broken. It doesn’t have value roots, no botched acquisition. But then M&S isn’t really one business. It’s more a joint venture between a mid-market/middle-aged clothing chain and a specialist premium food retailer. The clothing chain can be sharpened, but it remains the unrivalled clothing love of Middle England. However, food is being increasingly threatened by the grocers’ premium offerings and the one-stop quality of that other bourgeois emporium – Waitrose.
I wouldn’t back against Mr Bolland making a success of M&S. However, I think he faces his biggest challenge yet… why does M&S sell food exactly?
- Simon Laffin independent retail adviser and non-executive director