Even former boss Stuart Rose thinks that M&S Food needs to get online, but management think that there’s still lots to go for offline.

Even former boss Stuart Rose thinks that M&S Food needs to get online, but management think that there’s still lots to go for offline.

After all the recent focus on the much-vaunted Autumn fashion range, ahead of the interim results on Nov 5th, Marks & Spencer were relieved to be able to turn the market’s attention to the strength of its food business in yesterday afternoon’s lengthy presentation to analysts and the press at their Paddington HQ and at the Marble Arch store.

Of course, it’s not that long ago that M&S Food looked a very mature business that was threatened by the supermarkets’ erosion of its lead in the ready meals market, as they ramped up their own ranges, and even the logic of the push into opening Simply Food convenience stores was questioned by some in the City.

Yet now M&S say that the 427 Simply Food stores account for as much as 34% of their total UK Food sales and the new stores seem to be generating very good returns.

The big news yesterday was that M&S is confident enough now about prospects to actually step up the pace of Food store expansion over the next three years, via 50 to 60 new Simply Food stores each year (evenly split between the company-owned stores and the franchised travel stores business with BP etc).

Interestingly, M&S still thinks that it is under-represented in many UK towns. The national market share is just under 4%, but nearly half the population is still over a 10 minute drive away from an M&S Food store and some of the biggest M&S Food market shares are in the North, the Northeast and parts of Scotland, with a relatively light presence in the Southeast.

In Glasgow, M&S Food has as much as 8% of the market, but there it has 29 stores, ranging from the big out-of-town shopping centre shops such as Braehead to the Simply Food franchise stores on BP forecourts. In Norwich, M&S has less than 2% of the market, but that’s because it has only one store (although two more are on the way).

And much as the M&S Food market share range by geography is 1% to 8%, the market share range by product is 1% to 22%! Did you know that M&S has 22% of the ready meals market, but only about 1% of the potato market? And though M&S has a high share of the breaded fish market it doesn’t do so well in frozen fish, so M&S has big plans to expand the frozen food range including more frozen/longer life ready meals.

M&S’s Food business is inevitably shaped by the type of food that it sells and the type of shopping mission that it caters for. According to Kantar data, 43% of its food shopping trips are for “tonight” and only 1.4% for a “main shop” (at Asda, by contrast, nearly 24% of customers are doing a main weekly shop). M&S have as much as 41% of the market for “tonight” food and still enjoy over half the market for “meal deals”, even though its “Dine in for 2 for £10” promotion has been much copied by the supermarkets.

Clearly, one of the reasons why M&S underperforms in fresh vegetables such as potatoes is that nobody wants to carry a heavy shopping bag around with them afterwards, as few of the core stores have easy car-parking. Chief executive Marc Bolland joked that he could sell a lot more food in Marble Arch and Oxford Street Pantheon if he converted the upper floors to multi-storey car parks!

Online grocery shopping may have been the elephant in the room at the presentation yesterday, but it goes without saying that the M&S focus on top-up shopping or shopping for a quality meal for tonight doesn’t easily fit the online model. But M&S is focusing on how to make it easier to do a weekly food shop, by extending the range and developing the food to order operation, for Christmas food, party food, flowers and wine etc, as well as meat and fish.

As well as maintaining the M&S lead in product innovation (via the in-house development team of 35 chefs and product experts), the food division boss Steve Rowe is focused on developing the in-store experience for customers (with new ‘event zones’ for occasions such as Halloween, cooking demonstrations, food tastings and flower-wrapping facilities) and encouraging more cross-shopping via targeted coupons at till.

If truth be told, M&S has a strongly differentiated and unique business in food and there is a lot more that it can do to exploit it. If only the M&S clothing business was as well differentiated from the competition.

About Nick Bubb

Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos “Retail Think-Tank”.