Nick Bubb's verdict: Marks & Spencer's problems go beyond management instability

In any organisation, people sometimes want to move on for personal reasons and sometimes they have to be moved on, but it’s not often that people jump and are pushed at the same time. The first Rule of Management is, of course: “Always have a scapegoat”, so it can be no coincidence that today’s news of the departure of Kate Bostock as head of general merchandise comes as M&S announce really poor first quarter sales in this key division.

Yet the second Rule of Management is: “Always prepare the market for big changes”, so it is slightly bizarre to hear on this morning’s conference call, hours before the AGM, that Marc Bolland and Kate Bostock had secretly planned this move two years ago, when he took over as chief executive.

If we had known this, she would have been a lame-duck clothing boss, as the organisation would have seen her as a temporary appointment, but the open speculation about her future, after the press leaks about her chats with headhunters, has been unhelpful anyway. In fact, it is hard not to think that “the Kate Bostock situation” has been internally disruptive to a degree and may be linked with the apparent lack of confidence in the buying team about backing their “winners” this Spring/Summer season.

So, as Kate prepares to spend more time with her headhunters, what of the so-called “magic combination” that is picking up the baton at general merchandise? The news of John Dixon’s elevation has been well received, and rightly so, as Dixon, the head of M&S food, was the most impressive of the internal candidates to replace Stuart Rose as chief executive two years ago. He certainly had the gravitas for the role, but, ironically, lacked the experience in clothing, so if things go well in his new job he will be well placed to be the leading internal candidate to be chief executive, as and when there is another change at the top.

The general merchandise division looks in need of strong leadership and Dixon brings the necessary organisational skills to the role, but M&S have decided that he needs some help, via the surprise recruitment of Belinda Earl as style director. As the former buying director and chief executive of Debenhams she is no lightweight, but as she had step down from her previous role running Jaeger because of ill health it appears she will be only be able to work two or three days a week in her new role.

Everybody should wish Dixon and Earl the best of British luck in their new roles, as the business has not had much luck recently with the weather, but will the change of management really make a difference to performance? Is M&S just like the seemingly impregnable HMS Titanic, steaming on towards its doom?

Well, M&S may not be doomed, but when you are as big as they are in terms of clothing market share, it is hard to keep moving forward, with so many eager rivals snapping at your heels, from Primark to Zara, from Debenhams to ASOS. Now, the poor weather this summer clearly hasn’t helped any fashion retailer, but M&S’s problems in womenswear go far beyond the weather, as they are clearly losing market share. M&S say they could have sold more “winners” if they had enough stock of their best lines, but any retailer would say that.

It is more important to understand why M&S has been so promotional this season and why its best lines get buried in a sea of rails in the stores.

M&S tries to be all things to all people, to young and old, but by definition it is impossible to appeal to everybody: if you go for the older vote, you will alienate the younger customer and if you go for the younger vote you will antagonise the core older customer. It is tempting to develop sub-brands designed for specific customer segments, but then you end up with a confusing array of sub-brands lacking in clear differentiation.

And the uninspiring merchandising and ambience of the average M&S store is another big problem, at a time when the consumer has so much choice, online and offline. Primark has shown, for example, in its new Princes Street Edinburgh store how strong merchandising and store layouts can really make a difference. And Primark was pretty good already.

To be fair to M&S, these issues, of poor sub-branding and store design, are recognised by management, hence the store revamp programme as trialled at High Street Kensington and Westfield Stratford. But the weak first quarter sales imply that M&S’s response has simply been too slow. And offering “20% off” all the time isn’t the answer either.

The best retailers protect their pricing power, rather than throw it away unnecessarily. Just as you don’t see Next chopping and changing management all the time, you don’t see Next going on Sale all the time. Perhaps the first thing Dixon should do on October 1, when he starts his new job, is to walk in to Marc Bolland’s office and demand more money to invest in store revamps and a change in the promotional policy.