The recent strategic update from Marks & Spencer perhaps marks a watershed moment for a business that has been a retail beacon for decades.
M&S is at long last publicly recognising that it has to bite some painful bullets both in the UK and internationally.
In the UK, my generation grew up with M&S being the most important retailer in our lives, outside of the local supermarket.
In my case, being brought up in Winchester, it was the most dominant store in the city, the place where my mother bought virtually all of the family’s clothes.
In most towns and cities, the location of the M&S store defined the core of the retail pitch. Of course, at that time, there was nothing like the retail choice that there is now.
Today the M&S food offer continues to prosper. Over the years it has continued to innovate and the consumer recognises its distinctive proposition, despite intense competition from other supermarkets.
Out of fashion
Clothing and home are more difficult. In the past two decades, these categories have been assailed on several fronts by a plethora of brands and retailers.
Branded fashion has become accessible to more people and desired by virtually everyone as a result of dedicated marketing. M&S struggles to engage with the younger consumer buying fashion.
“Today there may be few takers for a whole store, so they will need to be redeveloped for a different mix of use”
Adjusting the store estate, not only in terms of the number of locations, but the size of some stores, will be very difficult.
M&S stores are large, either occupying a whole building in a town centre or an anchor space in a shopping centre. The scale of the stores is designed for a different era.
Today there may be few takers for a whole store, so they will need to be redeveloped for a different mix of use.
Reducing the retail space within an existing store will also be complex and could result in unoccupied space.
On the international front, the M&S announcement also brings into sharp focus the challenges of overseas expansion.
Sadly, UK retail has a history of a number of unsuccessful forays into international markets. Even Next, the most consistent of UK fashion retailers over the past 20 years, has tried and shied away.
On a far larger scale, so did Tesco, but perhaps more time was needed than shareholders were prepared to give it; Topshop appears to have stalled, possibly because of the negative publicity surrounding Philip Green.
“The online channel provides an easier route to establish a brand overseas. Everything can be fulfilled from the UK without having to make all these large investments”
On the positive side, Primark continues to expand and Ted Baker with a measured and tight approach is making good progress.
In the offline channel, just starting out overseas is expensive. You have to secure, say, two or three stores with lease commitments, and a local office with a distribution facility, even before the first sale is made through the till.
However, the online channel provides an easier route to establish a brand overseas. Everything can be fulfilled from the UK without having to make all these large investments.
Strategic change of this magnitude and complexity is difficult to implement, so I wish Steve Rowe and his team good luck.
If it’s of any solace, there are some other large-space retailers facing the same problem.
- Peter Williams is chairman of boohoo.com and Mister Spex