There was satisfaction among Marks & Spencer chiefs this week as the retailer won a judicial review of secretary of state for levelling up, housing and communities Michael Gove’s decision to block redevelopment of its Marble Arch flagship.
Whether the review results in a green light for the store’s reinvention will become clear in the coming months but, assuming it goes ahead, the project will represent M&S’ reinvigorated property strategy in action.
M&S’s ambition is to have “all stores we can be proud of” and a redevelopment of the Arch would be a big contribution to that.
The existing shop does not show the retailer at its best. However, changes across its estate do, and they demonstrate the potential of the Oxford Street store.
M&S operations director Sacha Berendji ran through the retailer’s property strategy at the recent strategy day, detailing the progress made so far. M&S’ estate, which had been pretty static for a long time, has undergone big change in recent years.
“Much of the change has centred on relocations – typically away from city-centre locations that no longer fire on all cylinders to more modern premises”
In 2017, the retailer had 305 full-line branches, since reduced to 244. It has an ultimate target for these stores of 180, with about 1.4 million sq ft less space as its clothing and home assortment is increasingly complemented by online and omichannel business grows.
Over the same period, M&S increased its Simply Food footprint by 66 to 319. The aim is for 420 of these stores by 2028.
Much of the change, particularly for full-line stores, has centred on relocations – typically away from city-centre locations that no longer fire on all cylinders to more modern premises where the right site is characterised by factors such as local demographics, easy car parking and attractive lease terms.
Berendji gave the exmaple of the new Liverpool One store, only a few minutes away from the shop it replaced “but could be 20 miles away” in terms of the appropriateness of the location. The store only moved from Church Street in the summer, but its performance so far is encouraging.
Although trading space is down by 35%, clothing and home revenue per sq ft per week is up by 47%, while food and cafe are ahead by 20%.
Customer numbers are also up – from 64,000 to 79,000 in clothing and home, and from 65,000 to 68,000 in food – as are basket sizes across the board.
Similar improvements at other new M&S stores indicate that this improved showing in Liverpool is likely to be sustained. Stevenage and Llandudno, for instance, both two years into renewal, have both generated sales uplifts of 13%, excluding opening periods.
The changes in M&S’ estate hold lessons for other retailers who, like the Marks of old, were slow to churn stores. Retailers such as Next always managed their estates very actively and its consistent success reflects in part that approach.
Next is also extremely open about store performance, revealing swathes of metrics in its results – something other retailers would benefit from sharing. It is to be hoped that M&S will continue to reveal detailed performance information and the return generated.
“All the signs so far are good. It would be great if, after being embroiled in needless controversy and delay, a revitalised Oxford Street store can play a part”
M&S does face a couple of challenges as it pushes on with its store renewal programme. There is intense competition for the right food locations, which are in relatively short supply, and there is very little quality full-line space being built these days – especially when retailers are seeking leases of 10 or 15 years.
However, M&S is confident it can meet its ambitions. “We feel we’re only just starting,” says Berendji.
All the signs so far are good. It would be great if, after being embroiled in needless controversy and delay, a revitalised Oxford Street store can play a part.
The Arch is M&S’ highest-turnover branch, although sales are some way off the heights it once achieved and it is outshone on profitability by stores such as Handforth Dean in Cheshire or Camberley in Surrey. There is opportunity across the network.