In the week in which M&S unveiled an investment of almost £500m in stores, chief executive Stuart Machin explains the benefits of a store rotation programme and how it supports the case for redevelopment of its Marble Arch flagship
We have just announced one of our strongest Christmas performances in recent years as the benefits of the steps we are taking to reshape Marks & Spencer as a leading omnichannel retailer begin to bear fruit.
This is where the future of shops lies: bringing digital and physical together to create great shops that allow customers to shop the way they want to today.
Our store rotation programme aims to do just that. While others retreat from towns and cities – and indeed, disappear – we are demonstrating our belief in stores and are backing that up with real money and scale investment.
Our investment supports our plan to move to 180 high-quality, high-productivity full-line stores, while opening over 100 new food halls by April 2026.
“To deliver a fairer, more prosperous and successful country, we must level up and retail has a unique role to play”
We have already secured 20 new stores for 2023/24 – in key city locations like Leeds, Liverpool and Birmingham (as we breathe new life into former Debenhams sites) and communities like Largs (North Ayrshire), Stockport (Greater Manchester) and Barnsley (South Yorkshire).
‘Right stores, right place, right space’ requires an always-on approach – our customers rightly demand nothing less. Whether that is opening new stores, renewing or relocating existing stores, or taking the difficult decision to close stores that are no longer viable.
Chesterfield is an excellent example of this in action. In November, we relocated from an ageing site in the town centre to a brand new, 46,000 sq ft store in a retail park just half a mile away. The result? A sales increase of 103% in December, the creation of 100 new jobs and support for the council’s vision for regeneration.
It is a similar story with our renewal stores. If you look at the stores we renewed last year, they are on average trading 14% ahead of our forecast, with Oatlands Harrogate up 26% and London Colney up 36%. In Llandudno, a relocation which opened in March 2022, clothing and home sales are up 35%, while food sales are up 75%.
Strong performances like these are the reason we are accelerating our store rotation programme into three years instead of five and this week’s £480m investment will be a catalyst for achieving that.
Unlocking value in our estate
Of course, our philosophy does also mean closing some stores that are not thriving and cannot be brought back to life.
However, part of the reason M&S stagnated for so many years was due to a reticence to take action to close underperforming stores.
I want to build an M&S that is sustainable in every way and that requires change. Our historic failure to modernise our estate is why 40% of our stores pre-date the Second World War. However, the good news is that we own many of them and so to fund the significant investment in our store estate, we are releasing the value that exists in them.
One such store is Marble Arch and it is well known that we have big plans to regenerate the site and bring a new lease of life to Oxford Street. Not everyone has agreed with our vision, but there is no doubt in my mind that our plans represent the right – and only – workable solution for all parties:
- Right for customers: the current store is made up of three interconnected buildings that together create a confusing warren of dense structures and misaligned floors over several levels.
The new store will offer a first-class, digitally connected shopping experience in a brand-new, vibrant shop with contemporary high ceilings and adaptable retail space. The sad reality is Marble Arch underperforms compared to renewed stores like Hedge End in Southampton and Bluewater in Kent. It belongs to a bygone era.
- Right for colleagues: a poorly designed, outdated and highly inefficient collection of buildings make work in the current store challenging for M&S colleagues, and, while safe, it is riddled with asbestos. Our proposal will offer an improved working environment with new facilities and colleague spaces.
- Right for communities: our approach is to always preserve valued heritage assets. We have several stores such as Chelmsford and Cheltenham that we have retrofitted to do just that.
However, the decision by Historic England to turn down two previous listing applications for the store demonstrates that the site is of low heritage value. Indeed, Orchard House – the part of the site that has been the focus of much debate – is less than a third of the total site.
The redevelopment incorporates materials in keeping with the rich heritage of Oxford Street. Finishes such as Portland stone and white Roman brick will be incorporated. The public realm will be improved by reopening a heritage east-west pedestrian arcade through the site from Orchard Street to Granville Place, opening up the entrance to Portman Mews, and creating a new pocket park.
- Right for growth: the effects of Covid-19 have brought a street that was once the jewel of UK shopping to its knees. Footfall remains 30% down on already dwindling pre-pandemic levels, with recovery in Oxford Street trailing its near cousins in Bond Street and Regent Street, both of which have benefited from significant redevelopment and investment.
The future of Oxford Street as a global shopping destination hangs on sustainable retail and mixed-use regeneration and M&S is the only retail-led regeneration on the entire length of the street, which will create 2,000 jobs.
However, the impact on growth is larger than one street. There is no levelling up without a strong, growing capital city and, as we stand on the precipice of a recession, the need for the government to give confidence to regeneration and investment – in London and across the UK – is paramount. What would previously have had a chilling impact would now put the economy in the deep freeze.
- Right for carbon: the new building will rank among the top 1% of sustainability performance in London. It will also use less than a quarter of the energy of today’s structure and promote circular economy principles, with 95% of the existing building materials to be recovered, recycled or reused.
This will see M&S’ proposed scheme, with a planned lifespan of 120 years, delivering a net-positive contribution to the environment from 11 years onwards once complete, a significant achievement for a new scheme in a highly sustainable building.
Of course, this goes to the heart of the broader debate between retrofit and redevelopment.
I do not want Oxford Street to decline further
The retrofit of buildings is always our first port of call. For Marble Arch we undertook a full assessment of the alternatives, looking at 16, but concluded retrofit was unworkable for this flagship site.
The current site delivers such poor sustainability performance it requires significant and unsustainable investment to keep running. If we leave M&S Marble Arch to continue trading as it is, the building’s energy efficiency – which is already very poor – will only continue to deteriorate.
We believe delivery of more sustainable buildings must be approached on a case-by-case, holistic basis, taking into account its whole-life carbon. Retrofit is not always possible and does not always optimise planning, public and sustainability benefits. The principle we believe should be established going forward is retrofit first, not retrofit only.
At M&S, we are clear that to deliver a more successful, growing and profitable business and keep employing 65,000 people and serving 30 million customers, we must invest in bricks and clicks.
That is why we are investing nearly half-a-billion pounds in stores across the country. We are also clear that to deliver a fairer, more prosperous and successful country, we must level up and retail has a unique role to play.
However, we need the confidence to invest and at the moment that is on shaky ground. The question I pose in closing is: if M&S cannot make retrofit work at Marble Arch – and we know we cannot – then who can?
I do not want our Marble Arch site – or Oxford Street – to be left in limbo and decline further. I want our site to be a flagbearer for modern, sustainable redevelopment and breathe life back into a much loved – and needed – part of our capital city, in the same way that we are investing to breathe life back into stores across the country.
This article first appeared on the M&S corporate website
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