At the end of the 1980s, Marks & Spencer’s legacy knew no bounds. TV comedy duo Fry and Laurie used to argue over the superiority of their local M&S store in ridiculous terms: “My local one’s got a small primary school in it,” said one at a dinner party, “well mine stocks nuclear missiles,” came the reply. The gag mocked the public’s homage to the, then, quintessentially British store. Its image was untarnishable.
Following its recent downturns, new M&S chief executive Peter Salsbury has habitually postscripted each sharp fall in profits with reassurances that “steps are being taken…”. Now it’s crunch time. Since the gloomy 50 per cent drop in profits last month, hard and fast contingency plans are emerging from all sides. There is set to be a complete review, but M&S is not putting all its eggs in one basket.
The business operates as a number of vertical strands (food, clothing, financial services, overseas stores and suppliers) and the revival plan looks likely to be accordingly piecemeal. Consumer research will figure heavily and concepts will be tried and tested, before being applied as befits particular locations. Heed is being paid to time and this will not be a slow exercise. By Christmas, the first fruits of its labours should be appearing nationwide, according to an M&S Retail spokeswoman.
Last week it became clear that Interbrand Newell and Sorrell has been appointed as M&S brand consultant, while Rodney Fitch & Co is pioneering a retail concept for its neighbourhood stores. The first new wine departments, M&S Wine Shop 2000, were opened too, designed by Holmes & Marchant International and Studio Hagger.
M&S cautiously confirms the reports, but is wary about divulging “plans”. Few of the consultancies concerned are being permitted to talk, but much more is certainly afoot.
Just about every strand of activity is being looked at in parallel. BDG McColl’s retail and leisure division, formerly The Principals, is expected to announce details of a currently confidential retail initiative, alongside that of Rodney Fitch & Co, soon.
Furthermore, M&S Financial Services is getting the treatment, says a spokesman for M&S FS. Although a relatively small part of the company’s activity, the in-store element of the direct banking operation is likely to be refreshed by Revolution. The spokesman says M&S is currently engaged in closed discussions with the consultancy regarding a project, set to be unveiled in the pre-Christmas period.
“Rodney Fitch & Co is working on a new concept for our neighbourhood stores. These are usually around 400sqm and concentrate on food, plus items like hosiery and greetings cards. It is working with us on a new consumer concept to make us more consumer-focused and customer-friendly. An unnamed store is piloting several different concepts and the green light is expected on one of them in a few months”, says the M&S Retail spokeswoman.
“Part of the concept is to research what customers want in their local area. It will not be ‘rolled out’, but there are about 45 stores where the concept will be applied if the trial is successful,” she says.
As far as M&S branding is concerned, INS looks set to undertake a review of the M&S identity, its St Michael brand, plus sub brands such as Footglove and Secret Support. “INS will be looking at everything that is considered an M&S brand,” confirms the spokeswoman.
M&S could be looking to review its overseas operations as well, although it is likely to take care of the domestic market first. A source close to M&S management says that lower operating margins of overseas retail chains have been a major factor in its decision to pull back from expansion into Europe.
“It has never had a marketing department per se for the domestic market, and no real marketing culture. Rebuilding this sort of operation is not something you can just buy in. Like Sainsbury’s, it has to go to the top end of the market, rather than opening up for the bottom end because down there is where all the competition has come from. It has lost market share across the board, from food, clothing, lingerie, to all vertical markets,” she says.
Management consultancy AT Kearney has also emerged as a recent appointee. It is reportedly advising M&S on its global supply chain in a bid to cut inefficiencies. Clothes made in South East Asia are said to be routed to Hong Kong stores via the UK. The in-house clothes design function is also being surveyed and could be extended to suppliers.
The real challenge for M&S is to identify who its target customers are and then persuade them back into the stores.
HMI managing director Andrew Doyle says the Marks & Spencer customer is just about the whole of the UK. But his consultancy at least identified two very different types of customers in the food and drink arena. These are the “bustler” and the “browser”, and he says store interiors must cater for both.
“The lunch-time customer buying a sandwich is used to whizzing into M&S to pick up a meal for the evening. With Wine Shop 2000 they can choose quickly and easily from a Top ten wine selection. The browsers with more time want things happening as they walk around, rather than just the usual wall of wine. You need to attract both sorts of customers and entertain them accordingly while they are in that space.”
A crucial decision is needed now. Either M&S spreads its risk or chooses an upmarket tack. If it tries to be everything to everybody it will not be likely to move very far. Just where the line is drawn could determine its chances of success.
Interbrand Newell and Sorrell
Rodney Fitch & Co
New store interiors
Possible financial services project
Possible retail project
Holmes & Marchant International
Wine department concepts, annual reports
Wine department interiors
Wace Corporate Packaging
M&S media packs
Building Design Partnership