INTRODUCTION:
Marks and Spencer plc (also known as M&S) is a British retailer headquartered in the City
of Westminster, London, with over 700 stores in the United Kingdom and over 300 stores
spread across more than 40 countries. It specialises in the selling of clothing and luxury food
products. M&S was founded in 1884 by Michael Marks and Thomas Spencer.
In 1998 it became the first British retailer to make a pre-tax profit of over £1 billion,though a
few years later it plunged into a crisis which lasted for several years. In November 2009, it
was announced that Marc Bolland, formerly of Morrisons, would take over as chief executive
from Stuart Rose in early 2010; Rose will remain with the company until mid-2011
FIRST STORE OF MARKS &SPENCER IN UNITED KINGDOM:
HISTORY OF MARKS & SPENCERS:
The company was founded by a partnership between Michael Marks, a Litvak Jew from
Slonim, Poland (now in Belarus), and Thomas Spencer, a cashier from Yorkshire.On his
arrival in England, Marks worked for a company in Leeds, called Barran, which employed
refugees. In 1884 he met Isaac Dewhurst, the owner of a Leeds warehouse, which resulted in
him opening his own stall on Kirkgate Market, in Leeds
STORE OF MARKS &SPENCER IN LEEDS:
The next few years saw Michael Marks open market stalls in many locations around the
North West of England. In 1894, Thomas Spencer invested in Marks' activities and they
opened their first store, in partnership, at 20, Cheetham Hill Road, Manchester
Marks and Spencer, known colloquially as "Marks and Sparks", "Markies", or "M&S", made
its reputation in the early 20th century on a policy of only selling British-made goods (a
policy eventually discontinued in 2002). It entered into long term relationships with British
manufacturers, and sold clothes and food under the "St Michael" brand, that was introduced
1928). The St Michael honours Michael Marks. It also accepted the return of unwanted items,
giving a full cash refund if the receipt was shown, no matter how long ago the product was
purchased, which was unusual for the time. It adopted a 90-day returns policy in 2005 but on
12 April 2009 the refund policy changed once again to 35 days. This is still the most
generous refund period on the British high street.M and S staff raised £5,000 money to pay
for a Spitfire fighter called The Marksman in 1941
By 1950, virtually all goods were sold under the "St Michael" label. M&S lingerie, women's
clothes and girls' school uniform were branded under the "St Margaret" label until the whole
range of general merchandise became St Michael. Simon Marks, son of Michael Marks, died
in 1964, after fifty-six years' service. Israel Sieff took over as Chairman and in 1968, John
Salisse became the company Director. A cautious international expansion began with the
introduction of Asian food in 1974. M&S opened stores in continental Europe in 1975 and in
Ireland four years later. The first M&S shop in central Asia was built in Kabul in the 1960s
but was later shut down
STORE OF MARKS &SPENCER IN IRELAND:
COMPANY’S EMPHASIS ON FOOD PRODUCTS:
The company put its main emphasis on quality, including a 1957 stocking size measuring
system. But for most of its history it also had a reputation for offering fair value for money.
When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has
historically been an iconic retailer of 'British Quality Goods'.
The uncompromising attitude towards customer relations was summarized by the 1953
slogan: "The customer is always and completely right!”
Energy efficiency was improved by the addition of thermostatically controlled refrigerators in
1963
M&S has sold Christmas cakes and Christmas puddings since 1958. In an effort to improve
the quality of their Swiss rolls, they hired the food expert Nat Goldberg, who made a major
improvement across their entire cake range, which had lost the public's favour a few years
earlier. As a later measure to improve food quality food labelling was improved and "sell by
dates" were phased in between 1970 and 1972.
Smoking was banned from all M&S shops in 1959 because of the fire hazards it posed. It
later became a permanent rule after concerns were raised by asthmatics about their health.
All international shops are operated under franchise, with the exception of those in the
Republic of Ireland and Hong Kong which remain in company ownership.
MARKS AND SPENCERS EXPANSION TO CANADA:
M&S expanded into Canada in 1973, and at one point had forty seven stores across Canada.
Despite various efforts to improve its image, the chain was never able to move beyond its
reputation there as a stodgy retailer, one that catered primarily to senior citizens and
expatriate Britons. The shops in Canada were smaller than British outlets, and did not carry
the same selection. In the late 1990s, further efforts were made to modernise them and also
expand the customer base. Unprofitable locations were closed. Nonetheless, the Canadian
operations continued to lose money, and the last 38 shops in Canada were closed in 1999.
Expansion into France began with shops opening in Paris at Boulevard Haussmann and Lyon
in 1975, followed by a second Paris shop at Rosny 2 in 1977. Further expansion into other
French and Belgian cities followed into the 1980s. Although the Paris shops remained
popular and profitable, the whole of the Western European operation did not fare as well and
eighteen shops were sold in 2001.
In 1988 the company acquired Brooks Brothers, an American clothing company and Kings
Super Markets, a US food chain.They were subsequently sold off, in 2001 and 2006
respectively.
M&S's profits peaked in financial year 1997/1998. At the time it was seen as a continuing
success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure
as head of the company, profit margins were pushed to untenable levels, and the loyalty of its
customers was seriously eroded. The rising cost of using British suppliers was also a burden,
as rival retailers increasingly imported their goods from low-cost countries, but M&S's
belated switch to overseas suppliers undermined a core part of its appeal to the public.
Another factor was the company's refusal until 2001 to accept any credit cards except its own
chargecard.
These factors combined to plunge M&S into a sudden slump, which took the company, its
shareholders, who included hundreds of thousands of small investors, and nearly all retail
analysts and business journalists, by surprise. The company's share price fell by more than
two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145
million in the year ended 31 March 2001
In 2001, with changes in its business focus such as accepting credit cards, the introduction of
the "Per Una" clothing range designed by George Davies, accompanied by a redesign of its
underlying business model, profits recovered somewhat and M&S recovered some of its
market share, but it was soon evident that problems remained.
In 2004, M&S was in the throes of an attempted takeover by Arcadia Group & BHS boss,
Philip Green.On 12 July a recovery plan was announced which would involve selling off the
financial services business to HSBC Bank plc, buying control of the Per Una range, closing
the Gateshead Lifestore and stopping the expansion of its Simply Food line of shops. Philip
Green withdrew his takeover bid after failing to get sufficient backing from shareholders.
In February 2007, M&S announced the opening of the world's largest M&S shop outside the
UK at Dubai Festival City.
M&S is currently ranked 21 in The Times' "Top 100 Graduate Employers 2010-11".
On 2 October 2008, M&S opened its first mainland China shop in Shanghai. Problems with
the supply chain for the first few months of opening led Stuart Rose, M&S chairman, to
describe failures in "basic shopkeeping".
The upmarket Zandra Rhodes collection, modelled and made by the British fashion designer
Zandra Rhodes, CBE/RDI was introduced in to the bigger shops by late 2009, but was
discontinued in early 2010.
A 2010 business audit revealed that Per Una was a rather successful and popular brand, as
was the new children's Plus 5 and 'Living the dream' lines.
FINANCIAL PERFORMANCE:
M&S is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
After fostering significant growth in recent years, mid-2008 saw share prices plunge to well
under half their value of twelve months before, as M&S struggled to cope with more
conservative shoppers in the credit crunch. M & S made a £298,000,000 profit in the half
year up to September 2009 M and S also showed a pre-tax profit of £632,500,000 for the 52
weeks to 27 March 2010
The winter snowfalls has cost Marks & Spencer between roughly £50m and £55m in lost
sales over the Christmas of 2010,after enjoying a strong third quarter, when same-store sales
rose 2.8% despite the impact of the snow. M&S has attracted a growing tranche of shoppers
with a range value for money priced offers, but the firm was cautious about the future and
feared another year of economic uncertainty as the government austerity measures, rising
crime, homlessness, swine flu, budget cuts, public sector job losses and rising taxes all
imploded consumer spending money.
Until 1999 M&S's financial year ended on 31 March. Since then, the company has changed
to reporting for 52 or 53 week periods, ending on variable dates.
BRAND OF MARKS & SPENCERS
Over the last 12 months they have responded to the difficult market conditions by
refocusing and increasing our marketing activity, keeping the M&S brand fresh and
relevant to our customers’ changing needs. They are already seeing returns on this
investment, with improving sales across the business.
Quality worth every penny
In 2009 we looked back over our 125 year history and the core values
M&S has always stood for. ‘Quality Worth Every Penny’ is a simple message that
demonstrated the continued relevance of our founding principles of Quality, Value, Service,
Innovation and Trust.
The campaign launched with a TV ad to celebrate our 125th anniversary, taking customers
back to where M&S began at Leeds Kirkgate market. In the midst of a recession, the
campaign resonated particularly well, reassuring our customers that M&S is a brand they can
trust to deliver quality and value.
We believe ‘Quality Worth Every Penny’ has ongoing relevance, reinforcing the value for
money M&S offers and this message continues to underpin our 2010 campaigns.
THEIR NEW DIRECTIONS:
This year we decided to take M&S Food back into the heart of family life, with a lighter, brighter
campaign, fronted by actress Caroline Quentin. The campaign wraps up all of our core values in a
single story, capturing all the reasons why customers turn to M&S – quality, innovative products,
provenance or simply good value – in our new strap line – ‘Just because’.
As consumers showed greater willingness to invest in their wardrobes, our clothing campaign
demonstrated the versatility of the M&S range, encouraging customers to ‘make your
wardrobe earn its keep’.
THEIR DELIVERING:
Our brand communications extend beyond advertising – from our in-store promotions
through to our website they help us show customers that we are in tune with their changing
needs. Investment in our marketing activity delivers tangible benefits across the business,
with our internal measures pointing to a direct correlation between improved consumer
perception of the M&S brand and positive sales and profit growth.
THEIR TRUST:
M&S occupies a special place with the British public and is repeatedly voted as one of the
UK’s most trusted brands. This is demonstrated in the success of M&S Money – which is
celebrating 25 years. It continues to perform strongly as consumers turn to trusted brands like
M&S for their financial services. This year we launched our Premium Club, which offers
shopping and travel benefits to M&S credit card holders.
Signature of STEVEN SHARP, Executive director of marketing:
MARKET OVERVIEW
In 2009/10...though Britain has returned to low levels of economic growth, concerns about
the economy meant uncertainty continued to be the main characteristic of the marketplace.
Consumer sentiment is that they’ve ‘weathered the storm’ and adapted well in a difficult
economic climate. As a result consumer confidence levels have doubled over the last 12
months, though as illustrated in the index above, they remain in negative territory.
However, increasing confidence has not marked a return to frivolous spending. Consumers
remain cautious and have adopted a trend for ’clever spending‘, flexing their budget
according to personal priorities. Put simply, they are willing to spend more, but only on the
things that matter to them
CONSUMER CONFIDENCE INDEX:
Customers are the heart of our business so it’s essential we understand what they want from
M&S. Our Customer Insight Unit (CIU) makes sure we are listening to our customers,
understanding what they think and how they behave.
Re
ad textual description of Consumer Confidence Index between June 2003 and March 2010
graph
Through a combination of market data analysis, research and customer feedback, our
CIU identifies emerging trends and how external factors are impacting consumer
behaviour. This ensures our customers’ needs are always recognised in business
decisions.
CLOTHING MARKET TREND:
Improving consumer confidence has seen the clothing market return to growth this
year.
Price remains one of the main drivers for purchases, resulting in the continued growth
of the value market. However, after a year of economising consumers have moved
beyond a wardrobe made up of cheaper staples and started to invest in quality
versatile pieces, this trend is particularly strong among the over 45s.
A greater appetite for investment pieces has translated into growth in the mid-priced
clothing market and a strengthening position in premium clothing.
Customers have sought easy, affordable ways to experiment with key trends, such as
footwear and accessories.
In 2008/09 the lingerie market suffered as women deemed luxurious underwear an
unnecessary extravagance and stuck to basics, but this year women started to treat
themselves again.
M&S Clothing response
Our ‘good’, ‘better’, ‘best’ pricing structure caters for ‘clever spending’, allowing consumers
to trade up or down to suit their priorities. We’ve encouraged customers to trade up by,
focusing on detailing and quality fabrics in brands such as Autograph, and have extended
Portfolio across footwear and accessories so customers can update their wardrobe and
experiment with new trends
HOME MARKET TRENDS:
Mortgage lending remained broadly flat for the year, providing little improvement to
the housing market.
Sales of large furniture and white goods declined, as homeowners opted to stay put
and improve their existing home rather than move.
In a slow market, consumers wanted to ‘individualise’ their home to give it a
distinctive stylish look – mixing and matching a range of soft furnishings and
accessories.
Shifting household demographics have resulted in more people in their 20s living with
their parents, along with a rise in older single households. This change has seen
greater demand for furniture offering flexible living solutions, such as combined
bedroom/ living and work space.
M&S Home response
The style credentials of M&S clothing have been translated into our soft furnishings offer to
appeal to customers looking to spruce up their home. We have focused on providing great
value, co-ordinated homeware so customers can easily build an updated look.
FOOD MARKET TREND:
Over the year price inflation has worked its way out of the market to the point of
deflation, with falling food prices masking the fact UK customers were buying more.
Deals continued to be a key driver, with 30% of the market sold on promotion.
However, copycat deals across the market meant consumers responded well where
quality and innovation were the point of difference, as they looked for deals that
offered something new and/or special.
As confidence improved consumers started to trade up to an alternative supermarket
or switched to better, premium ranges within their supermarket of choice.
Consumers also began to treat themselves again, resulting in growth in confectionery
and bakery markets. They also adopted a sense of nostalgia, creating a revival in retro
products with a modern update.
ONLINE TREND:
Online market growth remains strong at around 20%, but the rate of growth has begun to
stabilise as the market matures.
Consumers now expect a more engaging experience from online shopping, as retailers add
more editorial, interactive content to sites.
Developing technologies have meant consumers expect greater flexibility and tailored
choices in both purchase and delivery options.
The strongest opportunity for growth lies with retailers that can integrate an online offer
with other shopping channels, such as stores and call centres, to provide a multi-channel
service.
M&S Online response
M&S is committed to becoming a multi-channel retailer, integrating its online business with
other shopping channels. We launched ‘Shop Your Way’, to offer customers more flexible
purchasing and delivery options. We have also appointed a Director of Multi-channel
Development to help us exploit the opportunity in this area.
FUTURE TRENDS:
As they move into 2010/11, macro-economic conditions will continue to influence
consumer behaviour. However, our current research suggests the following trends are
likely:
The pace of mobile technology and growing acceptance of its ‘intrusion’ into
everyday lives, means consumers will expect brands to be ready to interact when they
want, requiring brands to be ‘on’ 24/7.
Retailers that allow consumers to have input into product development will be well
placed in the future. Increasingly consumers want to personalise purchases, through
colour, style and functionality, as well as providing feedback to both retailers and
peers about how they believe products and services could be enhanced.
Changes to family dynamics mean UK consumers are looking for alternative
communities, either ‘real’ or ‘virtual’ to achieve a sense of belonging. In the retail
space, this may lead to more brands setting up community pages or forums.
