Can marketing save falling retail giants?

Marks & Spencer’s recent announcement that it is to recruit a marketing team from outside its closely-guarded walls rang alarm bells with industry observers. The chain’s sudden fall from grace, following its dire trading and a profit warning, remind some of the fortunes of that other British fallen retail idol, Sainsbury’s.

Both have been accused of being arrogant, remote from their customers, over-bureaucratic and dominated by petty fiefdoms. Sainsbury’s tried to repair its image by ramping up its marketing, and M&S is just about to do the same.

M&S has appointed James Benfield, an insider with 17 years at the chain and former head of menswear, home furnishings, and direct mail, to head the new marketing department. However, sources suggest that Benfield’s role will change very little. “He’s always been a marketing head,” says one. The much-needed fresh blood is to come from the new appointments planned by the company in response to appalling Christmas results.

One analyst says: “I think Sainsbury’s parallels M&S’s situation most closely. It went off the boil five years ago and I’m not sure it has fixed it even now.”

When Sainsbury’s first lost out to Tesco in the market share table in June 1995, it reshaped its marketing and brought in an outside marketing director. It was the first time in the company’s recent history that it had had to play catch-up. It responded by appointing ex-Woolworth’s chief, Kevin McCarten, to the position of marketing director.

McCarten immediately set about altering the supermarket’s offer, decreasing Sainsbury’s own-label focus and concentrating more on branded product lines. Only two years out of a ten-year career with Procter & Gamble, he nurtured the company’s floundering relationships with brand-owners and launched initiatives to enhance Sainsbury’s value offer against its value-led rival.

However, after three years and several advertising rethinks, Sainsbury’s still lags behind its major competitor. The latest market share figures from Verdict Research for 1998 show Tesco with 17.3 per cent, Sainsbury’s and Savacentre with 13.3 per cent, Asda with 8.8 per cent and Safeway with eight per cent. The gulf has widened between the top two despite McCarten’s best efforts.

M&S is fortunate that it does not have such a tenacious rival as Tesco, but whether its external marketing “experts” can succeed where Sainsbury’s has failed remains to be seen.

Richard Hyman, chairman of Verdict Research, says: “M&S shouldn’t become the most marketing-led, dynamic retailer – it just wouldn’t suit its culture. What it needs is an M&S style of marketing.”

To many customers, M&S’s “style” has come to mean dowdy clothes of lower quality, no longer the good value that they used to be. Although it faces the tough comparison to its own high standards, recent clothing ranges have received a panning even from loyal M&S fans.

Reflecting that, clothing sales fell by six per cent in the crucial Christmas period – despite an extra nine per cent increase in overall footage – as disenchanted customers voted with their hands and kept them in their pockets. So it is clear a successful new marketing strategy will have a tough challenge.

As Steve Davies, an analyst at Corporate Intelligence on Retailing, says: “Marketing can only cover for bad products so far. Even with the best marketing in the world, it is still going to be hard to shift them. That’s what M&S has to get right first.”

McCarten had similar problems to face at Sainsbury’s. Customers essentially loyal to its brand perceived Tesco as offering better deals on their favourite products.

However, with or without good product ranges, experts believe that the main problem for both retail giants has been confusion over their public image.

Analysts complain that M&S’s communications with the City have been virtually non-existent – a fact the company has just addressed by employing its first City PR firm. In the same way, the organisation has never been press-friendly, while communication with customers has been patchy. It has always preferred to let its product do the talking, rather than using TV advertising.

One analyst says: “M&S has a slightly arrogant attitude, which has meant it sees advertising as unnecessary. It seems to think that because it is M&S, it doesn’t need to. It leaves that unsavoury business to others.

“It also has a policy that although its market capitalisation is roughly the same as Kingfisher, it only gives out a restricted list of investors. It has to correct that and start communicating its message to those outside the organisation.”

The situation at Sainsbury’s is quite different. It has advertised too much rather than too little. A number of campaigns have aired under McCarten’s stewardship, some successful and some not, but critical reaction to the John Cleese campaign has highlighted a lack of clarity in how Sainsbury’s wishes to be seen by its customers.

Says one retailer: “It was loved by the middle classes as the place to go for quality. Its efforts to present itself as good value for money has merely confused people.”

M&S’s policy of letting the products do the talking means that © when the products fail, as clothing and home furnishings did in the second half of this year, customers have nothing else to attract them to the store.

The focus, says the marketing director at one major chain, has to be on what it offers and then communicating positively outside its shop doors.

She says: “It has been hammered from a PR point-of-view. They have to decide what the brand strengths are, rather than trying to be what they are not, and communicate that to customers.”

At M&S itself, it seems effective customer focus is exactly what it has now set out to achieve, but across a broad spectrum and without deserting its inherently credible heritage.

“Our approach will be to change our traditional ways of working, but keep to our traditional values,” says chief executive Peter Salsbury

This will be good news for M&S fans but, given the fickle nature of British consumers towards their national institutions, Salsbury and Benfield’s task remains one that few would envy. But one to which Sainsbury’s, that other fallen retail giant, can easily relate.