Marks & Spencer may yet find its feet – in the middle ground

Inspired by the ‘we cater for everyone’ Tesco, Stuart Rose has mapped out a plan for M&S’s recovery – and the early signs suggest he is on the right track

Can a retailer survive in the middle market nowadays? In a world where mass markets are disintegrating, discounters and high-end specialists are flourishing, and shopper expectations of value, quality and experience continue to rise apparently exponentially, the high street has become a terribly unforgiving place. Retailers are dying there.

Look at Allders and Littlewoods and, in the US, big names like Kmart, Macy’s, Zales and Montgomery Wards, which have all recently filed for bankruptcy. A few years ago, it looked as though bastions of UK retailing such as Boots, Sainsbury’s, Marks & Spencer, and WH Smith might also go the way of all flesh.

But now the worm looks like it might – just might – be turning. With its Unichem alliance Boots is (perhaps) finding new focus in its pharmacy core and results from Sainsbury’s, M&S and WH Smith are all on the up. After last week’s trading statement, which bucked the high street’s general trend of falling sales, M&S’s share price is back to the levels reached when Philip Green was stalking it.

So can M&S really make it back to greatness?

Certainly, things are looking much better there on all fronts. In the crucial clothing market, chief executive Stuart Rose has refocused buyers and marketers back on its core customer base – women between 35 and 55 – and put the days of chasing fickle, fashionable youth behind it. The new autumn range (Rose’s first since taking over) has been received well, along with new advertising featuring models Erin O’Connor and Twiggy.

But as Rose keeps on repeating in his presentations, that’s just one part of the task. The overhaul at M&S has to be comprehensive. Take the supply base, for instance.

Demand then supply

Back in 1997, 75 per cent of M&S’s clothes were sourced from the UK. Today, the UK accounts for just five per cent of supply with about 50 per cent coming from Europe (meaning places like Romania and Turkey), 30 per cent from the Far East and 17 per cent from India. With that shift, one of M&S’s biggest intangible strengths – its strong, close and often quite controlling relationships with suppliers – disappeared out of the window. So one of Rose’s initiatives has been to appoint new on-the-ground regional sourcing directors who are based in each region and close to the action, to manage relationships with suppliers.

M&S’s desperate quest for better value (that is, lower prices) a few years back also led it to bulk buy, which only shunted its problems to a different place: high levels of inventory and end-of-season markdowns. Under Rose, volume buying commitments have been reduced by as much as 40 per cent. In addition, the introduction of an “open to buy” policy means that up to ten per cent of the total buying budget can be committed later in the season when fashion trends have become more apparent. Result: more of the right stuff and less of the wrong stuff in stores, leading to fewer markdowns, happier customers and higher revenues.

Then there’s pricing. Over the past decade, two core strategies have emerged in retailing: cut costs, pass the savings back to customers and reap the rewards through higher volumes; or chase margins item by item by offering exclusive quality, ambience, design, fashion and so on. Together, they have created a pincer movement that left “middle market” operators like M&S exposed. Rose’s response – much of it learned from Tesco – is to square the circle by offering both.

The trick (and it’s by no means easy) is to construct a mix of discount offerings such as the 6 T-shirt and the 9 pair of jeans next to the cashmere cardigans – just as Tesco sells baked beans next to champagne. The aim: clear good-better-best quality and price points to cater to all tastes and occasions.

Luxury on all levels

An added spin is to create special treats by democratising luxuries. Tesco slashed the cost of champagne; M&S slashed the cost of cashmere. Both lead to huge jumps in sales. Democratising luxury can be a very big business, and with its massive buying power (sales of 7bn make M&S five times bigger than rival Next), M&S is in a good position to milk such ideas.

Rose is also working hard to reinvigorate a demoralised and battered staff. New career progressions have been designed for sales assistants: the chance to become a “coach” to other assistants, for instance. And while Mary Gober, the US customer service guru currently being employed by M&S may be an easy target for the press, it’s hard to disagree with her core motto, “Everything you do or say is either a service or a disservice to another person”. As guides for life go that’s not bad and if any company can internalise just a bit of it, it has to make a positive difference. Training and motivating 55,000 staff isn’t easy. But it’s clearly high on the M&S agenda.

The third item on Rose’s list of improvement areas is the shopping environment. Simply Food, the food-only M&S outlet, is being pushed ever further, into BP forecourts for instance. M&S is charging as fast as it can into retail parks – a format it neglected to its cost in the late 1990s.

It’s also rolling out new-look stores which have been redesigned from top to toe: lighting, signage, changing rooms (real doors, not curtains), navigation, carrier bags, staff uniforms, display units, the lot. New merchandising policies (display less stock of each item to pack more variety into the same space) make choice seem much greater, even though the actual number of lines (or “ways”) being sold has been cut by up to 18 per cent. Different areas – menswear, the children’s department, lingerie, Per Una, Limited Collection – each have their own ambience. “We are creating clear water with our competitors not only with quality products but with quality experience too,” declares Niall Trafford, head of store design.

Further experiments in the food area include new “hot to go” and “eat over deli” services and bakeries. “We’re meeting basic needs while also offering treat experiences,” says Trafford.

M&S executives refuse to divulge any hard data for the new stores’ performance. But the pace of investment – about 40 new or revamped stores up and running by Christmas – suggests the returns are good.

But still, does this really add up to a recovery? If you stop doing silly things and start doing sensible things better, you can’t help but improve. The question is, has M&S really got a vision to excite its core market? Can it deliver the “clear water quality experience” Trafford talks about?

Still a way to go

Not everything is suddenly going M&S’s way. George Davies’ resignation is a blow for the Per Una brand. Compared to rivals like Zara and H&M – and despite sourcing garments in Europe for faster turnaround times – M&S is nowhere as close to matching their speed or flexibility. It’s also still plagued by out-of-stocks which, at about ten per cent, do little more than throw 10p in the pound out of the window while also infuriating customers. Meanwhile Tesco continues to take M&S to the cleaners on price. While Rose boasts of cashmere jumpers at 69 (down from 99), Tesco is offering them at 25. No wonder Rose is staying cautious about future prospects.

Underneath it all, however, there does seem to be a lesson. Tesco chief Sir Terry Leahy makes a point of saying “everyone is welcome at Tesco. We have an inclusive offer”. That doesn’t make Tesco bland or unfocused. It requires clever targeting and segmentation within an umbrella offering: value lines and Finest, baked beans and champagne.

M&S could yet pull off the same trick. Middle class, middle-aged, middle income and middle of the road. Dull and boring? Perhaps. But that’s the core of the UK market. If M&S can fall in love with middle England again, middle England might fall back in love with M&S. But it’s not quite there yet.

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here