M&S cuts marketing spend as it moves towards digital
Marks & Spencer cut its marketing budget by almost 5 per cent (4.9 per cent) last year despite the launch of high-profile campaigns including Leading Ladies as it moves towards a more digital focus in its marketing and looks to halt sliding profits, which fell for the third consecutive year.
By Sarah Vizard
Marketing and related costs fells to £147.7m in the 12 months to 29 March, down from £155.3m the prior year. M&S has previously spoken about putting digital at the heart of its marketing and last year launched its Christmas ad on social media before TV for the first time.
The retailer saw sales at stores open for more than a year increase by 0.2 per cent, with food up 1.7 per cent and general merchandise down 1.4 per cent. Total sales increased 2.7 per cent to £10.3bn, but underlying profits were down 3.9 per cent to £623m.
M&S has now reached the end of its three-year turnaround strategy aimed at setting the retailer up for a digital shopping future. That plan included a huge investment in its website, which relaunched earlier this year, as well as new more inspirational store concepts and a renewed focus on quality and style in its GM business.
The retailer says these changes, as well as its Leading Ladies marketing campaign, has helped to turn around general merchandise sales. Although these fell last year, they did increase in the fourth quarter, with womenswear performing particular well, according to M&S.
However, it is expected to be at least another three months before M&S feels the benefits of its new website despite the launch of a marketing push to position M&S.com as its new flagship store and appeal to the 19m shoppers who buy online but not with M&S. The retailer is warning that it will take four to six months for the website to “settle in”, which will affect GM sales this quarter.
M&S boss Marc Bolland has now pledge to cut capital expenditure by between £500m and £550m for each of the next three years and to improve the profitability of its clothing business as it switches from “transformation to delivery”.
Bolland says: “Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer. We are making solid progress on this journey and are now focused on delivery.”
However, Neil Saunders, managing director at retail analysts Conlumino, has raised concerns over M&S’s turnaround plans. He says that while food remains a high point, benefitting from strong marketing around events, its clothing ranges remain “hit and miss”.
He adds: “There is a saying among climbers which M&S should heed: it isn’t the mountain ahead that wears you out; it’s the grain of sand in your shoe. The grain of sand in M&S’s shoe is a continued lack of vision and ambition on clothing and, in particular on womenswear. Until it is removed, once and for all, M&S’s advances will be limited.”
