M&S CEO Bolland: Marketing initiatives are boosting brand love if not sales yet

Marks and Spencer’s chief executive Marc Bolland has insisted the two major marketing initiatives it has launched over the last six months have improved brand “appreciation” but admitted that there is a “lag” before that will transfer into sales improvements as the high street giant announces a disappointing   festive trading period.

M&S’s Christmas campaign is its most digital yet.

The retailer said today (8 January) sales from its general merchandise division, which includes clothing, in stores open for a year or more fell 5.8 per cent in the 13 weeks to 27 December. The decline is markedly steeper than in the previous quarter, when like for like sales fell 2.9%.

“Unseasonably” warm weather in October and November was blamed for the dip with the retailer claiming its large share of warm weather clothing market left it particularly exposed. Elsewhere, its struggle to cope with demand at its Castle Donnington distribution centre, which led to a failure to meet next day delivery promises and delays in standard delivery was cited as another reason for the decline.

In a call with reporters to discuss the results, the company says the impact of the warm weather in October and November had had hit sales by 3.5% accounting for the majority of the like for like fall, while the distribution centre had hit general merchandise sales by between 1 and 1.5%.

Meanwhile, food sales continued to outperform general merchandise although sales did fall short of expectations. Same store sales were just 0.1% in the period although this is ahead of supermarket sector sales over the period, which according to several forecasts are expected to have fallen by 2-3%

M&S’s problems within its general merchandise business, particularly clothing are long-standing – the slump over Christmas was its 14th consecutive quarterly decline.

‘Marketing changes are paying off‘

It has attempted to address the problem through fresh in-store merchandising and more youthful ranges. It has also turned to digital-led campaigns, now spending up to 25% of its marketing budget on digital in a bid to attract younger shoppers. Its Christmas brand campaign, “Follow the Fairies”, was launched on social media channels first and included more social elements than in any previous activity.

It also introduced the ‘Only M&S’ initiative last year, which saw it drop its ”Leading Ladies” fashion and ”Make today delicious” food campaigns in favour of one unified brand idea for the first time as it looked for clothing sales to match the success of its food business.

Asked by Marketing Week whether the marketing initiatives had been successful given the continued slump in general merchandise sales, Bolland said:“’Only M&S’ and the ‘Fairy’ campaign has been extremely well received by customers, improving brand appreciation and [the latter] was one of the most successful over Christmas [on social media] by most measures.”

He added: “There is always a lag in sales. It’s about changing people’s minds but they are taking a more appreciative stance. There’s no direct line there yet but brand building is going in the right direction…. It’s a journey”.

“There’s no direct line [to sales] there yet but brand building is going in right direction” – M&S CEO Marc Bolland

Maintaining margins in a discount culture

Another of M&S’s marketing challenges is maintaining profit margins amid a culture of high street discounting by rivals as well as an expectation by consumers of price-cuts on a regular basis. Bolland said on the call that it had deliberately held back on promotions and “mega deals” in December, which hit general merchandise volume sales but helped it maintain margins – margin guidance is unchanged at +150 to +200 base percentage points after the festive period, M&S said.

Bolland shared some of the concerns expressed by John Lewis boss Andy Street over Black Friday, a fixture in the retail calendar that sees retailers offer deep discounts on the final Friday of November, who called on retailers to ‘rein back’ on Black Friday promotions over concerns it was distorting the crucial Christmas trading period.

“Black Friday should be embraced but it has consequences. We need to find answers, as that is what consumers want and it is not going away,”he added.

‘M&S.com seeing green shoots of recovery’

Meanwhile, Bolland reported improvements in the performance of its M&S.com website, forecasting a return to growth in the first quarter of 2015 when free of “constraints” – referring to the pre-Christmas distribution problems.

M&S.com, which placed content at the centre in response to the growing number of consumers shopping online for fashion, was relaunched in February 2014.

The new-look website got off to a tricky start, with its first half trading figures showing that sales were down 6.3%. M&S has had to make a number of updates to the website, including improved navigation and display and a new guest checkout facility.

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