M&S CEO’s five point plan to revive the brand

New Marks & Spencer boss Steve Rowe used his first formal set of results to lay out a five point strategy that he hopes will revive the brand by appealing to ‘Mrs M&S’ but also to those customers that shop infrequently at its stores.

M&S saw underlying profits rise 4.3% to £689m in the year to 2 April while revenues were up 2.7% to £9.5bn. Yet as has been the story for most of the past five years this was a tale of two businesses.

Food continued its strong run, with like for like sales up by 0.2% and total sales increasing 3.6%. Yet in general merchandise, which includes clothing and home, total sales fell 2.2% while sales at stores open for more than a year were down by 2.9%.

“We need to think about: How do we get brand positioning absolutely right? How do we get clothing and home back up and how do we continue to grow our food business with pace?” he asked at an event in London today (25 May).

Rowe has made “recovering and growing” clothing and home his top priority, while at the same time not losing focus in food. This is how he plans to do it:

1. A new brand purpose in clothing to ‘make every moment special’

M&S has previously said that key to its success in food was finding its brand purpose and that it has struggled to replicate that in clothing. However Rowe announced a new strategy for general merchandise revolving around ‘making every moment special’.

Read more: How M&S transformed its ‘schizophrenic’ food marketing

That he believes, will focus the minds in the business around what differentiates M&S and the type of products its customers are looking for. He said M&S must focus on “wearable style” and wardrobe essentials, offering high quality, increased availability and improved service.

“Our target customer does not want the latest catwalk fashion, they demand quality, fit and contemporary style. If we get the core quality right we know we can sell more. And we do that by focusing on fit and finish,” Rowe explained.

He also laid out changes to M&S’s price and promotional activity. He wants to take a “strong position on price” to ensure M&S is no more expensive than competitors but is better quality.

The retailer has also been guilty in the past of driving up sales through promotions, with Rowe admitted it has “trained our customers to buy on discount”. That will end now, with M&S cutting down on the number of flash sales in its calendar to focus on value-added treats and personalised promotions through its loyalty programme Sparks.

“We need to be more strategic about promotions,” he said.

2. Cherishing core shoppers

M&S has been accused in the past of chasing younger customers and ignoring its core market. Yet Rowe promised he would “cherish Mrs M&S”, who he described as female, 50 and who shops with the retailer about 18 times a year.

Yet Rowe pointed out that M&S “does have other customers”. He said 42% of customers are men and 22% are aged under 25. The issue is that these under 25s only represent 10% of sales and that is mostly (although not exclusively) in food.

only marks 2014

Where M&S sees its biggest opportunity is in getting people to shop across both parts of its business. Rowe highlighted that only 30% of its customers shop both food and GM, while 90% visit for a single mission. “They are either looking to dine or buy a jumper, rarely both at the same time.”

Getting all its customers to shop one more time a year would put an additional £500m into the tills, claimed Rowe. The key is how it does that, and Rowe believes the answer lies in its emotional connection with its shoppers.

3. Listening to customers

While the food business continues to outperform the market, Rowe said there is still more M&S can do. Customer research found that he shoppers want M&S to be “more ahead of trends”, tapping into flavours and food combinations before most people know about them.

“On food we will play to our strengths and set the innovation agenda while focusing on the best quality and fresh ranges. M&S stands for convenient foods in convenient locations,” he said.

On clothing, Rowe admitted M&S is “frustrating customers”, in part by giving them too much choice.

“Customers say we haven’t got style and fashion right – too much choice is making us irrelevant. They also tell us they want us to do better. We get it right on food and they want us to get it right on clothing – we will do it by continuing to listen,” he said.

4. Making decisions based on hard evidence

Rowe wants to turn M&S into a “data driven business”. The retailer launched its Sparks loyalty card in the second half of last year and it already has 4 million members, providing M&S with valuable data on how often they are visiting, what they are interested in and what they are buying.

It now wants to make sure it uses that data while at the same time not losing sight of what its customers think and say.

“We will make decisions based on fact and hard evidence. Things we know rather than things we think.”

Steve Rowe, CEO, M&S

CFO Helen Weir gave some examples of how this can work in practice. For example, M&S has taken a deeper dive into the demographics that shop at each of its stores to make sure that its stock matches. And Sparks data has been used to analyse size ratios and to improve size availability.

5. A focus on the long-term brand revival not short-term sales

M&S warned that all its planned changes to the business – from cutting prices to improving staffing levels – will impact on its profitability in the short term. Yet Rowe believes profitability should not be the focus now.

“Our priorities are the customer and brand and how we are going to recover clothing and home and continue to grow the food business. That involves improving our net promoter scores, evaluating reviews online and look at fit and quality online.”

M&S is planning more IT investments as it looks to continue building on its website and will spend more improving the in-store experience by upgrading cafés or introducing new concepts such as coffee-to-go.

He will also reinstate staffing levels, admitting the brand has previously “cut back a little too far” in certain areas.

“We will not chase sales at any cost and this is likely to be challenging in the short term. But our previous approach was not sustainable. We have to aim for sustainable and get profit growth back,” he concluded.

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