Marks and Spencer (M&S) plans to keep “marketing costs down” by focusing more on direct marketing through its Sparks loyalty programme.
M&S cut its marketing budget by 9.7% to £84.1m in the six months to 1 October, a drop it attributed to focusing spend around the launch of its loyalty card Sparks.
But when asked during an analyst briefing today (8 November) whether M&S planned to refocus efforts on fashion advertising in 2017, its chief executive Steve Rowe suggested Sparks could provide an alternative to costly above-the-line campaigns.
Rowe said: “Five million people now have a Sparks card and it gives us a completely different type of marketing.
“Rather than increase the overall cost of marketing, Sparks will allow us to keep it down and do more direct marketing. It is also a channel that lets us get closer to our customers and understand their habits and what it is they want.”
Rowe’s comments align with its head of marketing for clothing Maria Koutsoudakis who recently told Marketing Week the retailer was to abandon age segmentation and instead focus on “universal truths” established from data connected to programmes such as the Sparks card.
Planned store closures
Marketing isn’t the only area set to face cuts at M&S as it embarks on a turnaround strategy. Following a steep 88% fall in pre-tax profits to £25.1m – from £216m in the same period a year ago and partly due to higher pension costs – M&S is set to close stores and cut head office jobs by 525 roles.
Rowe revealed that more than 100 UK stores – a quarter of its floorspace – would be affected by the shake-up with clothing departments to be shut in 60 stores.
Another 45 stores will either be turned into branches of its more successful Simply Food chain, downsized or relocated, with the three-year plan, which aims to boost sales as more Britons buy clothing online, expected to cost up to £150m.
M&S will also close 53 overseas stores as it distances itself from the less profitable, non-franchisee-owned, stores it holds outside the UK market.
General merchandise sales also fell 5.9% and when asked by an analyst whether it was correct food would make up 75% of sales in five years time, Rowe replied: “That sounds about right.”
Food sales were down 0.9% for the half-year period. Overall group revenue edged up 0.9% to £4.99bn, however UK turnover was broadly flat, up just 0.1%.