Marks & Spencer is hoping a focus on data and personalisation can help turn around its fortunes and make it one of the world’s leading retailers again.
M&S saw pre-tax profits increase fourfold to £118m in the six months to 30 September as revenue in its troubled clothing division stabilised on the back of a 5.3% increase in full-price sales. However, food, for so long responsible for propping up the company, saw sales growth slow in the face of headwinds including inflation and a more competitive market.
Speaking this morning (8 November) following its results, M&S CEO Steve Rowe said: “M&S is a great business with unrivalled assets in UK retailing. It has high brand recognition, a wide customer base and exceptionally high market share in key markets such as lingerie and ready meals. Most important of all, quality, value and innovation are part of the M&S DNA.
“20 years ago, this was one of the world’s leading retailers. I believe we can make M&S great again.”
Speeding up the transformation
The retailer has made some progress since Rowe took over 18 months ago. A decision to take a short-term hit to like-for-like clothing sales by cutting down on promotions is now paying off as full-price sales rise. M&S has also reduced its range, focused on cut and quality and improved pricing. However, Rowe admitted it needs to “move faster to keep up”.
“When we get things right for customers we are unbeatable. However, the world around us is changing and we need to move faster to keep up,” he said. “Having great assets does not mean we can rest on our laurels.
“There are a number of immediate and burning issues. Customers are telling us that the offer has become confusing… and they do not understand what we stand for.”
In food, Rowe said progress has been “mixed in food” and there is a need to improve execution by focusing on ranging, availability and pricing. “We are price competitive but our price architecture is inconsistent. There are too many confusing promotions,” he added.
We want data analysis to become the glue that sits above our business units and underpins the brand.
Steve Rowe, M&S
M&S’s store estate also needs modernising. Rowe said customers feel its stores are not inspirational enough and there is too much space. And so it is stepping up its closure programme, shutting more than 100 existing locations for clothing and homeware – around 30% of its store estate.
Some will be replaced with a standalone food offering, while others will relocate to better locations. In the first half, M&S closed six stores and relocated two of them – with sales retention “substantially higher” than it expected. A further 56 stores will see their space “reallocated” to areas of growth such as kids, home and footwear. And there will be a focus on bringing digital innovations in-store, such as fitting room tech and ‘scan, pay and go’.
Cuts to marketing
There is also a growing focus on costs, and marketing has not escaped unscathed. CFO Helen Weir spoke of “savings” due to by fewer, larger campaigns and a reduction in in-store décor. M&S has recently repositioned its whole business under the new ‘Spend it Well’ strapline, bringing together various divisions including food, clothing, homewear and Plan A, as well as internal comms, for the first time.
Spend is also down on this year’s Christmas campaign. Patrick Bousquet-Chavanne, M&S’s head of brand and marketing, said this is in part because it expects a halo effect from the use of Paddington and timing of the release of the Paddington 2 film, but also because it is being more efficient with its spending as it learns what works best.
A growing focus on digital and Sparks to reach consumers is also behind the reduced spend. The loyalty programme now has seven million members, according to the brand, and is increasingly being used to personalise communications and offer members special treatment.
Rowe said: “Sparks has seven million members but that is nowhere near its full potential. We want data analysis to become the glue that sits above our business units and underpins the brand. The relationship between Sparks, M&S Bank and online can help us to deliver truly personalised experiences.”