Todays results and strategic update from Marks and Spencer underlines the resolve and determination of Steve Rowe. Making tough unpopular decisions isn’t easy but he knows he must initiate change if he is to get Marks back on track. In the toughest retail market anyone has ever seen, M&S needs to get smaller before it can return to growth.
Shutting stores is hard for a business that has done the opposite for more than a century. Having stores not too far apart may have made sense years ago but not today. Online growth means most UK retailers simply have too many stores and we will be seeing lots of closure programmes over the next few years.
Another major bullet bitten is international. Marks has run a very successful franchised business for many years, partnering with local businesses to provide know how. Company-owned stores is a very different matter and Rowe has acknowledged that in most markets, the M&S brand hasn’t worked. Most will be shut.
He is also weaning M&S off the discount drug, reducing the frequency of price promotions. This is critical. Shoppers get used to seeing discounts and trust in a retailer’s prices is undermined when you suspect an item will be cheaper next week. Getting prices right first time, and sticking to them, will help restore belief in the brand.
Then there is editing the clothing offer. Fewer items does not mean less choice – having lots of irrelevant fashion does not represent genuine choice. So the need is to be much more clear about exactly who today’s M&S is serving and build ranges accordingly.
Most of the change announced is about clothing. Marks food business continues to perform well. It’s clothing side needs to learn about focus and innovation from its food arm. I believe Steve Rowe is moving in the right direction. However, it will take time to achieve the change required – years, not months. My concern is whether the City will give him the time he needs. Turning round an £11bn business is hard enough – doing it quickly is impossible.
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