M&S is having an identity crisis: Only radical action can save it now

 
James McGregor
Chief executive Marc Bolland has his work cut out

Thousands of articles have been written about, and just as many reasons given for, the ongoing struggles of Marks & Spencer (M&S). The latest one, given only yesterday by none other than the chief executive himself, Marc Bolland, was the “settling-in” period of the new website. This, of course, is balderdash, or at least peripheral in the grand scheme of things.

True, results released yesterday showed that online purchases were down by 8.1 per cent, contributing to the overall 1.5 per cent fall in like-for-like sales of general merchandise in the 13 weeks to 28 June. And food sales increased by 1.7 per cent over the same period. But Bolland is kidding himself if he thinks this is purely a matter of a transition phase for the new website.

Another reason given for the sub-par performance of general merchandise, and clothing in particular, was a reduction in online and in-store promotions. Again, the claim that M&S is focusing on delivering full-year margin guidance is a red herring — and equally peripheral. It’s ignoring the elephant in the room. And it’s an awfully big elephant.

The real problem being experienced by M&S is incredibly simple: what we’re witnessing is a brand that is genuinely struggling with its identity. The bottom line is that M&S, once the darling of the UK high street, a company more sure of itself than any other retailer, is proving extremely hesitant when it comes to shaping itself to meeting the needs of the 30-somethings it must address.

In the retail world, this hesitation and identity problem can be fatal if it’s not resolved quickly and decisively. Once customers sense it, the problem can rapidly spiral out of control.

M&S is caught in the no-man’s land between an older clientele – to whom, in fairness, it is being incredibly loyal – and a younger audience. But by trying to serve both, it is managing to serve neither. To add to the confusion, its food division, the one thing that does successfully span the generations, is gaining an almost irresistible momentum. And then there is the biggest irony of all – clothing is managing to consistently underperform, despite the fact that the food business is constantly delivering strong and regular footfall into stores. It’s a steady stream of customers that other retailers would kill for. M&S has an open goal, but is repeatedly hoofing the ball wide.

What’s certain is that unless M&S makes a decision about its future trajectory, and soon, it will continue to lose customers and market share. So what’s the rub of the green? As things currently stand, the average 30-something wouldn’t even entertain the idea of shopping for clothes in M&S stores. There are exceptions to this – underwear, for example, or that rare event when something catches the eye on the way to get a prawn and mayonnaise sandwich.

Why is this? It’s because M&S clothing departments are the closest thing you can get to time travel. One accidental step to the left, and you’re back in the 1980s in the blink of an eye. In the past, I’ve said that the company’s main problem is that there’s always a danger of turning up to your grandmother’s birthday party to find you are both wearing the same M&S dress.

So what’s the solution? There are two main options available to Marc Bolland and M&S. The first is to create a new standalone clothing brand exclusively targeting a younger market. It would mean targeting those people who are more attuned to the aesthetics and ambience of Next, House of Fraser and Zara, than the lifeless, confusing and commodity-driven racks still found within the majority of M&S stores.

The other option is for M&S to go down the department store route, and borrow from the Selfridges or House of Fraser model, layout and all-round “vibe”. This, however, given the size of the M&S estate, will require a phenomenal amount of investment – far beyond what the retailer has spent previously on revamps. And for the brand, it would be nothing short of a revolution, representing a sea change in its identity. But is the management bold enough to do this?

What worries me most of all is that the current management do not appear to be able to see the wood for the trees. The last sentence of yesterday’s first-quarter trading update ran as follows: “Our focus is on delivery in order to make M&S a stronger and more profitable business.” This kind of pragmatic sign-off, promising action, is as you would expect. But it brushes aside the key fact that M&S is hesitating when it comes to the most important delivery of all: the 30-somethings. If it doesn’t address this market soon, the consequences could be dire.

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