Marks & Spencer is in a pay row with staff and could be axing 500 jobs. Is it time to split the retailer in two?

Julian Harris
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Marks & Spencer Christmas Sales Expected To Be Disappointing
M&S shares are down 39 per cent since May last year (Source: Getty)

Marks & Spencer’s famous adverts (“These are not just potatoes, these are pan-shaken ready-to-roast extra-crispy King Edward potatoes...”) may have stayed ripe for mockery for over a decade, but between our guffaws lies a reluctant acceptance that the branding is absolutely spot on.

M&S food halls have been a roaring success, especially among the millions of Brits who would rather pay a little bit extra to secure a tastier-than-usual home dinner. And it doesn’t always cost an arm-and-a-(slow roasted, cider and honey basted...)-leg – the £10 meal deals have long been a favourite among City couples. Specifically, the £10 pizza-and-prosecco offer shows an acute understanding of its target market.

Read more: M&S pay row: New offer for workers - but campaigners say it isn't enough

Another aspect of M&S that has always made it stand out from the crowd is an above-average level of service. Mooch around a Marks in any corner of the country and one will generally find a more content, pleasant and helpful staff than in nearby, rival stores.

But could this be about to change? As first revealed in City A.M., the retail giant is at loggerheads with staff over a new pay deal, while Sky’s City editor (and City A.M. columnist) Mark Kleinman broke news over the weekend of an impending cull at M&S’s head office, with up to 500 jobs heading for the scrapheap. The cull is unsurprising, given M&S’s struggles in recent times. The food side of the business may be thriving, but the remainder looks like a completely different beast. Shares are down 39 per cent since May last year, with new boss Steve Rowe wrestling to turn around the company’s prospects.

Read more: What heatwave? M&S is already filming its Christmas advert

Keeping staff happy and helpful is key to M&S’s success, but management needs to find a way to afford the higher costs that this entails. Years of sclerotic decision-making and ineffective tinkering have forced the firm into a corner.

For the sake of its back office workers, its front of shop staff, and the customers they serve, Rowe must consider some radical ways of turning the business around. Most M&S customers either buy its food, or its clothes – but never both. So perhaps it’s even time to split the company in two.

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