How M&S lost its focus and fell into this long decline

 
Richard Hammond
JUST AS Woolworths allowed Wilkinsons, Poundland and Tesco to eat its lunch, M&S is putting its fingers in its corporate ears while the likes of Next, Zara and Waitrose at one end, and Aldi and Primark at the other, leach away its customers. We may now be talking about the fall in M&S’s pre-tax profits from £658m in 2011-2 to £564.3m in 2012-13, but its problems lie much deeper.

The decline of M&S is about more than one retailer. We need M&S on our high streets – it’s a blue ribbon presence in British retailing. M&S is an anchor in many struggling town centres, and a fertile breeding ground for retail talent. All this is at risk.
M&S was always about quality and value – principles laid down by good Northern traders Simon Marks and Israel Sieff. Onto that foundation the brilliant Marcus Sieff (Israel’s son) focused on quality control and value for money, built around long-term partnerships with suppliers. It was an astonishingly successful combination that allowed M&S to grow from humble beginnings in 1884 to become one of the world’s most iconic retailers.

A friend of mine once grew tomatoes for M&S. He feared its buyers: they would reject whole deliveries if just one tomato was suspect. But it was an arrangement he felt he could live with because “they kept us on our toes but worked with us and paid us a fair price”. He was convinced it resulted in him being a better farmer and in customers eating a better tomato.

As a result, customers trusted M&S to sell them reliable products at fair prices. From the humble cocktail sausage to a new winter coat, M&S had been a dependable source of quality and value. The retailer became a much-loved part of British life.

But somewhere in the late 1990s, that emphasis slipped. As Judy Bevan points out in her excellent book The Rise and Fall of Marks & Spencer, “the company credo – quality, value and service – had even been dropped after decades from the front cover of the annual report.”

Staff numbers were cut, training was pared back, and senior management pushed itself away from the shop floor. When M&S experienced its turn of the century crash, store staff were the first to detect something was up. Customers began to melt away, but senior management buried its head in the sand, ignoring urgent feedback from the stores.

That disconnect remains: despite rebrands and imported fashion gurus, M&S lacks a defined focus. It mistakes quality and value for “premium”, and has failed to successfully update its enormous estate. The most recent store-fit is grim: cheap display systems, overstuffed with stock, and blandly merchandised.

Leading retail analyst Nick Bubb sees a potential recovery for M&S among the financial fundamentals. But he includes a caveat on the company’s ability to keep pace with the market. That is by no means certain. M&S is out of touch with its customers and its own values. Can chief executive Marc Bolland turn things around? I hope so, for customers, staff and for British retailing.

Richard Hammond is the author of Smart Retail and managing director of retail consultancy Smart Circle. Follow him on Twitter @TheseRetailDays