Private Investor: Rose is looking in the wrong place for M&S customers

I had hoped to avoid writing about
Marks & Spencer for the umpteenth week running, but the withdrawal on Thursday of Philip Green's informal bid has forced my pen, I'm afraid.

I had hoped to avoid writing about Marks & Spencer for the umpteenth week running, but the withdrawal on Thursday of Philip Green's informal bid has forced my pen, I'm afraid. Actually I confess I had made my mind up to say a few things about this shareholding earlier in the week.

I could not really believe my ears when I heard Stuart Rose on the radio. The chief executive of M&S was talking about how he thought the company had neglected its core clothing customers - women in the 35 to 55 age group - and was going to concentrate the firm's effort to win them back.

Well there's nothing wrong with going after disaffected customers, and M&S long-term complacency was no doubt a factor in losing them in the first place. But I really rather wonder whether this is the right way forwards. I think the future of M&S lies in a service station on the M1 where, last Saturday, I stopped off for refreshment. There I found an M&S food shop bang next to the usual fast-food outlets and the usual service station shops, all serving food from burgers to sandwiches. But where were the tired and hungry motorists and their families heading? To the M&S food mini-store. Even the small queues didn't deter them.

For me it was an almost Pauline moment of conversion. If I was in charge of M&S, of course I would try to do something for the clothing side of the business, but from now on I would concentrate on developing M&S's surprising resilience in food. That's where the potential growth is. Indeed, the more radical side of me dreams of getting up at an M&S AGM and asking the board why they don't just run down the clothing side of the business (or some more polite business-speak expression like "stabilise it for the long term" or "allow it to grow into maturity") and concentrate instead on selling nice food to all sorts of people who value the quality that they can still find at M&S.

According to one website's gossip: "If you look at those attending any AGM, the vast majority are pensioners. That's because they are the ones who have the time to go to AGMs and they look forward to the nosh provided. In fact some don't even go into the meeting. Trust me, I'm one of them." Never mind.

Now I learn that the number of food lines is being cut and the life stores being closed down. I don't know about the life stores (furniture and knick-knacks) but the key to success in food retailing is surely to offer choice. When it comes to fresh fruit our supermarkets stock a depressingly narrow range of each type but there is still a good selection of exotic and wired fruits available. M&S should do both; offering some of the more forgotten varieties beloved of the organic crowd as well as the latest from the depths of the New Guinea rain forest.

Instead of that I am offered a pound a share "cash in hand" as part of Mr Rose's recovery plan. Well, I don't want a quid a share, I want a company that works, will grow and make a decent return on my investment. I don't know if Mr Green would ever have delivered that, although I suspect he hasn't given up his ambition long term, but I don't like the look of the recovery plan. I don't think the shares will collapse, because I can't believe things can get significantly worse, so I don't want to sell now. However there are few hard objective reasons for staying invested.

So, as ever, I'm on the search for value. I can't say I've seen much that appeals, or I haven't been looking hard enough. I do want to examine why Vodafone is sliding slowly backwards, down to 120p or so from almost 150p recently. Intriguing.

s.o'grady@independent.co.uk

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