M&S's U-turns: Will the latest plans last?
Britain's best-known retailer hasn't always been consistent. As a new chief executive takes over, Richard Northedge reviews its progress
Sunday 14 November 2010
Marks & Spencer has a new chief executive – and yet another new set of expansion plans. Marc Bolland avoided directly criticising his predecessor, Sir Stuart Rose, last week – Rose remains chairman until next year – but scrapping brands, ending Amazon's distribution deal and looking to expand abroad set M&S in a new direction. Again. Rose's Plan 2020, to update IT, is now Plan 2013-15. Rose's Plan A – to make Marks greener – continues, but Bolland has added his own Plan B.
Bolland's Plan for Growth is only the latest of many M&S strategies. In 1956, Simon Marks, the founder's son, launched Operation Simplification, saving money on electricity and paper, but since then the business has staggered to keep up with the times.
There have been U-turns ever since M&S stopped being a penny bazaar. The company invented its own traditions, from not advertising to producing only British-made goods, then tore them up when executives noted how well its rivals were adapting to changes in the high street. Here are some of the most notable examples – raising the question: how long will it be until Bolland's policies are reversed?
The name over the doors was "Marks & Spencer", but since 1928 the tags on the clothes said "St Michael". It was the M&S brand, joined briefly by "St Margaret" for women's and children's wear. But after dropping St Michael in 2000, the retailer invented a panoply of new brands.
Customers have been confused by Indigo, Collezione, North Coast, Orient Express, Autograph, Blue Harbour and Per Una. Rose added SP Clothing, View From and DB07. The company now acknowledges that the brands were not developed properly, as Bolland is planning to turn these labels into star names. They will now have their own brand managers and marketing budgets. The upmarket Portfolio fashions will be rebranded as – wait for it – "Marks & Spencer".
For decades, Marks sold only its own brands, but in November 2008 it reversed that policy and introduced famous-name foods. Last week, Bolland did another U-turn, however, losing a quarter of the external brands. "The Marmite will be there but we're not going to have Walkers crisps in five different pack sizes," he says.
M&S refused to accept credit cards for years, even if it lost customers. In 1985 it launched its own card. But it only relented on ordinary cards in 2000.
Marks also resisted Sunday trading when other stores opened all weekend from the 1980s. It belatedly joined the trend in 1994. Now some branches have 24-hour Christmas opening. And the retailer performed a U-turn on post-Christmas sales – and at any other time it needed to clear slow-moving stock.
Until 1988, customers could not try on clothes at Marks. They had to take them home and return them if unsuitable. The M&S "no questions asked" refund policy was famous – and famously abused. Having reversed its fitting room policy, the store set a time limit refund policy in 2004.
M&S didn't. There were occasional cinema ads and magazine announcements, but Simon Marks shunned marketing, claiming: "Good goods will sell arse upwards." Marks ripped up that policy, and now produces some of the most notable television and poster campaigns with the model Twiggy and Dannii Minogue.
Marks was so proud of selling UK-made goods it adopted the "99 per cent British" slogan. Even 25 years ago it acquired a fifth of all the clothing made in Britain and more than half the shirts. But competitors discovered cheap suppliers in the Far East and M&S backed down and started buying from abroad in the 1990s.
Upmarket or down?
Marks & Spencer has fluctuated between chasing the mass market and seeking niches. It started as a market stall, of course, but after decades of serving the middle classes, it opened a Lifestyle store in Gateshead. It proved far too trendy and closed in 2005 with plans for others cancelled.
Selling food brands seen in rival supermarkets was intended to generate volume sales and the "Dinner for £10" campaigns counter Marks's reputation as an expensive grocer. But last week's new plan, cutting the number of external brands and increasing exotic foods, is a move back upmarket. However, Bolland insists: "The brands that we carry are going to be at Tesco pricing."
Every decent town has an M&S and that M&S was in the town centre – near the bus station and the busiest footfall. But rivals realised the convenience of edge-of-town locations, where cheaper property permits bigger premises and car parking. Marks resisted until 1988, then changed policy and opened a store next to Tesco's Hertfordshire base. More quickly followed at retail parks and out-of-town shopping centres.
And having closed smaller stores to concentrate on big units, Marks saw its competition prove size is not everything. It has now opened 352 Simply Food mini-supermarkets.
The old M&S philosophy was to own its stores' freeholds. Bolland claimed last week its brands are its assets but his predecessors thought its assets were its properties – collateral for borrowing and a demonstrable asset even when trading turned down.
A sale and leaseback of 78 stores in 2001 reversed that policy. And now Marks, besides not owning all the properties it trades from, does not even own all the businesses trading under its name. Some 195 of the UK Simply Food outlets operate under franchises, outnumbering the 157 that M&S runs itself. Even more of the group's overseas shops are franchises.
Marks ventured abroad in 1973 with a chain of 50 Canadian stores and two years later opened in Paris, followed by 37 other European outlets. In 1988 it purchased Brooks Brothers, an upmarket New York outfitter, and Kings, a chain of US supermarkets.
Canada closed by 1999; Brooks and the European stores went in 2001; Kings five years later. But now, Bolland is expanding abroad again. He has 337 overseas stores but wants to build on strengths in Eastern Europe and around Shanghai.
The retailer split the roles of chief executive and chairman to meet governance requirements – only for Rose to anger investors by taking on both jobs in 2008. They have been separated again, Bolland joining as chief executive in May and banker Robert Swannell becoming chairman next year.
Bolland: He's not just a boss...he's an M&S boss
Following in Sir Stuart Rose's footsteps was never going to be easy. But Marc Bolland probably has the best chance as the new head of M&S.
While less of a party-loving man about town than Sir Stuart, Bolland is said by those who know him to be cautious and conservative, but quietly confident. As he should be, with almost 20 years at the world's third-largest brewer, Heineken, under his belt. He started there as a graduate in 1987, and became chief operating officer in 2005. In 2006, he took over the Morrisons supermarket chain.
The 51-year-old Dutchman, son of a car-parts factory owner, lives in Harrogate. He's a car lover – reportedly owning a BMW 7 Series and a 1967 Aston Martin – and a patriotic football fan, supporting AFC Ajax. He's also partial to a bit of partridge shooting; a handy skill in the boardroom.
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