The 136-year-old company was founded by Michael Marks and Thomas Spencer in 1884 and soon became a hit among Britons for its reputation for selling fashionable, high-quality British-made products. In 1998, the company became the first British retailer to make a pre-tax profit of over £1billion, but just one year later those profits were halved, forcing M&S to belatedly switch to overseas suppliers to cut costs. Since then, the company’s executives have penned a “radical” plan to focus more on the food retail side of the brand and, of the 959 stores across the UK, 615 now only sell produce and by 2022 they will have closed more than 100 clothing stores.
Channel 5’s ‘Inside Marks and Spencer’ documentary revealed how Marks and Spencer’s fell from grace, and what bosses are pinning their hopes on to turn things around.
The narrator said in 2019: “In 1998, Marks and Spencer became the first-ever British retailer to post a pre-tax profit of £1billion, but almost immediately things started to sour.
“Britain’s retail landscape was becoming increasingly volatile and by 2000, M&S itself came under serious financial pressure.
“Even worse for the company, its clothing lines were no longer seen as fashionable.”
Former CEO of the company, Stuart Rose, outlined some of the issues they faced at Marks.
Marks and Spencer have a radical plan to change things
Marks was opened in 1884
He said: “You have got rising costs, you’ve got no ability to pass the costs on.
“You’ve got squeezed margins and you have got an audience who’s pretty savvy, and then you’ve got people who are less interested in buying stuff.”
Placed with dwindling sales, M&S decided on a rebrand in 2001, acquiring the help of George Davies – the founder of Next – in an unprecedented more.
Author Judi Bevan explained why it was a great move for the brand.
She said: “Per Una was brought in to revitalise the brand and make it appeal to the younger woman.
By 2022 M&S will have closed more than 100 clothing stores.
“Marks and Spencer brought in George Davies, the founder of Next.
“He was a brilliant, creative mind, and he was fantastic at designing clothes.
“For a while, it revitalised the company.”
Profits initially went up, but after three years M&S bought out Mr Davies for £125million and financial woes returned soon enough, leading to a hostile takeover bid.
The narrator explained: “By 2004, M&S was in such trouble, it became vulnerable to a takeover.
Stuart Rose is the former CEO of Marks
Judi Bevan criticised the company’s past decisions
“Controversial retail tycoon Philip Green came forward with a £9billion hostile bid.
“Earlier in his career, Rose had sold the retail group Arcadia to Green, and the two men knew each other well, so the billionaire believed Rose had betrayed him by refusing to sell M&S.
The narrator went on to detail how the problems deepened.
She added: “M&S may have finally won the takeover battle, but they were losing the retail war as more Britons began to shop online.”
“In a further blow, M&S even began to lose its hard-won reputation for quality, the result of importing more clothes from abroad in a depart attempt to keep down costs.
Philip Green and Stuart Rose
“Over the next decade, M&S saw their market share continue to drop and by 2018, radical surgery was required.
“The company announced multiple store closures.”
Ms Bevan stated that she thought M&S suffered from belatedly addressing competition.
She added: “I think Marks and Spencer suffered from this feeling of arrogance, that we are the best.
“You know, ‘we don’t really need to go onto the internet’.
“They didn’t see it coming and they thought ‘well, people like to come into a store, they like to see and feel’.
M&S will open more Foodhalls
“They didn’t understand.”
The narrator went on to detail how things may be turned around.
She continued: “M&S must change, but how? Some believe the answer is to embrace an audience it has too often ignored.
“Despite all the gloom, some observers believe a brand that was once high street royalty can regain its crown by going back to its roots, embracing innovation and change.”
On November 9, 2010, chief executive Marc Bolland revealed plans to strengthen the company’s overall brand image, which involved the discontinuation of its ‘Portfolio’ fashion brand and the sale of electrical products.
But, on January 7, 2016, it was announced Mr Bolland would step down and be replaced by Steve Rowe, head of clothing.
In 2018, Stuart Machin was appointed Managing Director of Food to lead the transformation of the Food business and the overall direction of the company away from clothing.
M&S core shops now typically feature a selection of the company’s clothing, homeware and beauty ranges and an M&S Foodhall, the range of clothing sold and the space allocated to it depends on the location and customer demographic and in 2019.
But many stores are now standalone Foodhalls and in 2019, M&S launched five of these as part of the transformation of the business.
Ms Bevan said the moves reflect a cultural shift in the company.
She added: “I think, at the moment, there is a huge cultural change.
“The current management are not frightened of new ideas and I think they are also becoming a lot more international in their outlook.”
Published at Sat, 20 Jun 2020 18:20:00 +0000