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Friday, May 21, 1999 Published at 16:16 GMT 17:16 UK


Business: The Company File

Marks seeks lost spark

Marks and Sparks has seen sales drop dramatically

So just what is going on at Marks and Spencer?

This bastion of the UK high street, a chain which has clothed generations for many decades, had appeared unstoppable.

Its quality of products, its customer service and its ranges of functional and fashionable clothes at affordable prices had been unbeatable.


[ image: The retailer is keen to sharpen up its act]
The retailer is keen to sharpen up its act
But as everyone now knows, its invincibility has proved somewhat less long lasting than its trusty socks.

Profits have been halved and sales continued to be down - a worrying 15% - leading into Easter.

Concern for its welfare can only grow as the gloom continues. It appears to have been floundering into ever deeper waters for more than a year now.

Ponderous management

Yet there are defenders of M&S who correctly point to the general fall in the amount spent by shoppers in the UK during the autumn and winter.

That is true, but French Connection, Next and now Selfridges have appeared to be taking the St Michael by choosing this week to rush out statements saying how their sales have risen back to healthy levels.

So could it be something peculiar to M&S itself?

This is the chain, remember, which refused to accept debit cards in many of its stores years after their introduction at neighbouring shops.

That hardly smacked of putting the customer first. Rather more of an arrogant or ponderous management, perhaps bloated on its own incessant success.

It is also the chain which believed itself above the need to advertise despite the increasingly cut throat competition on the high street.

But M&S also appears to have been cursed by some bad luck, or judgement, in its choice of product ranges.

When it was criticised for being too dowdy it attempted to respond by introducing more fashionable lines.

Production abroad

Unfortunately these flopped, alienating traditional customers while not attracting new ones - the fashionable crowd do not exactly see the St Michael's label as a badge of honour on the streets of cool.

Meanwhile a rigorous round of cost cutting has seen more and more M&S clothes being made at cheaper factories abroad.

This has led to longer times between M&S ordering clothes and their arrival - which has made it slower than rivals to respond to changing high street trends.

Things have got so bad that M&S shares actually rose this week with relief that the halving in profits was not accompanied by warnings of further gloom to come.


[ image: Peter Salsbury has work to do]
Peter Salsbury has work to do
New chief executive Peter Salsbury has attempted to liven up what he obviously believes to be an overly bureaucratic organisation, decreeing that 290 middle management jobs are superfluous.

He has also changed the policy on advertising. M&S and its famous St Michael brand have been so well known that it had not seen the need to advertise.

Now for the first time it is spending money - £20m - on a television advertising campaign.

It also took the unprecedented step of temporary price cuts to clear its poor selling winter stock.

Further aggressive price cuts could follow but would have a devastating impact on other retailers.

"The company is now going to start buying much closer to the seasons as well as improving its styling and quality and sharpening up its act," said retail analyst Richard Hyman.

"However the whole process could take a year and a half."

Marks and Spencer will not want to wait that long.

Its says sales are showing signs of improvement in May, with some of its emergency measures already paying fruit.

But it is still lagging behind the 19% sales rise reported by its rival Next on Tuesday - a chain which only a few years ago was itself in even direr straits.

It remains to be seen whether M&S can reclaim its position as the undisputed champion of the UK high street.

We asked you where you thought M&S has gone wrong - and what it should do next. Read your reactions





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The Company File Contents


Relevant Stories

21 May 99 | Business
Marks and Spencer - Your views and suggestions

19 May 99 | The Company File
Next bucks retail gloom

18 May 99 | The Company File
M&S profits halved

08 Mar 99 | The Economy
Clothes shops fight for survival





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