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Tuesday, 8 February, 2000, 12:51 GMT
What's gone wrong with the great British brands?




These are not happy times for some of the best-known brands in Britain.

British Airways is the latest titan to be having a rough time. Chairman Bob Ayling announced that the self-styled world's favourite airline lost 60m before tax in the last three months of 1999.

Although the airline says it is on the way to recovery, it has been hit by, among other things, too much of the world deciding their favoured airline was actually one with cheaper fares.

Now BA is joining some other distinguised names in the departure lounge of the public's affection.


Marks and Spencer hopes for great things from its 2000 collection
Only last week, 3,000 BT staff found out that they would be having more time to keep in touch with their families when the company announced a 24% drop in profits.

But this midlife crisis is not restricted to privatised companies like BA and BT. The NatWest - for so long the cornerstone of high streets up and down the country - is trying to fend off two much smaller Scottish banks who are trying to buy it up.

It has become vulnerable after a series of unsuccessful business ventures, including attempts to set up an investment bank.

And the headaches continue just a few yards up the road from the NatWest. Sainsbury's, another stalwart of Middle England, saw its crown as the country's top retailer poached by Tesco's a couple of years ago.


Tough times for BT
And things have carried on going badly for it. Even the Queen bought Tesco Christmas puddings.

The company's efforts to stem its trouble have had little joy. Its advertising campaign starring John Cleese was actually followed, rather unusually, by a drop in sales.

Sainsbury's has a new boss now, but Tesco's march continues - last week it announced it was opening 150 Tesco Express shops on Esso forecourts. Its Tescodirect internet business is selling 2.5m each week.

But if Sainsbury's has a headache, Marks and Spencer's has a intense migraine.

If ever there was a symbol of the unshakeability of the British way of life, it was M&S. But it's come a long way since Mrs Thatcher told the nation it was the only place to buy underwear.



It's globalisation working at a High Street level
Paul Cheeseright

1998 saw a 41% drop in profits. Results for the first half of 1999 were a further 44% down. The next set of results are due out next month.

Although the company had been ahead of the trends in selling ready-cooked meals and offering financial services, customers broke the habit of lifetimes and went elsewhere for their clothes. Among the big winners was Next.

It even got to the stage before Christmas where the financial pages were speculating that M&S could be subject to a takeover bid by...Tesco.

So what's it all about?

They are troubled times indeed. But why? Is it simply coincidence that all these big names are having big problems at the same time or are they all doing something wrong? A latter-day British disease?

The one thing all the companies have in common is that they have faced particularly keen competition.

Cheap airlines hitting BA, cheap international phone calls tackling BT, supermarket banks challenging NatWest, Wal-Mart looming over the supermarkets.


Former NatWest boss Derek Wanless stepped down to make way for new management
And it doesn't end there. Industrial writer Paul Cheeseright says each company faces its own problems. But one thing each of them had in common was facing an increase in domestic and international competition.

"Foreign players have come in to seek a chunk of the market which, for instance, Sainsbury's might have called its own.

"It's globalisation working at a High Street level. A retailer isn't just competing with its next door neighbour, it's competing worldwide, and if it gets it wrong, there are not only domestic firms which will try to supplant it, there are international ones."

Jean-Paul Berthon, a tutor at the Cardiff Business School agrees, but adds that keeping in touch with how the market was developing is also a common problem.

"It's a matter of constantly reinventing and renewing the company, and that's a difficult thing to do," he says. "Companies have to be prepared to take difficult decisions, and sometimes they can look very strange.


AOL's Steve Case and Time Warner's Gerald Levin celebrate their merger
"When Time Warner started buying cable television companies, people questioned it. But since the tie-up with AOL, the man who did it is praised as a genius visionary for seeing the potential of the smooth and integrated flow of information."

If firms didn't keep their eye on the ball, they could become very vulnerable very quickly, he says.

Cheeseright adds that if British firms were feeling hard done by foreign competitors, it was worth bearing in mind that the UK is the world's third-largest investor overseas.

Which means companies in other countries are, in turn, feeling British competitors breathing down their necks.

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See also:
11 Jan 00 |  Business
M&S: A brand new challenge
23 Nov 99 |  Business
What's gone wrong for Sainsbury's?
04 Feb 00 |  Business
Tesco-Esso deal to boost jobs
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