Marks And Spencer Stores example essay topic

An Analysis of Marks and Spencer INTRODUCTION TO THE FIRM AND ITS INDUSTRY Marks and Spencer is one of the largest retailers in the United Kingdom, and is also known as a major retailer selling diverse product ranges under their own exclusive brand in more than thirty countries. Customer confidence in the Marks and Spencer brand remains second to none. According to recent research undertaken by the Company, it shows that, in clothing, Mark and Spencer has a clear lead over all its major competitors in the key areas of fit, quality, trust, breadth of range and customer service. In November of 2000, Marks and Spencer will launch a trial of three new lingerie-only outlets in Paris, Hamburg and Dusseldorf. According to industry statistics, Marks & Spencer remains the clear leader in the UK lingerie market, with over thirty percent of the market share. These pilot stores, distinctly branded 'ms l', are designed to showcase the product range, taking the very best of Marks & Spencer lingerie to the Continent.

Moreover, twenty-five percent of the 'ms l' range has been designed exclusively for the continental market (Marks & Spencer PG). According to David Norgrove, Marks & Spencer Executive Director, the new stores developed by Marks and Spencer 'clearly show how we can give customers what they want in the way they want it. Today we have both depth of product and a variety of retail formats, so that we can encompass factory outlet stores and designer clothing under the Marks & Spencer brand. Our new concept stores carry a wide range of products and services tailor-made for its local customers but, at the same time, we are also launching the European pilot of a specialist retail format which builds on our core strength in lingerie.

All of these products and formats are being in response to customer research, to meet a proven need' (Marks & Spencer PG). THE COMPETITIVE STRUCTURE OF THE INDUSTRY The British retailer Marks & Spence decided to close its one Edmonton store, along with fourteen others across Canada, with the eight remaining stores being closed just one month later. This marked the ending of Marks and Spencer's 26-year run in Canada. The chain announced its Canadian pullout, which will affect only sixteen staff, was a surprise for Canadian shoppers. Heritage Mall manager Kirby Nishikawa said 'the shutdown hurts the shopping center. ' (Le Riche, 44, 1999).

Marks and Spencer had about 585 square meters of mall space. 'It was the only outlet in the city and it brought in a lot of people,' said Nishikawa. 'It's a shame' (44, 1999). The mall is working on a redevelopment plan, said Nishikawa, but no details are ready to be released. But Adam Finn, director of the Canadian Institute of Retailing and Services Studies at the University of Alberta, said the Marks and Spencer pullout doesn't hurt the Edmonton retail picture as much as the Eaton's crisis.

Eaton's, another major competitor of Marks & Spence, had bailed out of the mall earlier. Eaton's is looking for a buyer for its other outlets, and has already announced the closure of its Londonderry Mall store. ' Marks and Spencer were never successful in Canada,' said Finn. 'Eaton's is a bigger issue. ' If Eaton's is sold to an American buyer, as rumors suggest, the new owner may only want one or two outlets in Edmonton, said Finn. 'That would leave a couple of other stores,' said Finn.

'I doubt Sears would want them. 'So, it would probably mean a couple more vacant spaces in the major malls. There are already a number of them. ' In some cases, Marks and Spencer stores will close earlier than scheduled if all of the store's goods are sold, the company said (Le Riche 44). The food departments may also close earlier than the rest of the store. Marks and Spencer said mounting losses and an increasingly competitive retail economy had forced the company to leave the Canadian market.

Analysts have said the retailer's merchandising mix of clothes and specialty British foods - including Christmas crackers, jams and preserves - never worked well in North America (Le Riche 44). The most unusual part of this downswing of Marks & Spencer is that the company has added 50,000 new investors to its share register over the past year. Normally a company as crisis-torn as this one cannot attract such a voluminous new following of investors, and rarely can the new fan club have been so disappointed by what it found. The shares have been in more or less continual decline throughout this period.

Many analysts are wondering why? (Anonymous 21). One explanation is that Marks & Spencer has appeared on numerous share tip lists as an obvious recovery stock. Many important newspapers included the company in its New Year share tips, and the brokers have been unrelenting in rating the stock a buy. But investors don't have to read the newspapers to think in the same way as them. Marks & Spencer is still a very good brand which in the past has achieved outstanding retail success.

The logic behind buying the shares, then, is the belief that they must at some time bounce back (Anonymous 21). This is a bad enough strategy to apply to stock market investment generally, but it is a particularly bad when applied to a specific stock such as in this case. The world is a fast changing place and just because a company was once at the top of its competition doesn't mean it will ever be that way again. Marks & Spencer shares have repeatedly over the last year attempted to stage a recovery, supported presumably by those 50,000 newcomers, only to be bashed equally repeatedly by yet more bad news.

The correct strategy with Marks & Spencer shares would have been to sell into the upswings, not the usual one of buying on the low margins (Anonymous 21). It is worth remembering that even at these depressed levels the shares command one of the best ratings in the retail sector, however. This seems hard to justify for a company that is losing market share and sales on the scale unveiled recently. Marks & Spencer continues to enjoy a premium rating - albeit not as big as the one it had - but there is no sign of the renewed sales growth needed to back it up. As market industry analysts agree, it may well be that things are destined to get still worse before they get better (Anonymous 21). FUTURE STRATEGY FOR MARK AND SPENCER COMPANY Mark & Spencer's future strategy includes the launch of a fundamental review of its entire business in an attempt to position the company for the next several years.

For the first time ever, Marks & Spencer is to bring in several different firms of management consultants in order to advise on such issues as organization and structure, merchandise, its international development and examine where its stores should be based (Rankine PG). David Norgrove, the Divisional director, has been appointed to head a newly- established business strategy unit. This new unit will be responsible for the lengthy strategic review. The outcome of the review is expected within a year to 18 months (Rankine PG).

According to Marks & Spencer spokesman's, who declined to comment on which management consultants will be brought into its Baker Street head office, they said they were unable to determine how much money would be spent employing consultants (Rankine PG). 'We have launched a fundamental review of what our business is and where it is going,' said the spokesman. 'We shall look at all aspects of the business and a range of consultants will and have been brought in' (Rankine PG). Part of the review will also look at whether the company should split Sir Richard Greenbury's role as chairman and chief executive. As a matter of fact, Marks & Spencer was forced to issue a statement saying that its board was in its decision to ask Sir Richard, who will is now 62, to remain as chairman until he is 65. The statement added that an announcement about his successor is not imminent (Rankine PG).

Other recommendations suggested in order to turn the troubled company around are: REPLACE MANAGEMENT Ousted CEO Peter Salisbury and two other top executives were fired, which was the fifth shakeup at Marks & Spencer in two years. IMPROVE IMAGE Spend $84 million to revamp stores by year end and $28 million on the company's first-ever advertising campaign. FOCUS ON HOME MARKET Shelve international expansion plans and probably sell U.S. clothing chain Brooks Brothers. EXPAND E-COMMERCE Sell online through partnerships with Microsoft Network, the BBC's been. com, and digital-television providers such as Telewest (Capel 35). A Marks & Spencer spokesman confirmed that its non-executive directors changed their minds over who should lead the company last autumn because of the huge changes within the business. Over the next five years the company is expanding its selling space by nearly a fifth in Britain and by forty percent in overseas markets (Rankine PG).

By the year 2005, Marks & Spencer should once again be on the top of their category.

Bibliography

Author not Available. 'Outlook: M&S investors don their hair shirts. ' Independent, (1999), 21.
Capel l, Kerry. 'Britain: lighting a fire under Marks & Spencer. ' Business Week International, (2000): 35.
Le Riche, Timothy. 'Closure date set of M&S leaves voice at Heritage Mall. ' Edmonton Sun, (1999): July, 44.
Marks and Spencer. 'Marks & Spencers Launches Two New Formats. ' (2000), October: PG.
Rankine, Kate. 'M&S asks outsiders to review strategy. ' The Daily Telegraph, (1998), PG.