With half year results showing like-for-like clothing sales continuing to fall - down 5.9% for the 26 weeks to 1 October - the future of fashion at M&S looks set to be testing.
Marks & Spencer Cheshire Oaks
Alongside the results, M&S announced a series of measures aimed at reviving the ailing fashion side of the business, including refining product its selection, as the retailer has long faced criticisms over its confused offer.
However, despite cutting three clothing sub-brands (Indigo, Collezione and North Coast) and announcing store closures in the UK and internationally, the retailer faces questions over whether the changes it has proposed will go far enough in clarifying the brand’s core consumer and reducing retail losses.
Honor Strachan, lead analyst at Verdict Retail, says M&S must further clarify its target consumer. “Removing just three sub brands does not seem drastic enough to allow it to more effectively target a clear consumer segment,” she comments. “Though it has tried to remove shopper confusion about which brands they should shop by displaying clothing in product categories, as well as making steps towards improving availability and slimming down options, these actions seem like band aids for its core issue of not understanding which segment of the market to go after.”
Strachan stresses that the success of M&S in the future will rely on product, and being able to replicate the success of their food business in other aspects of the company. She explains: “M&S should be willing to take a risk to slim down its offer and target a smaller shopper group with relevant and desirable clothing which is differentiated.”
Failure to identify a core consumer for its clothing is also highlighted by Phil Dorrell a partner at retail consultants Remedy Retail, who implies that the only way to combat this issue is for yet more changes at the top. “We would like to see a new face at M&S, one that is new to the business not just to the board room, to identify the customer that they want, not the customer that they have,” he says. “She is confident in her style, something that M&S should learn from, and yes she is an existing customer already only she currently walks past the clothing rails in search of food.”
M&S have also announced plans to reduce the number of full-line clothing and home stores in the UK by 60. A total of 30 stores will close and 45 will be downsized or turned into Simply Food stores. While M&S says the closure is to “better meet consumer needs”, Dorrell believes that the measure is no solution to M&S’s problems. “Reducing cost will take the pressure off the profit performance but this will only be short term, and will not save themselves rich,” he says. “Get the offer sorted out before worrying about short term profit. If they don’t, they could regret giving up that space one day.”
However Jon Copestake, retail analyst at the Economist Intelligence Unit, said the decision to focus on food over fashion was “long overdue”. “The decision to consolidate clothing stores and switch strategic focus firmly onto M&S’s food offering is long overdue and Rowe can be credited with acting decisively in this respect. Clothing has long weighed on profitability for M&S and the current economic climate is seeing a number of clothing retailers struggle with sales.
”The decision to switch investment into food stores, especially smaller format ones, is sensible within this context since food is growing for M&S even as clothing and homewares decline. However, by the end of the decade may seem ambitious in the current uncertain economic climate.”
With these changes to product and portfolio, M&S is attempting to adapt to its changing consumer, and the changing retail environment. Michael Weaver, managing director of Duff and Phelps believes this is key if the retailer is to survive. “As consumer spending is forecast to decline, it will be the retailers adapting to changing customer behaviour that will fare better than more traditional retailers,” he explains. “Although valuations for the sector are reducing, it has already become apparent that retailers which have moved quickly to adapt are under less pressure and unless others catch up and become more nimble, the divergence in the sector will become more pronounced.”