As Marks & Spencer announces that former Halfords CEO, Jill McDonald, will be its new managing director for clothing, home and beauty, Drapers rounds up some of the most pressing challenges she’ll face when she takes up her role.
1. Flagging fashion sales
The biggest challenge for McDonald in her new role will undoubtedly be the task of turning around the fortunes of M&S’s clothing and home division, which has been flagging for years. The retailer has been criticised for a “confusing” clothing mix and lack of understanding of its core customer.
Following another set of weak clothing and home sales figures for 26 weeks to 1 October 2016, M&S decided to axe some of its brands and close of some of its clothing and home stores. In January, it revealed that total clothing and home sales grew 3.1% in the 13 weeks to 31 December, beating expectations and suggesting the new strategy is working. McDonald will be under pressure to make sure those figures stay positive.
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2. Differentiating its product
While recent collections have earned praise for taking a more fashion-forward approach, and the Rosie for Autograph and Archive by Alexa collaborations have been popular, M&S’s clothing offer is still suffering an identity crisis.
In the latest of Drapers’ Hit or Miss series, in which we mystery shop the high street to find out which retailers are nailing the in-store experience, M&S was criticised for offering products at odds with its core consumer. It is not the first time it has been penalised for aiming to please a classic consumer and a modern shopper at the same time.
3. The discounting conundrum
McDonald will need to work out how to deal with discounting on the high street without eroding margins and sales of full-price clothing. In December, Steve Rowe announced that prices were being lowered across 2,000 lines in store, as the retailer pulled back on Black Friday discounting in an attempt to help revive full-price sales. As heavy discounting continues across the high street, this isn’t a problem easily solved, and eyes will be on McDonald’s discounting strategy when she takes the helm.
4. Weak consumer confidence
Consumer confidence has been unstable over the past year, with concerns around the economy and Brexit impacting spending and footfall. Rowe has previously flagged that this is creating a challenging market for retailers. McDonald will need a clear strategy to help the general merchandise division of M&S tackle any downturns in confidence, as well as navigate the uncertainties ahead.
5. Looming price rises
When clothing sales rose for M&S in December, Steve Rowe credited the results in part to the lowering of prices across several lines. However, the outgoing M&S chairman Robert Swannell has warned that the negative impact from the weaker value of the pound has so far largely been mitigated by currency hedging, and price rises are beginning to loom. McDonald will have to balance these pressures with demand from consumers for lower prices.