Marks & Spencer chief executive Marc Bolland said retailers are under increasing pressure to choose between improving gross margin or boosting sales at Christmas, following the “sea of red” promotions on the high street last month.
After M&S reported a “disappointing” 5.3% drop in clothing sales for the 13 weeks to December 27 this morning, Bolland said: “We deliberately held back on our level of discounting in December. This impacted our sales, but led to a good performance on our gross margin.”
He continued: “December was a highly promotional market and it was very red on the high street in terms of promotions. You have to weigh up an improvement in gross margin versus an improvement in sales and we’ve done that.”
In 2013 M&S ran a blanket two-day promotion the week before Christmas, offering 30% off all clothing. This year the retailer focused on more targeted discounting for certain product categories, such as 30% off women’s cashmere.
Bolland said the business sold more womenswear - which was the best performing category in fashion - at full price this year than in 2013, showing M&S’s “confidence in the product”. He declined to break out sales figures for womenswear, menswear and kidswear.
Despite pulling back on pre-Christmas discounting, Bolland said retailers need to embrace the way consumers want to shop. Black Friday, he added, “is not going away”.
“What we do is always driven by consumers and the market is becoming more digital. Black Friday is part of this digital world and we should embrace it, but it does have its consequences. Black Friday gave us a peak we couldn’t reach afterwards, but if consumers like to shop like that we need to find answers.”