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Property industry reacts to M&S store closures

There was little surprise in the property industry today as Marks & Spencer confirmed it will be closing 30 full-line stores in the UK and converting 45 into branches of M&S Simply Food, while closing 53 of its company-owned stores in 10 loss-making markets.

pantheon store 2

pantheon store 2

Some suggested the cuts did not go far enough to restore M&S’s struggling clothing business back to growth, but many feared the impact store closures may have on local high streets and small towns.

Property agents and sources Drapers spoke to today had not seen a list of properties pegged for closure and M&S stressed it was looking at the stores on a “case-by-case basis”. 

“M&S is making the right move in cutting the size of its store portfolio, though I think that the UK - rather than international - should have been more of a focus, given the sheer size of the UK estate and the number of shops in the UK that contribute little to the business,” said Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs.

“Politically it is clearly difficult for M&S to close too many stores in the UK easily, given that in many small towns where there is an M&S and little else, they are a major employer. However, more cost needs to be taken out of the business, and my view is that ultimately M&S should look to trim its UK store portfolio by 20%+.”

Another property source agreed it is difficult for M&S to take drastic action in the UK, due to its status as a nationwide, long-standing retailer.

“I’m not surprised at all that they’re cutting that many stores,” he said. “The figures were worse in terms of fashion sales than I expected. It will be interesting to see which stores they actually cut – I haven’t seen a list as yet. They have such a legacy portfolio, I am surprised that they are shutting so few in many ways but it is very political for them to shut stores.”

However, De Mello also cautioned against the cutting of international operations, which will see M&S close 10 stores in China and seven in France, as well as all of its stores in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia. “International has been made a bit of a scapegoat, when ultimately - given their maturity in the UK - international growth is important if M&S are to grow the size of their business overall. International expansion is a long term project and one that requires concerted investment, not a knee jerk reaction to what the company thinks the market might want.”

Edward Cooke, chief executive of retail property industry body Revo, said:M&S’s strategy reflects changing consumer behaviour, resulting in an increased focus on convenience stores, price competition, a strong online presence and excellent customer service – rather than business growth through an ever-increasing property footprint.

“Although M&S continues to look actively for Simply Food expansion opportunities, its fashion-led branches in so-called ‘weaker’ high streets are expected to be the focus of store closures and this will be of concern in those places, given the role retail plays in supporting successful local economies and communities.”

Revo called on local authorities to partner with the private sector to regenerate and enhance retail locations to ensure they continue to meet changing consumer needs.

“M&S and other retailers continue to be subject to a business rates regime which hampers property investment and occupation,” added Cooke. “We continue to urge the government to urgently reduce the tax liabilities arising from this punitive tax and address the opaque appeals system.”

 

 

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