British shopping institution Marks & Spencer lost 25% of its share value yesterday when its Executive Chairman Sir Stuart Rose announced that due to a lack of consumer confidence, same period store sales were down 5.3% and revenues for the full calendar year would fall by 20%. It must be really bad if people have stopped buying their underwear (M&S is noted for good quality undergarments).
Alas, the trouble is not in clothing rather their decidedly upscale food markets located in nearly every large High Street or shopping mall store. They could never compete with Tesco, Sainsbury or Asda on volume for such low margin business so they provided upscale products in the manner of specialty food retailer Waitrose. Indeed they poached Steve Esom from Waitrose to head their food division just 13-months ago and he was announced just four months ago as a likely successor to Sir Stuart. All was tea and crumpets until yesterday.
Alas, Mr. Esom’s departure was also announced yesterday as his understudy John Dixon, head of M&S Direct, their online retailing arm pulled a Shirley MacLaine of his own and was slotted in as head of food. (MacLaine was a chorus member understudy to Carol Hane in Broadway’s Pajama Game, stepped in when Carol broke her leg and was promptly discovered moving on to fame and fortune, while most still ask Carol who?) How long before we say Steve who?
M&S business strategy often reminded me of Volkswagen in the 1970’s. The brand has an enormous value and name recognition but the lines extending underneath it make little sense.
Volkswagen meant solid reliable Beetles and Campers to virtually everyone. The 70s saw them branch into so many cars and then they did away later with the Beetle altogether they lost their soul and identity as a company. OK, it was a bit eerie to see Hitler parade around Berlin in one and they were the car every kid could afford to buy and maintain. They went crazy with all the different cars including something they marketed as ‘The Thing’ and almost disappeared. Now with the new Beetle leading the way, VW is back strong and synonymous with sleek autos.
M&S has struggled with the development of hypermarkets such as Tesco and Asda superstores and just never decided what it wanted to be, a top flight department store, High Street anchor or specialty food purveyor. So they did all three. Aside from the roadside service home run they hit with their partnership with motorway provider Moto Services to bring healthy food options to rest areas, they have lagged.
Their online operation is now easier to navigate and the delivery/fulfilment system works well enough, but you don’t think of them in terms of innovation, fitness and sexy, mostly solid singles up the middle with their “me too” response.
Tesco.com is the online gold standard where virtually every item in store can be purchased online. They have a few things still to learn, but none more important than deciding who they really want to be because trying to be all things to all people is a failing strategy in today’s niche business world. So the High Street weather barometer shows a period of low pressure moving in, but they’ve been here before and always come on strong.
John, we’re ready for you onstage sir. Break a leg?
