Thursday 24 October 2019

John McGee: 'This is not any brand problem, it's an M&S brand problem

Perception is a challenge that must be overcome by the veteran British retailer. Photo: Bloomberg
Perception is a challenge that must be overcome by the veteran British retailer. Photo: Bloomberg

John McGee

Forty years ago, my late mother arrived home one day with a bag of goodies which included lemon drizzle cake, Cumberland sausages, maple flavoured bacon, some delicious breasts of cooked chicken on the bone and a big bag of juicy tangerines.

With strong retailing blood coursing through her veins, she loved nothing better than trying out new shops and snapping up anything unusual or semi-exotic. So, when Marks & Spencer opened the doors of its first Irish store on Dublin's Mary Street in 1979, it is entirely conceivable she was first in the queue.

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Forty years in the retailing world is a long time and many of the once-proud retail brands which strode the landscape like colossi in the 1970s and 1980s have either gone wallop or been reprieved by 11th-hour pre-pack administrations over the past few years.

Others have hobbled on, aided by drastic restructuring, often in the belief that they were staving off - for the time being anyway - a slow, painful but inevitable demise.

Over the last 18 months, well-known retail brands such as House of Fraser, Debenhams, Poundworld, LK Bennett, Karen Millen, Coast and Jack Wills have all found themselves in financial bother. Without the help of pre-pack administrators, most of them would have gone to the wall by now.

Now, with the spectre of Brexit hovering menacingly over the aisles, the future outlook for retailers remains pretty grim.

It is difficult to pinpoint one precise cause of all this distress but you can certainly point the finger at a number of converging trends: the rise of online shopping, the mushrooming of out-of-town shopping centres, the arrival of the German discounters, greater competition, eroding consumer confidence, rising rents and a decline in real spending power.

For M&S, some or all of the above is particularly true. But you can also add to this list the brand's perception and its relevance in the daily lives of consumers, and where M&S sits on weekly shopping lists.

If you were to organise a round-table focus group and ask 10 different people what the M&S brand means to them, you will get a wide and varied set of replies. Some of them are likely to include it's too expensive, it's too fuddy-duddy, it doesn't really cater for younger shoppers, it's frequented mainly by the over-50s, its women's and men's clothing ranges are all over the place, it's too middle-of-the-road and, like a Brexit-backing Middle Englander, it's been dining out on past glories for far too long.

The trouble with these replies is that they are all right. How people perceive a brand may be subjective but it is this subjectivity, however ridiculous or unfounded it may seem, which exerts considerable influence over their spending choices.

For management at M&S, this poses all kinds of challenges when it comes to things such as marketing and advertising, the brand positioning, the customer experience, the product offering and the target market.

In the case of M&S, substantial management upheaval has taken place at all levels, including the marketing department, in recent years. Agencies have been hired and fired and new buying strategies have been rolled out with varying degrees of success and failure. This has led to some serious soul-searching and harsh decision- making, the most controversial of which is its decision to close 100 stores by 2022.

Brand problems aside, the problems facing M&S are further highlighted by the steep decline in profitability and sales. Back in 2014 it notched up sales of £10.3bn (€11.5bn) worldwide, including Ireland, where it operates 18 stores. Four years later, sales had only increased to little over £10.7bn. Over the same period, pre-tax profits have steadily declined from £580m in 2014 to just £68.8m in 2018.

Not surprisingly, this abysmal financial performance, coupled with the erosion in its market capitalisation, has led to it dropping out of the FTSE 100 this month.

Whether or not M&S goes the way of some of its other retail rivals remains to be seen. One would like to think it will reinvent itself and regain some of its long-lost mojo, not least because what happens on the high streets of Manchester, London or Edinburgh has a knock-on effect on the high streets and shopping centres in Ireland.

But 40 years on from its first Irish store opening, my mother's favourite son tries to maintain her retail tradition with the occasional splurge on reasonably priced wine and delicacies, including Cumberland sausages, which are hard to find elsewhere.

But when it comes to my own Boohoo-loving 16-year old human guinea pig, who is the shopper of tomorrow, the idea of buying a pair of jeggings or a top in M&S would probably terrify her, because, well, that's where her granny shopped 40 years ago.

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