Five reasons for M&S’ woes: from loyalty to innovation

Source: https://econsultancy.com

It seems like a year can’t pass without news of Marks & Spencer’s continued decline.

From disappointment over clothing ranges to overpriced food – we’re constantly being told how consumers are dissatisfied with the British retailer.

This time, however, things are undeniably bleak. And as a result, M&S has given in to defeat – it’s just announced that it is to close 100 of its stores by 2022, alongside news of a 62% drop in pre-tax profits.

While it’s easy to single out Marks & Spencer’s failure, it would be foolish to disregard the wider retail industry as a whole – and the dwindling fortunes of the ‘great’ British high street.

Overall retail sales growth has declined from 4.7% in 2016 to just 1.9% in 2017, meaning than retailers like Maplins, who couldn’t always compete on price or convenience with Amazon, have struggled. Both Toys R Us and Maplin announced that they are heading into administration, while there have also been rumours that New Look is to close many of its stores, arguably because of tough competition both on the high street as well as online.

In this sense, there’s no denying that M&S is just one of many struggling due to the current state of the high street, higher inflation and stagnant wages. But M&S’s brand and cultural heritage makes it a more interesting case. In the context of today’s retail landscape, where exactly is M&S going wrong? More importantly – can it make a comeback? Let’s discuss.
Competition, both high and low

Perhaps the simple explanation is M&S hasn’t been doing enough to change things, with the retailer instead focusing on things like customer service and store-layout rather than product or price. But do customers really care about this?

While its financial state suggests that people are growing tired of M&S, it’s also interesting how many speak so fondly of the retailer – even in overly sentimental terms.

From the social cachet of its sausage rolls to the ever-present popularity of Percy Pigs, news of its dwindling fortunes has got everybody waxing lyrical about the part M&S has played in their own lives.

It seems to hold a cultural relevance that goes deeper than most retailers. There’s something quintessentially British about Marks’, and much like Cadbury’s chocolate or the Queen, us Brits seem ready to defend it to the hilt if anyone (other than ourselves) dare criticise it.

So, if we feel such an attachment to the store, why aren’t we shopping there?

Quite simply, there are alternatives which now provide something it does not – both lower prices and better choice. From Aldi to George at Asda, there are a whole range of affordable, accessible and quality physical retailers stealing M&S’ glory.

For staples like underwear, people are finding it hard to resist Primark’s low prices. On the other end of the spectrum, supermarkets like Waitrose have been eating into the aforementioned sentimentality, with shoppers on the look-out for quality also going elsewhere for posh picnic fare.

So, Marks & Spencer’s has been stuck between a rock and hard place for quite some time. Should it concentrate on improving quality or lower prices? Compete with Lidl or John Lewis? Focus on food or homeware?

Its inability to decide, alongside its determination to be all things to all people is perhaps the crux of the matter. Ultimately, in today’s highly competitive high street, being middle of the road means you are likely to be overlooked.
Lack of digital innovation

That being said, you could argue that other retailers (Debenhams, House of Fraser etc.) are slightly nondescript too. However, these brands – as well as known for being bigger department stores – also have fairly decent ecommerce offerings.

Instead, while online sales have been increasing for M&S, the retailer’s (lacklustre) digital presence has undoubtedly held it back. Its website is notably average, both in terms of design and ease-of-use, with even chief executive, Steve Rowe, admitting that it is far too slow.

The company has also acknowledged the need for action, recently announcing that it will execute ‘accelerated change’ to complete digital transformation, which has so far been too sluggish.

One big change will be its partnership with IT firm Tata Consulting, which will help the company to replace legacy IT systems for employees. Alongside this, it plans to further invest in its main warehouse and online website. M&S also hopes to move a third of its clothing and homeware sales online in the next few years, with improvements to its supply chain and delivery services.

So, will a better online service entice shoppers back in? There’s no doubt it will help, especially considering growing consumer expectations for a fast, easy, and omni-channel experience. With the likes of ASOS winning online thanks to top quality logistics, M&S has no choice but to step up its game.
In-store CX & Sparks card

Another area which could definitely do with improvement is in-store CX.

Last year, M&S decided to separate its Food and Clothing divisions into two separate businesses, which are both now independently managed. While this makes sense to a large extent – each face different challenges – the two often still go together in the minds of consumers. This is because M&S stores typically include both divisions, which only adds to the somewhat confused and jumbled nature of the in-store CX.

Layout is often cited as a big bugbear for customers, both in terms of the confusing way clothing departments are set out, and how often things change around in-store. In comparison to other fashion retailers like Zara or John Lewis, M&S stores also just feel quite dull and inspiring – and certainly outdated in terms of design.

Of course, it wouldn’t make much sense for M&S (which tends to appeal to an older demographic for clothing) to include flashy or bawdy design elements, however, it could certainly work on streamlining its stores as well as doing more to grab the attention of passers-by.

Meanwhile, another big area of confusion for customers seems to be the Sparks loyalty system, which is often criticised for being overly convoluted and difficult to understand. Unlike a lot of loyalty programs, whereby points directly translate into money-off items, Sparks focuses on ‘exclusive’ offers and events, which from the sounds of it, don’t align to the typical needs or wants of regular M&S shoppers.
Brand values

Lastly, it’s also been suggested that M&S has been setting its sights too high – especially when it comes to corporate responsibility.

Its Plan A/2025 initiative is impressive and certainly determined – M&S even calls it “an ambitious customer focused sustainability plan”. The report outlines the retailer’s aim to raise £25m for charities supporting cancer, dementia, heart disease and mental health, plus plans to halve food waste, improve communities, and reduce gas emissions.

While Plan A did make headlines when it was released last year, I doubt many consumers are currently aware of it, or have even given much thought about sustainability in relation to the brand.

Rather then, in conjunction with the promise of quality, perhaps M&S should be making more noise about its ethics. Perhaps if it does (alongside improvements to its online capabilities and a better CX) it might help to re-establish the brand as a retailer that’s worth paying a bit more for.

A brand that – alongside something special for dinner, or a really nice pair of slippers – can be counted on for decent values.



Categories: Brands, Business, Europe, Retail

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