Marks and spencer corporate strategy
Marks and Spencer also known as M & S, is a British retailer that has several outlets outside UK. M&S dominates clothes retailing in Britain. It is one of the largest and most iconic chains in the UK. Majority of its shops sell garments and other related accessories; which are popular among its loyal customers. .. In 1997/98 it sold £4.3 billion of clothing, footwear and gifts, giving it a 15 per cent share of the UK market. It is perhaps most associated with underwear, accounting for about 35 per cent of the UK market.
It has incurred some losses in past few years; but it is growing again. One major blunder M&S committed was to go for online selling in 2001. M&S believed that it 24 million customers a loss of 38.6 million pounds. Being unable to cop with the problem the company has to sign an agreement with MSN to take care it. in the past few years M&S has recovered and sales went up 11 % with £3,929.4 million in 2006. M&S revenue was up 11 percent in 2006(as shown in table below).
Mark and Spencer buy clothes from local manufacturers such as Vivell, Courtaulds, all of which are meant to compete in the lucrative market to keep the survival of these paltry UK garments industry. It has also been in increasing its relation with the overseas manufacturers for the last few years to compete with low budget imported casual wear.
During the last two decades, the British industry went through relocation, bankruptcies, and labour cost saving and enormous job loss. In the wake of growing invasion of cheap garment; Marks and Spencer went out to find outsource in Mediterranean and Asian countries. The company now has factories in many developing countries ranging from Tunisia to Turkey and China for two main reason; low cost budget clothes to compete with imported Chinese material, and cheap labour that creates greater profitability. By 2002, 70 percent of their production was manufactured overseas. This trend has been growing even in the 2006.
Since 1986, British import has been enormously increased from China, Hong Kong (China and Hong Kong are linked economies) and also added import from Turkey, India and Indonesia. The garment import has been risen 57 percent by 1996. British import have increased, however it cannot keep pace with Chinese boom nor is it able to compensate for the job loss. However its not just outsourcing which can help M&S. M &S needs to launch its products in the growing economies such as Vietnam, China, and other Asian countries. The population of Asian countries is enormous; M&S can sell in bulk at lower price for the reason of local production of material. The competition is tough especially from China; the challenge is to increase market share and drive profitability. One positive point on which M&S is cashing in its brand image; which is very sellable; but the need it to make it more affordable for consumers in Asian countries..
M&S has been working as a traditional British style civil service (jack of all trades master of none) for the past many decades. The modern industry is focusing on specialization of products. M&S has this challenge of changing its corporate structure by recruiting specialists who can focus meticulously on refinement of products. Such move will cut down the increasing cost of products and will also give rise to innovation.
One way to increase profitability in any business; especially in retail is listening .The process of listening to the customer has to be supported by massive advertising; a huge investment which unfortunately M&S is not doing. One exception was the recent M&S brand awareness show at Grand Prix 2006; sponsored with logo “Your M&S”. There is a greater need to spend more money on advertisements and marketing of its products; if M&S has to reach the new generation of customers who are more media and tech savvy.
For any company; the over all business strategy is to increase profit and further business expansion. Even though M&S has earlier failed in selling online; the new e-strategy is to sell through Amazon. M&S has done an agreement with Amazon, but this alliance will not work unless it reaches the customers directly. The way to reach to online customers is by offering incentives; discounts and massive online adds; only then M&S would be able to reach its potential online customers.
Looking at above it is clear that M&S needs a corporate strategy; which should be a combination of great value with stylish products coupled with good customer service (online and offline) to drive M&S profitability in local and overseas market.
M&S Annul Review 2006
http://www2.marksandspencer.com/thecompany/mediacentre/pressreleases/2006/fin2006-11-07-00.pdf Accessed on Dec 3, 2006.
M&S, Chief Executive Review
Available at < http://www2.marksandspencer.com/thecompany/investorrelations/annual_review06/downloads/index.shtml> Accessed on Dec 3, 2006.