Whether or not Philip Green gets his hands on Marks and Spencer, big change is now inevitable in every part of the business. New M&S chief executive Stuart Rose made that much clear when rebuffing Green’s initial advances for the chain this week and outlining his initial thoughts on how to kickstart growth at the retailer. “We can identify some quick wins and we need to get the right people in place to sort things out” says Rose.
Womanswear is obviously his priority – and there are some huge challenges there. But what about food? Although the M&S food business has consistently outperformed clothing in recent years, there is no room for complacency at the moment, with like-for-like sales in the past year up by just 1.6%. That’s better than Sainsbury's and Safeway but slower than recent years and leagues behind Waitrose, Asda, Tesco and Morrisons, who are increasingly playing M&S at its own game and winning according to one source close to the company.
He explains. “Ten years ago, one thing was very clear about M&S food – it had to be bloody brilliant. The product developers had to provide a real wow factor. That has been eroded over the years. Everyone has moved into the same space: Sainsbury Taste the Difference, Tesco Finest – the list goes on.”
But focusing purely on the premium end of the market may be a mistake warns PA Consulting’s Mark Dorgan, who says: “Gone are the days when the consumer aspired only to the superior quality of M&S foods. Consumers now buy an eclectic range of products in every category at various prices to meet different needs for quality and price at different times.“
If M&S wants its customers coming back for more, says Dorgan, it needs to follow the lead of its supermarket rivals and differentiate ranges into a good, better, best hierarchy.
That would be a radical step for M&S – although there were reports last year that the company was looking to re-engineer the quality of some food products and pushing for keener prices. Other analysts point to more fundamental issues that need taking costs out of the business.
And one predicts that Rose will probably see food as ripe as clothing for some serious cost-cutting. “The first thing someone like Rose – or Green for that matter – might come in and say is ‘why do suppliers have to put the product in front of the world and his wife”. There are too many layers of management in the business before you get to the people that actually buy the product.”
Whether such changes will be made by the current management team at M&S or whether Rose will bring in new blood is a moot point. Rose would not be drawn on any specifics this week, saying only : “We have got lots of good people in this business and if I have to shuffle people around I will.”
But some analysts are already predicting that head of food Maurice Helfgott could be a casualty – even though he has only been in the role less than six months. Speaking at the M&S results presentation just days before Green dropped his takeover bombshell, Helfgott acknowledged the issues facing M&S.
He accepted the business needed to differentiate itself, and said that, in part, by focusing on those areas where M&S was still seen as a destination store by shoppers: fresh and health, gastronomic adventure and celebration foods.
Helfgott also identified the threat posed by the premium ranges developed by the major supermarkets and the challenge from upmarket grocers such as Waitrose, adding: “We have to make our food even more convenient and even more special.”
And one analyst agrees that in some ways, radical change isn’t needed. “I still think M&S sells the best food in the market. But it has got to differentiate itself even more and get its message out more effectively.
