An Analysis of Marks and Spencer

An Analysis of Marks and Spencer

INTRODUCTION TO THE FIRM AND ITS INDUSTRY

Marks and Spencer is one of the largest retailers in the United Kingdom, and is also known as a major retailer selling diverse product ranges under their own exclusive brand in more than thirty countries. Customer confidence in the Marks and Spencer brand remains second to none. According to recent research undertaken by the Company, it shows that, in clothing, Mark and Spencer has a clear lead over all its major competitors in the key areas of fit, quality, trust, breadth of range and customer service.

In November of 2000, Marks and Spencer will launch a trial of three new lingerie-only outlets in Paris, Hamburg and Dusseldorf. According to industry statistics, Marks & Spencer remains the clear leader in the UK lingerie market, with over

thirty percent of the market share. These pilot stores, distinctly branded 'msl', are designed to showcase the product range, taking the very best of Marks & Spencer lingerie to the Continent. Moreover, twenty-five percent of the 'msl' range has

been designed exclusively for the continental market (Marks & Spencer PG).

According to David Norgrove, Marks & Spencer Executive Director, the new stores developed by Marks and Spencer "clearly show how we can give customers what they want in the way they want it. Today we have both depth of product and a variety of retail formats, so that we can encompass factory outlet stores and designer clothing under the Marks & Spencer brand. Our new concept stores carry a wide range of products and services tailor-made for its local customers but, at the same time, we are also launching the European pilot of a specialist retail format which builds on our core strength in lingerie. All of these products and formats are being in response to customer research, to meet a proven need" (Marks & Spencer PG).

THE COMPETITIVE STRUCTURE OF THE INDUSTRY

The British retailer Marks & Spence decided to close its one Edmonton store, along with fourteen others across Canada, with the eight remaining stores being closed just one month later. This marked the ending of Marks and Spencer's 26-year run in Canada.

The chain announced its Canadian pullout, which will affect only sixteen staff, was a surprise for Canadian shoppers. Heritage Mall manager Kirby Nishikawa said "the shutdown hurts the shopping center." (Le Riche, 44, 1999).

Marks and Spencer had about 585 square meters of mall space. "It was the only outlet in the city and it brought in a lot of people," said Nishikawa. "It's a shame" (44, 1999). The mall is working on a redevelopment plan, said Nishikawa, but no details

are ready to be released. But Adam Finn, director of the Canadian Institute of Retailing and Services Studies at the University of Alberta, said the Marks and Spencer pullout doesn't hurt the Edmonton retail picture as much as the Eaton's crisis. Eaton's, another major competitor of Marks & Spence, had bailed out of the mall earlier. Eaton's is looking for a buyer for its other outlets, and has already announced the closure of its Londonderry Mall store.

"Marks and Spencer were never successful in Canada," said Finn. "Eaton's is a bigger issue." If Eaton's is sold to an American buyer, as rumors suggest, the new owner may only want one or two outlets in Edmonton, said Finn. "That would leave a couple of other stores," said Finn. "I doubt Sears would want them. "So, it would probably mean a couple more vacant spaces in the major malls. There are already a number of them." In some cases, Marks and Spencer stores will close earlier than scheduled if all of the store's goods are sold, the company said (Le Riche 44).

The food departments may also close earlier than the rest of the store.

Marks and Spencer said mounting losses and an increasingly competitive retail economy had forced the company to leave the Canadian market.

Analysts have said the retailer's merchandising mix of clothes and specialty British foods - including Christmas crackers, jams and preserves - never worked well in North America (Le Riche 44).

The most unusual part of this downswing of Marks & Spencer is that the company has added 50,000 new investors to its share register over the past year. Normally a company as crisis-torn as this one cannot attract such a voluminous new following of investors,