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CASE STUDY
Marks & Spencer (B)
Nardine Collier stocked generic ‘essential’ clothing, and priced its products at a ‘reasonable’ level, while emphasising their high quality, a claim based on its insistence of using British suppliers.
M&S’s problems crescendoed in 1998 when it halted its European expansion programme, announced a 23 per cent decline in profits, and suffered decreasing customer satisfaction. Richard
Greenbury (CEO) blamed this on a loss of market share to ‘top-end’ competitors such as Oasis, which offered more fashionable, but similarly priced goods, and at the bottom-end with competition from discount stores and supermarkets, which offered essential clothing, but at lower prices.
Analysts felt M&S no longer understood its customers’ needs, was preoccupied with its traditional risk-averse formula thus ignoring changes in the marketplace, focused on day-to-day operations rather than long-term strategy, and had an inwardlooking culture, as executives were promoted internally, after immersion in M&S’s routines and traditions. To counter these problems successive CEOs implemented many strategies, including refurbishments, store acquisitions, restructuring, new ranges, overseas sourcing, European expansion followed by complete withdrawal, diversification into homeware, and moving from the corporate headquarters.
However, these measures made little impact, and profits warnings and falling share prices
(2503/4p at its lowest) followed.
Michael Marks began one of the world’s most recognised brands by establishing a penny bazaar in 1884. The phenomenal success of the business led Marks to seek a partner; he chose Tom Spencer.
From this partnership Marks & Spencer (M&S) steadily grew, but by the early twenty-first century its success was running out.
Hitch in the formula1
Until the late 1990s M&S was highly successful in terms of profit and market share. This was achieved by applying a fundamental formula to its
Marks & Spencer (B)
Nardine Collier stocked generic ‘essential’ clothing, and priced its products at a ‘reasonable’ level, while emphasising their high quality, a claim based on its insistence of using British suppliers.
M&S’s problems crescendoed in 1998 when it halted its European expansion programme, announced a 23 per cent decline in profits, and suffered decreasing customer satisfaction. Richard
Greenbury (CEO) blamed this on a loss of market share to ‘top-end’ competitors such as Oasis, which offered more fashionable, but similarly priced goods, and at the bottom-end with competition from discount stores and supermarkets, which offered essential clothing, but at lower prices.
Analysts felt M&S no longer understood its customers’ needs, was preoccupied with its traditional risk-averse formula thus ignoring changes in the marketplace, focused on day-to-day operations rather than long-term strategy, and had an inwardlooking culture, as executives were promoted internally, after immersion in M&S’s routines and traditions. To counter these problems successive CEOs implemented many strategies, including refurbishments, store acquisitions, restructuring, new ranges, overseas sourcing, European expansion followed by complete withdrawal, diversification into homeware, and moving from the corporate headquarters.
However, these measures made little impact, and profits warnings and falling share prices
(2503/4p at its lowest) followed.
Michael Marks began one of the world’s most recognised brands by establishing a penny bazaar in 1884. The phenomenal success of the business led Marks to seek a partner; he chose Tom Spencer.
From this partnership Marks & Spencer (M&S) steadily grew, but by the early twenty-first century its success was running out.
Hitch in the formula1
Until the late 1990s M&S was highly successful in terms of profit and market share. This was achieved by applying a fundamental formula to its