Origin

Marks and Spencer story spans 125 years. M&S made a reputation on a policy of selling only British-made goods (eventually discontinued in 2002). By 1984, when the company Marks & Spencer (M&S) celebrated its centenary, annual turnover was more than £2.8bn.  However in the late 1990s it suffered a reversal in its fortunes.

This case was presented skillfully at Tasmac and many lessons were highlighted by the talented group below.

M&S Presentation Gp Tasmac

Michael Marks

Polish-born refugee from Russia, Michael Marks, set up a market stall in Leeds selling everything under the admirably

Michael Marks

simple slogan: ‘Don’t ask the price. It’s a penny’. Michael Marks became well known for pioneering ‘penny bazaars’ in late 1980s. His business grew rapidly and he decided to partner Thomas Spencer, a cashier from Yorkshire.

Simon Marks

After his father Simon Marks took over the running of M&S. He was aggressive with his ideas for the organization and even went to America to study the retail stores. He introduced the ‘St Michael’ logo as a sign of quality and trust. There was a feeling of camaraderie and family

Simon Marks

within the stores. Its clothes were a byword for affordable quality and its food halls pioneered ready-prepared meals. He used the same UK-based suppliers and ensured the goods were exactly to specifications

Richard Greenbury

The next CEO Sir Richard Greenbury was focused more on classic fashions. And not so much on the cutting edge of fashion. The top-down culture continued. In 1998, under the leadership of the irascible but effective Sir Richard Greenbury, M&S became the first British retailer to clock up annual profits of £1bn.

Richard Greenbury

Then in late 1990s their image became – stodgy, the staff deserted in droves and the shares plummeted – it has long lost its claim to be either Britain’s biggest retailer or its most profitable (both of those titles go to Tesco).

Greenbury, Chairman and CEO, blamed the competitive environment. Competitors were eroding market share, from the top and bottom ends of the retail market. They offered basic range of clothing, but at significantly lowered prices.

Peter Salsbury

In Nov 1998 Greensbury had to step down from the CEO position. A senior director Peter Salsbury was voted-in as the new CEO. Oates his contender did not attend the board meeting and elected to take early retirement.

Salsbury began to implement a reorganization strategy to become more customer focused by moving M&S away from

Peter Salsbury

its bureaucratic culture. Breaking down the power of the traditional buying fiefdom and to adopt a customer focused approach, rather than allowing the purchase department to dictate what the stores should stock.

Salsbury saw the closure of six of M&S’s European stores, a reduction in its head office, and closure of all 38 of its Canadian stores that had operated at a loss for 24 years.  New design consultants were appointed to create a new store image.

Luc Vandevelde

In 2000 for the first time an outsider Belgian-born Luc Vandevelde was appointed Chairman and given a ‘golden hello’ and a lucrative salary. Vandervelde left his MD role at Promodes, the French food retailer. There he had achieved a six-fold increase in the value of stock.   M&S Vandevelde revamped the value chain – earlier stores of the same size were sent the same clothes regardless of location or customer profiles.     

St Michael Logo

In March 2000 M& S declared a dramatic overall to its brand. It downgraded the once acclaimed seemingly its invaluable, St Michael brand, in a move which would have shocked the founders and past CEOs. This was because it was identified that customers were confused about the differences between St Michael and Marks and Spencer’s.

One distinctive brand would operate and St Michael to be relegated to inside clothing labels as a symbol of quality and trust.

A New Vision

M&S launched Plan A in January 2007, setting out 100 commitments to achieve in 5 years. Now Plan A is extended to 180 commitments to achieve by 2015, with the ultimate goal of becoming the world’s most sustainable major retailer.

Emerging Markets

In 2008 new M&S chairman, Sir Stuart Rose said India and China will be key markets as the largest U.K.

Sir Stuart Rose

clothing retailer expands overseas. India is “ideally suited to the M&S demographic” and China will be a “viable business” in the next five years.

What issues come out of the M&S saga? Were they ethnocentric and ignored diversity?  Slow to change? Not customer focused? Their chances of success in emerging markets? What did they do right?

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About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

20 responses »

  1. thank you says:

    sir ,
    due to leadership why did made under performance from 1990 to 2010 m&s. why there was frequently change in the management in m&s. with link plz provide me answer. thank you

    Liked by 1 person

    • dilipnaidu says:

      Hello my friend. Well I appreciate you interest in the the M&S case study. I am afraid I have been out of touch with management literature and will need to brush up on the case as well as where the company is now.

      But I will surely read up and give it a thought. May take some time due to my present commitments.

      Till then best of luck and cheers 😀

      Like

  2. Motunrayo says:

    From the over viewed, M&S should call in for diversification and change management, as the market trend is flexible. Fashion world has a taste per time and season. especially with world’s global recession, economic factors should be considered in determining price while still protecting the organization’s standard and image.

    Like

    • Dilip says:

      Hello Motunrayo,

      Welcome my friend from Nigeria? Yes you are quite right in saying must keep pace of changing trends and even be prepared to diversify. Pricing is yet another challenge for M&S known for its high price as we see here in M&S India.

      Thanks do come again.

      Like

  3. Susmita Mandal says:

    Dear Sir,
    I have read all the above comments and found them extremely good.I may not be able to analyze the case in that great way but mentioning whatever i feel.As we can see in the case different ways of leadership at different phases of M & S,we find that all the ideologies of the leaders were successful at some juncture of time.So it is clear that M & S will have to change its strategy with changing time if it wants to be in the race.It will have leave its traditional,expensive image and be customer oriented and customer friendly.As far as its business expansion in India it will have to understand customer psychology and have to work hard to influence them as not by British tag and high price.
    Thank u
    Susmita Mandal
    Batch-E
    Asian School Of Management
    Pune

    Like

  4. Dilip says:

    Great response Akash. Its true that SWOT is a powerful strategic tool. And you have linked it very well to M&S. Thank you Akash.

    Like

  5. akash says:

    Respected Sir,

    Good Morning ……..!!!!!!!!!!!

    M & S ‘s SWOT analysis :-

    SWOT Analysis is basically a procedure to generate new information which might be helpful in setting up the organisations goals, their programs and the ability to which they can operate within the environment in which they operate.

    (i) Strengths: M & S was famously known for their excellent store layouts and excellent standards of quality.
    They clearly and carefully study trends and thus understand customer preferences.

    (ii) Weaknesses: A major weakness is that their competitors use suppliers located overseas to cut down their costs where M & S always use British suppliers considering they would provide them with the best quality standards at low costs.

    And also, they at time lag behind in introducing latest fashionable clothing thus making them all the more vulnerable to its competition.

    (iii) Opportunities: In order to survive in this time of globalisation, M & S has brought in a wider choice thus expanding their business.
    Also, they have got ample opportunities to offer their overseas supplier giving them cost advantage.

    (iv) Threats: Marks and Spencer, over the past few years have been in good competition with brands like GAP, Next who offer approximately similar priced products but more fashionable.
    Also, discount stores like Matalan, Asda etc. offer them good competition as well.

    Thank you Sir for your Loving Support and HELP………………….

    Thanks and Best Regards,
    akash

    Like

  6. Sahajo says:

    According to Mr. Stuart Rose, M&S sees India and China as a key to overseas growth. As on 24th Feb, 2010, Mr. Rose said, “International growth is going to be a long-term journey. India is ‘ideally suited to the M&S demographic’ and China will be a ‘viable business’ in the next five years.”

    The appointment of Marc Bolland is an exciting development for M&S but (of course) is not without risks. M&S is behind the pace in its global reach and this is one of the attractions of Marc Bolland.
    M&S Chief Executive Officer Marc Bolland will use his 30 years’ of experience in Marketing and three years as a “turnaround specialist” to speed international expansion of the U.K.’s largest clothing retailer.

    The London-based company is accelerating store openings at the international division, which accounts for about 10 percent of sales, with new outlets in China, India and Eastern Europe.

    Rose said that M&S’s store in China is “doing extremely well” and the retailer will open a second Chinese store soon and almost certainly, a third this year.

    In India, there is already a strong demand for great quality, good value Marks & Spencer products. Partnering with Reliance Retail enables M&S to accelerate their growth in this dynamic economy.

    Marks & Spencer believes that India offers significant expansion opportunities and the potential is huge with a wider range of products, bigger M&S stores and a better brand experience overall.

    So I think M&S is doing pretty well in India as well as in China.

    Thank you..

    Like

  7. Gaurav R Arora says:

    This case study brings out the fact that Customer feedback is very important aspect, particularly in global world.

    in order to attain multinationality it is very important to get multicultural people particularly at higher position.

    Developing value for money (by cutting cost) to benefit customer and Training provision for the staff(strategies which they later adopted) are the good points which i liked about Marks and Spencer.

    A Good presentation given by Mustakim and team.

    Thanks,
    Gaurav R Arora

    Like

    • Dilip says:

      Gaurav. The points you mention are valid. The organizational challenge is to be open to global views and learning. M&S needs to build a powerful strategic value chain with suppliers spanning across the globe and not be restricted to ‘only British’. Akash too has touched upon an important issue.

      I wonder how M&S is doing in India and China?

      Thanks for your comments and regards,

      Like

  8. akash says:

    Respected Sir,

    Good Morning ……..!!!!!!!!!!!

    A firm’s strategy is said to be its long-term objectives or its direction in its quest to gain and sustain competitive advantage over its rivals.

    In this race to achieve competitive advantage, a firm must ask itself 3 questions, what forms of value do we seek to create? How do we create this value? And how is the value creation process organised or managed?

    I have chosen to research the food department of Marks & Spencer in order to gain an insight into what strategies they use in an attempt to gain competitive advantage…………….

    for marks and spencer ,

    i have identified the following as core values :-

    • Quality
    • Value
    • Service
    • Innovation and
    • Trust

    As a company it is vital that they keep in mind these core values when they are deciding which strategies to employ………..

    By looking at Marks & Spencer’s food department in this way, we can begin to craft out different kinds of strategy that they use in order to gain competitive advantage.

    The basis for the strategies that M&S food department use takes an almost top-to-bottom approach. It begins with an issue that M&S as a company take very seriously, and that is Corporate Social Responsibility.

    A second strategy that links into CSR is supply chain management, and the way that M&S food products are sourced and how they eventually arrive on the shop floor shelves.

    Thank you Sir for your Loving Support and HELP……….

    Thanks and Regards,
    akash

    Like

    • Dilip says:

      Dear Akash,

      I read your views – क्या बात है … आपने बहुत अच्छे से इस केस को समझney की कोशिश की है … हमें आपके कमेंट्स बहुत अच्छे लगे …

      Sustainable strategies are possible only when values and ethics are given highest importance. Your research on M&S food department has identified the core values very accurately.

      The linkage of CSR with the value chain will surely ensure that the organization is not be vulnerable at any of its chain anywhere in the world.This is a brilliant observation.

      I am highly impressed by your line of thought. Keep it up.

      Regards,

      Dilip Naidu

      Like

  9. Vedant says:

    Hi Sir

    Greetings!

    M&S is well known lifestyle brand in the world.M&S entered in India with JV Planet retail pvt ltd but they were not able flourish brand in India. They have dissolved the agreement. Then, they have JV with Reliance Brands and the CEO is Mr. Darshan Mehta, he was COO of the VF Arvind Brands. In India, he is coming up with strategy of Pricing. They have two brands under roof of M&S i.e Blue Harbour & Autograph. Blue Harbour is affordable in nature and Autograph is Premium brand of it.

    M&S has long way to go in the market because people still do not know that they have slashed their prices in India. Anyways, even personally I like the stuff of M&S… n its simply awesome!!

    Cheers!!
    Vedant

    Like

    • Dilip says:

      Dear Vedant,

      As always I am delighted to read your comment. Your comment based on personal experience has enlivened this post. I am aware of you rich experience in retail in Pune soon after your MBA. I feel a few months retail experience is good thing to happen to any fresh MBA.

      From what you have said of M&S India I feel they need to learn speedily how to fit in the Indian competitive environment. The competition appears to be quite challenging.

      Thanks and regards,

      Dilip

      Like

  10. Dilip says:

    Hi Geetha,

    ‘Value discipline’ and ‘customer-intimate discipline’ express very well the core issues of M&S. Whenever they drifted they lost market share. When leaders change consistency in adhering to values becomes a challenge. Perhaps a sustainable vision and culture can help.

    Thank you very much and kind regards,

    Dilip

    Like

  11. Geetha says:

    Dear Sir,
    This case study on M&S has very incisive insights on “value discipline” and “customer-intimate discipline”.

    Thanks and regards,

    Geetha

    Like

  12. Dilip says:

    Mustakim,

    Thank you for an insightful analysis.

    1. M&S strategy of relying on British suppliers did work well till the Simon Marks era. It is was important to have reliable suppliers who share your vision and never compromise on quality and timely supplies. After all it in this period that the famed St Michael logo – a symbol of trust and quality was introduced. M&S also believed in a top-down culture that worked due to Simon’s exceptional leadership and deep understanding of the customers needs and tastes.

    2. Later in the Greenbury time the global environment had changed – low costs, trendy and fast changing fashions and international competition (GAP, NEXT ….) were in the market with competitive products. But M&S did not change its strategy. The competitors had global value chains and they leveraged this advantage to provide superior value to customers. In fact they were much more customer focused than M&S.

    3. Even in today’s times most global corporations compete not with their products but with their value chains. But M&S has now got its act together and is doing well in building a global value chain oriented to the countries that are their target markets – like India and China. In India they have about 10 retail franchise outlets and are sourcing their raw material from Gujrat and possibly some other states.

    I appreciate your response. Thanks.

    Like

  13. Mustakim says:

    Waters (1999) states that to develop a competitive strategy, managers must look at the organisation’s strength and weaknesses in relation to those of its competitors. At this point, what I have observed M & S didn’t follow what competitors follow, early years of 20th century where M & S always use British suppliers considering they would provide them with the best quality standards at low cost, And also, they at time lag behind in introducing latest fashionable clothing thus making them all the more vulnerable to its competitors. While his competitors standards are high and their competitors use suppliers located overseas to cut down their cost.
    , M & S over the past few years have been in good competition with brand like GAP , NEXT , ZARA etc who offer approximately similar priced product but more fashionable ,Also discount stores like Matalan , Asda , Primark etc offer them good cloth more fashionable with very low cost .

    Like

  14. Manish says:

    http://www.management-issues.com/2006/8/24/research/marks-spencers-dirty-laundry.asp

    More thoughts on concurrent.
    You would have thought Marks & Spencer chief executive Stuart Rose had enough on his plate turning around the troubled high-street icon without having to suffer this week’s very public boardroom spat.

    On paper, of course, it’s little to do with him. Former Whitehall mandarin Lord Burns is to take over as chairman from current incumbent Paul Myners at the retailer’s annual general meeting in July next year.

    But in reality it is very much about him, or at least his close relationship with Myners, the man originally brought in as part of a “dream team” to help head off billionaire Philip Green’s bid for the chain last year.

    What appears to have happened is that when Myners, who was supposed to be a stop-gap chairman, indicated he would like to continue in the role permanently a rift developed with Misys boss and senior non-executive director Kevin Lomax.

    Lomax was reportedly concerned that the rapport between Myners and Rose was too close and worried Myners was holding down too many other roles to devote enough time to M&S.

    The compromise solution reached – that of Burns initially assuming the role of deputy chairman from October but not stepping up for 14 months – has led to suggestions of a “fudged decapitation”, that Myners will be a “lame duck” and that it has all simply been a case of “tethering” egos.

    In the wake of the Higgs corporate governance reforms, the non-exec has become a much more pivotal – and powerful – position.While it is impossible to know the exact ins and outs, the M&S saga does signal a fascinating evolution in the role of the non-executive director. In the wake of the Higgs corporate governance reforms, the non-exec has become a much more pivotal – and powerful – position.

    “Non-executive directors are becoming increasingly aware of their accountability. There is a whole new breed of non-executive directors coming along that will not just do what the chairman wants,” suggests Susan Bloch, managing director of thought leadership at consultancy Whitehead Mann.

    It was Royal Mail chairman Allan Leighton who famously coined the phrase “going plural” when he stepped down from the helm of Asda to take on a raft of executive and non-executive roles.

    It is somewhat ironic then that the just as portfolio of directorships held by Myners was an issue, so it could prove a headache with Burns, too.

    However good his relationship with Rose becomes – and there is no reason to believe it is going to be frosty – the number of directorial hats worn by Lord Burns (Pearson, British Land, Welsh Water, Abbey National to name but a few) could pose a problem going forward, particularly if M&S continues to struggle financially, warns Bloch.

    “There is a strong feeling nowadays that you cannot do too many directorship roles. The demands kick in when a company is going through a crisis, and it is likely that in a company such as M&S the non-executive directors are spending more time on it than they had planned,” Bloch suggests.

    “What happens if you are sitting on the boards of 10 companies and five are going through crises?” she questions.

    As The Times business editor Patience Wheatcroft pointed out this week, with retail sales cooling, the 14-month interval before Burns takes on the top job is likely to be a torrid time as it is.

    “The risk is that whatever may have been agreed in fraught conversations over the past couple of days, the board will be gripped by tension and continued in-fighting will take precedence over the best interests of shareholders,” she wrote.

    Departures will be needed, she suggested, with Lomax a leading candidate to go.

    The FT’s Martin Dickson also warned that the compromise may not have calmed tensions and divisions could erupt again.

    “But having salved their pride, the protagonists should be more inclined to be grown up – and board meetings have evidently remained pretty workmanlike during the recent squabbles,” he said.

    Whatever the merits of what has been happening at M&S – and the solution has probably been better than a full-blown resignation crisis – washing your dirty linen in such a public way can never be good for a business.

    The challenge now is for Rose, Myners and Burns is put aside any differences, work together and not lose sight of their primary goal, that of wooing back the long-suffering M&S shopper.

    As Bloch warns: “If things are dysfunctional at the top that will cascade down. People start concentrating on what is going on in the boardroom, concentrating on finding out what is happening and what it means for them and the customer gets forgotten.”

    Like

    • Dilip says:

      Hi Manish,

      You have touched upon an interesting debate and that is the Board Politics and Corporate Governance. Boardroom battles do have a significant impact on shareholders and on organizational morale. There are also a number of examples of non executive directors becoming more powerful in critical times.

      Boardroom political games and spats do erupt frequently and often figure in news. Recall the case of HP spying on boardroom colleagues. Another recent example is that of Vodaphone chief executive Arun Sarin who is been embroiled in a fierce and public battle at the board of the world’s largest mobile phone company.

      In 2009 again Marks & Spencer’s embattled board had to defend itself against a barrage of hostility from small shareholders over the position of chief executive Sir Stuart Rose. The key point to their anger was Rose’s failure to anoint successors to his positions of chief executive and chairman.

      BTW have you by chance visited any M&S retail store in India? 🙂

      Thanks!

      Like

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