Marks & Spencer in Decline: Extensive Remedial Action Required for Turnaround Plan to Work

Monotonous decline has been a prominent feature of Marks & Spencer performance for a considerable period, only occasionally interrupted by a good year – most notably 2008. Now the store closure program is being extended and the company recently registered a substantial decrease in profits.

The apparel retailer faces numerous problems needing significant remediation. Catching up with rivals will not be easy – M&S is far behind in key areas such as supply chain technology and selling the brand image. Even if the latest turnaround plan improves company fortunes, chances are any recovery will be slow – that much work needs to be done.

Scope

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Reasons to buy

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Table of Contents

Table of Contents

Overview 2

Catalyst 2

Summary 2

Marks & Spencer initiates turnaround strategy 6

Announced store closures are necessary to slim down business 6

Signs are store closures are helping to initiate a slow turnaround in business performance 7

Reforming supply chain to meet modern expectations is now essential 8

Change of supply chain will help Marks & Spencer to become nimbler 8

High-street rivals remain far ahead, leaving Marks & Spencer with much work to do 9

Renowned retailer facing struggle to catch up in online realm 11

Initial foray into online and omnichannel shopping failed to inspire consumers 11

Infrastructure for modern shopping experience leaves Marks & Spencer trailing 12

Positive early signs of success after change in selling strategy 13

Ending the discount culture will help restore brand image of being a high-quality retailer 13

Sales have fallen in response, but that is not such a bad thing when the complete picture is examined 14

Marks & Spencer is not selling in an attractive manner, making it harder to win over customers 14

Long period of stagnation suggests recovery will be difficult to achieve 16

Cited as a reason for decline, restructuring management will yield results but is a slow process 16

Current problems have longstanding histories, pointing towards a slow recovery at best 17

Trouble elsewhere on the high-street points towards any recovery being hard to win 18

Conclusions ..19

Marks & Spencer is not out of trouble but is moving ahead on slow path to recovery 19

Appendix 20

Sources 20

Further Reading 20

Ask the analyst 21

About MarketLine 21

Disclaimer 21

List of Tables

List of Tables

Table 1: Marks & Spencer UK stores due for closure during 2018-19 6

List of Figures

List of Figures

Figure 1: Location of Marks & Spencer suppliers in Europe and Asia-Pacific, September 2017 8

Figure 2: Zara shop owned by Inditex 9

Figure 3: Marks & Spencer shopping app 11

Figure 4: Marks & Spencer discounts 13

Figure 5: Clothing & Home segment revenue (£m) Mark & Spencer 2011 to 2017 14

Figure 6: CEO Stuart Rowe 16

Figure 7: Marks & Spencer net profit 2007 to 2017 (£m) 17

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