Marks & Spencer
| File:Marks and Spencer.gif | |
| Company type | Public (LSE: MKS) |
|---|---|
| ISIN | US57069PAD42  |
| Industry | Retailer |
| Founded | Leeds, England (1884) |
| Headquarters |  London, England |
Key people | Michael Marks, Founder Stuart Rose, Chief Executive |
| Products | Clothing, food, household items, coffee shop, furniture, technology |
| Revenue |  £7.798 billion GBP (2006) |
| £0.746 billion GBP (2006) | |
| £0.521 billion GBP (2006) | |
| Website | www.marksandspencer.com |
Marks & Spencer plc (known also as M&S, Your M&S and sometimes colloquially as Marks and Sparks, Marks or Marks's) is a British retailer, with several branches outside of the UK. It is one of the most widely recognised chain stores in the UK and is the largest clothing retailer in the UK, as well as being a multi-billion pound food retailer. Most of its shops sell both of these categories. It also has a third line of business selling homewares such as bedlinen, but this is far smaller than the other two.
In 1998 it became the first British retailer to make a profit before tax of over £1 billion [1], though a few years later it plunged into a crisis which lasted for several years. As of 2007 it is growing again, and rapidly increasing profitability, but it is now less than one quarter of the size of the UK's largest and most profitable retailer, Tesco.
History
Early years
The origin of Marks and Spencer was a chain of "Penny Bazaars", founded in 1884 by a Russian-born Polish-Jewish immigrant, Michael Marks in Leeds with a loan of £5 from Issac Dewhirst, a wholesaler. The site of the first stall is marked with a green and gold commemorative clock in Leeds Kirkgate Market. One of the original Penny Bazaars - in the Grainger Market, Newcastle upon Tyne - remains open to this day, and is now the smallest Marks & Spencer store in operation.[2]
Marks' first full store was opened in 1894 at Stretford Road, Hulme, in Manchester. Marks entered into a partnership with Thomas Spencer who was working as Dewhirst cashier. Dewhirst went into manufacturing and remains the biggest supplier to M&S. The official first Marks and Spencer store opened in 1904. Then when founders Michael Marks and Thomas Spencer passed away, the title of Chairman went to Marks’ son Simon Marks. Simon Marks started to work with his friend Israel Sieff and thanks to their joint efforts, Marks and Spencer grew to become a household name. Marks and Spencer became a Limited Company after adopting the revolutionary policy of buying directly from manufacturers. In 1926 the company then started selling textiles and in 1928 the St Michael Trade Mark was registered. In 1930 M&S opened a flagship store at Marble Arch, London. Then Café Bars were introduced in many stores. These provided cheap, hygienic and nutritious mass catering. This was a valuable resource during the war, making efficient use of scarce food. In 1931, a food department was introduced selling produce and canned goods. By 1956, all goods were sold under the St Michael label. In 1964, Simon Marks died after 56 years' service to the Company, and Israel Sieff took over as Chairman. In 1974, Asian food was introduced into the stores. M&S opened up stores in continental Europe in 1975, then four years later in Ireland. By 1999, Online Shopping was brought in, and the company grew with new sales of fashion clothing.
20th century
M&S made its reputation in the 20th century on a policy of only selling British-made goods. It entered into long term relationships with British manufacturers, and sold the goods under the "St Michael" brand (trademark registered in 1928), which was used for both clothes and food. It also accepted the return of unwanted goods, giving a full cash refund if the receipt was shown, no matter how long ago the product was purchased. It has now adopted a 90-day returns policy.
Unlike most of its rivals M&S resisted the lure of television advertising when ITV was launched in 1955, preferring to rely on its reputation to draw in customers. It was not until the mid-1990s that the first TV commercials for M&S clothing were broadcast.
The company put its main emphasis on quality, but for most of its history, it also had a reputation for offering fair value for money. When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of 'British Quality Goods'. Its business model required suppliers to commit to long term contracts solely with M&S. This approach often led to over-reliance by manufacturers on the portion of trade they did with M&S. Accordingly, when the M&S fashion buyers changed suppliers on some aspects of the company's retail clothing offering, manufacturers were left dangerously exposed — many became insolvent. This has resulted in a change of climate, and no longer is a contract to supply M&S held up as the panacea it once was.
In 1988, the company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain.
1997 onwards
M&S's profits peaked in financial year 1997/1998. At the time it was seen as a continuing success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure as head of the company, profit margins were pushed to untenable levels, and the loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also a burden, as rival retailers increasingly imported their goods from low-cost countries, but M&S's belated switch to overseas suppliers undermined a core part of its appeal to the public. Another factor was the company's refusal to accept any credit cards except their own store card. In addition, as an aging and famously bureaucratic company, it was losing touch with potential younger customers, who were reluctant to shop with it.
These factors combined to plunge M&S into a sudden slump, which took the company, its shareholders, who included hundreds of thousands of small investors, and nearly all retail analysts and business journalists, by surprise. The company's share price fell by more than two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145 million in the year ended 31 March 2001.
Since the late 1990s M&S has experienced serious boardroom instability and has made a number of attempts to revive its business, with only partial success. In 2001, with changes in their business focus such as the introduction of the "Per Una" clothing range designed by George Davies, accompanied by a redesign of their underlying business model, profits recovered somewhat and M&S recovered some of its market share, but it soon became apparent that problems remained. Other changes to tradition included accepting credit cards and opening their stores on Sunday.
In 2004, M&S was in the throes of an attempted takeover by Arcadia Group & Bhs boss, Philip Green. On July 12 a recovery plan was announced which would involve selling off the financial services business to HSBC Bank plc, buying control of the Per Una range, closing the Gateshead Lifestore and stopping the expansion of its Simply Food line of stores. Philip Green withdrew his takeover bid after failing to get sufficient backing from shareholders. Philip Green's offer to the shareholders in 2004 of £4 a share, has been recently made to look feeble by M&S's current revival. Since June 2005 the share price has almost doubled from 319p a share to a high of 632p in May 2006.
Chairmen
- 1884-1907: Michael Marks (set up first stall in Leeds in 1884)
- 1907-1916: William Chapman[3].
- 1916-1964: Simon Marks (Lord Marks)
- 1964-1967: Israel Sieff (Lord Sieff)
- 1967-1972: Edward Sieff
- 1972-1984: Marcus Sieff (Lord Sieff)
- 1984-1991: Derek Rayner (Lord Rayner)
- 1991-1999: Sir Richard Greenbury
- 2000-2004: Luc Vandevelde
- 2004-2006: Paul Myners
- 2006-present: Lord Burns
When Stuart Rose took charge of the business in 2004 he was appointed as 'Chief Executive but not Chairman.
Paul Myners was appointed Chairman in 2004: he has finished his reign at the last AGM in July 2006, to be replaced by Lord Burns, a prominent figure in the City and a former permanent secretary to the Treasury.
Financial performance
Until 1999 M&S's financial year ended on 31 March. Since then, the company has changed to reporting for 52 or 53 week periods, ending on variable dates.
| Year ended | Turnover (£ M) | Profit before tax (£ M) | Net profit (£ M) | Basic eps (p) |
|---|---|---|---|---|
| 1 April 2006 | 7,797.7 | 745.7 | 520.6 | 31.4 |
| 2 April 2005 | 7,490.5 | 505.1 | 355.0 | 29.1 |
| 3 April 2004 | 8,301.5 | 781.6 | 552.3 | 24.2 |
| 29 March 2003 | 8,019.1 | 677.5 | 480.5 | 20.7 |
| 30 March 2002 | 8,135.4 | 335.9 | 153 | 5.4 |
| 31 March 2001 | 8,075.7 | 145.5 | 2.8 | 0.0 |
| 1 April 2000 | 8,195.5 | 417.5 | 258.7 | 9.0 |
| 31 March 1999 | 8,224.0 | 546.1 | 372.1 | 13.0 |
| 31 March 1998 | 8,243.3 | 1,155.0 | 815.9 | 28.6 |
| 31 March 1997 | 7,841.9 | 1,102.1 | 746.6 | 26.7 |
| 31 March 1996 | 7,233.7 | 965.8 | 652.6 | 455.8 |
Corporate social responsibility
Look Behind the Label
In 2006 the Look Behind the Label marketing campaign was introduced [4]. The aim of this campaign was to highlight to customers, the various ethical and environmentally friendly aspects, of the production and sourcing methods engaged in by M&S including:
- Fairtrade products
- Sustainable fishing
- Environmentally friendly textile dyes
The company is also looking at how stores can be made more environmentally friendly and in particular the materials used when fitting out stores, for example using flooring made from natural rubber. As well as looking to source electricity from environmentally friendly sources.
Charity
For Christmas 2006 the company has introduced a range of products to support the housing charity Shelter [5] predominantly in the food to go range including a range of seasonal Christmas sandwiches.
Fairtrade products
All coffee and tea sold in M&S stores is now Fairtrade[6], in addition the company offers clothing lines made from Fairtrade Cotton in selected departments[7].
Marketing
Branding
In the late 1990s, The St Michael brand was discontinued in favour of Marks & Spencer.
When Steve Sharp joined as marketing director in 2004, after being hired by new Chief Executive Stuart Rose, he introduced a new promotional brand under the Your M&S banner, with a corresponding logo [8]. This has now become the company's main brand in its advertising, online presence and in-store merchandising. The clean font and modern colours of the new image are somewhat incongruous alongside the traditional M&S signage and associated fittings that still adorn the stores themselves. In fact the only thing they have in common is the use of M&S traditional green in the ampersand of the new logo. This may seem confusing at first, but the new look has been instrumental in the company's recent resurgence, particularly with the success of a new clothing campaign featuring the celebrated model, Twiggy, and younger models associated with the bohemian styles of 2005-6, and the TV ad campaign for their food range featuring Dervla Kirwan and the popular tagline "This is not just food, this is M&S food".
New store format
A new store format designed by Urban Salon Architects, has won much praise and is in the process of being rolled out across all stores, of which, 35% have been completed.
Several of the 'Luton' format stores have received what is known internally as a 'Light Touch' re-fit, which is a temporary update to interiors in stores which have had recent investment in them, or where stores are in areas that are likely to be subject to re-development. Areas covered by this refit may include new mannequins, carpets replaced by laminate flooring, and some new decals, to rejuvenate the old store formats until the full new look overhaul can be undertaken.
The full new look makeover is a drastic reworking of store design, including the gutting of old stores, and installation of a brighter, more spacious, modern and contemporary design, replacing carpets and laminate floors with white tile throughout (black tile in Foods) thus opening the floor instead of having pathways, having new contemporary white mannequins in new designs and poses, new displays and kit such as new design clothing rails, product stands (formerly known as "Lutons"), display and product walls, window display styles, larger fitting rooms (replacing old curtained booths baring fleur-de-lys designs, with new contemporary doored compartments baring black and white model photoshoots), glass walls, till points, and general total updating of decals, designs, equipment, lighting and new black or beige uniform for customer assistants and section co-ordinators and red shirts for section managers.
Products
Collections
Menswear
|
Ladieswear
|
Per Una
per una is a range of female clothing sold at Marks & Spencer.
Launched on September 28, 2001 as a joint venture between Marks & Spencer and Next founder George Davies. The brand name means for one female in Italian. All Per Una items include the three hearts logo, inspired by a postcard seen by Davies while on holiday in Italy.
Per Una has been a major success for the company [9], and in October 2004, Marks & Spencer bought the brand in a £125 million, two-year service contract with George Davies[10].
Home Technology Department T04
In 2006, M&S opened a Technology Department in 13 flagship stores, and a there is a wide selection of Technology goods in other large stores, which have Home departments.
Head Office locations
The headquarters of M&S was for many years in Baker Street, London; during World War II these offices were used by the Special Operations Executive for secret missions in Occupied Europe. In 2004 the company moved to a new headquarters in Paddington Basin, London.
As well as the main offices in London there a number of other Head Office sites across the UK:
- Stockley Park - IT Services
- Salford Quays - Marks and Spencer Shared Services Ltd is located here and provides HR and Finance Administration to Stores and Head Office [11][12]
- Draycott - Per Una
International buying offices
The company has overseas sourcing offices in Hong Kong, India, Bangladesh, Turkey and Sri Lanka [14].
Stores
Locations
M&S have over 450 stores located throughout the UK, providing nearly 12.5 million square feet of selling space. This includes their largest store located on Oxford St., near Marble Arch, London, which has around 170,000 square feet of sales floor. Outside London, the next biggest store is then located in Warrington, at Gemini Retail Park.
In addition they have a growing international business, with 192 stores managed under franchise in 30 territories mostly in Europe, the Middle East, Asia and the Far East, and wholly-owned stores in the Republic of Ireland and Hong Kong.
The newest store to open is "Bolton Middlebrook", in Horwich, which opened on October 5 2006 complete with the new look, and will be the benchmark for new stores, especially Retail Park stores, with many new ideas including mobile order points.
In the run up to Christmas 2006 from the 18th - 23rd December, a total of 22 Marks and Spencer stores were open for 24 hour trading including the recently opened new retail park stores at Bolton Middlebrook and Abbey Centre Belfast[15] [16].
Simply Food
There are 187 Simply Food stores selling predominantly food with most carrying a small selection of general merchandise. Chief Executive Stuart Rose has announced plans to expand the number of these stores to a total of 400 [17].
A number of these stores are run under franchise agreements:
- Select Service Partner (SSP) runs the stores at mainline railway stations and airports [18]
The most recent store to open was Ilkeston, on 28th March 2007.
Standalone Home stores
One of the first Home stores for Marks and Spencer at Trafford Park, Manchester.
This Home store will be dedicated to sell products from the Homeware ranges of Marks and Spencer. Being newly constructed currently, due to open early 2008, the Home store will be located opposite to The Trafford Centre.
Marks and Spencer already have a large store within The Trafford Centre, and this will remain open, when the life store opens. The new store is expected to also house a Cafe Revive for M&S and a Technology centre.
This Home store will stock every product from the Marks & Spencer Homeware range, and will be larger than most complete stores presently alone.
M&S Online
On 23 March 2007, Marks and Spencer made significantly more of its products available online when it launched a new web store in partnership with Amazon.com. The move was meant to support Stuart Rose's stated goal of quickly doubling the company's online sales. The site combines Marks and Spencer products, online content and branding with Amazon features such as wish lists, 1-click ordering and account management tools.
In addition, customers can now view their M&S Money account online; allowing them to check their &MORE credit card balance and pay bills.
People
Training and development
Customer service training
M&S staff are trained in customer service techniques using a customised programme based around the 'Mary Gober Method'. This is known internally as 'Your M&S - Our Service Style - The Mary Gober Method'.
'Our Service Style' is defined as follows "We are friendly, helpful, courteous people, who are knowledgeable and enthusiastic about taking care of our customers".
This definition is derived from principles originally identified by the business in the 1950s as being key to good customer service.
Our Service Style training was originally delivered in large seminars hosted by Mary Gober, which all staff attended. Its delivery to staff continues through in-store coaching and training programmes.
Staff members who have been trained in 'Our Service Style' can be identified by a brooch/pin of a starfish on their uniform.
Trainee Management Scheme
The Marks and Spencer Trainee Management Scheme was set-up to "fast-track" potential Section or Commercial Managers to becoming trainees with the company. The applicant can either already be working for Marks and Spencer or can be completely new to the company. The selection procedure is strict and the entire training scheme is 24 months in duration (when training for Commercial Manager). All applicants must apply online through the Marks and Spencer Communication Centre and successfully complete and pass the following psychometric tests to evaluate their suitability for the role. The tests are firstly a Verbal Reasoning test which then, upon success and passing, leads onto a Numerical Reasoning test. If this is successfully passed, the candidate is then required to complete an OPQ (Occupational Personality Questionnaire) which is the final stage of the online selection procedure. All of the tests must be taken within 7 days from the first application, otherwise the application is withdrawn automatically.
The Verbal Reasoning and Numerical Reasoning tests are 'marked' through an online method; however the OPQ is considered personally. If the OPQ is found to be unfitting for the company, the candidate is rejected. However, if successful, the candidate is invited to attend an Assessment Day at one of the company's flagship stores where paper copies of the tests are taken again under supervision. This is the final stage in the entire selection procedure.
Upon appointment to Trainee Section Manager, the trainee will be placed in a Learning Store where their performance and progress will be constantly monitored. Upon completion of the two year training course, the employee will now be a fully-trained Commercial Manager and be placed in either a Flagship or Regional store, depending on suitability and location.
Graduate Training Scheme
Marks & Spencer ranked number 22 in The Times Top 100 Graduate Employers 2006 [21].
Other Business Activities
Outlet Stores
Marks and Spencer Outlet Limited is a wholly owned subsidiary, with 29 stores at present and growth expansion plans for future. The Outlet division of Marks & Spencer offers M&S products with the majority of offering at least a 30% discount from their original high street selling price.
Marks & Spencer Outlet product offering includes; womenswear, lingerie, menswear and childrenswear along with home and beauty products.
Initially Marks & Spencer Outlet was opened by Marks & Spencer, with the purpose to protect the brand by selling surplus merchandise in an outlet centre environment.[citation needed].
Expansion of the outlet chain
Recently the company has taken the step of opening stores in locations outside factory outlet centres. Both in retail park and high street enivronments.
The retail park stores were planned to be branded 'M&S For Less', so as to create a perceived difference with the stores located in outlet centres. However after the first store, Astle Park, opened. It was decided not to continue with the new brand as it confused customers with regards the returns policy[citation needed]. At present the store at Astle Park remains trading under the M&S for Less fascia, while customer response to the brand is monitored. All future retail park openings will be branded Marks and Spencer Outlet.
In 2004 the first of three Outlet High street stores opened. These stores were originally 'main chain' stores selling the normal M&S product range. Since conversion they continue to offer a full-price food offer but with an Outlet store range of textiles.
Outlet Store Slogans
- Quality You Expect, At Prices You Don't.
- Quality You Trust For Less.
International Stores
All international stores are operated under franchise with the exception of the stores in Hong Kong which remain in company ownership.
International store locations
There are currently franchise stores located in the following locations: [22]
(list updated 21/03/07) |
History of the international business
The expansion into France began with stores opening in Paris at Boulevard Haussmann and Lyon in 1975, followed by a second Paris store at Rosny 2 in 1977. Further expansion into other French and Belgian cities followed into the 1980's. Although the Paris stores remained popular and profitable, the whole of the Western European operation did not fare as well and all the stores were closed in 2001. Branches remain in some European countries, such as the Czech Republic.
M&S expanded into Canada in 1973, and at one point had 47 stores across Canada. Despite various efforts to improve its image, the chain was never able to move beyond its reputation in Canada as a stodgy retailer, one that catered primarily to senior citizens. The stores in Canada were smaller than British outlets, and did not carry the same selection. In the late 1990s, further efforts were made to modernize the stores and expand the customer base, and unprofitable locations were closed. Nonetheless, the Canadian operations continued to lose money, and the last 38 stores in Canada were closed in 1999.
The first M&S store in central Asia was built in Kabul, Afghanistan in the 1960s. The store was later shut down.
In February 2007, Marks & Spencer announced the opening of the world’s largest Marks & Spencer store outside the UK at Dubai Festival City.
References
- ^ http://news.bbc.co.uk/1/hi/business/96531.stm Marks & Spencer profits top expectations - BBC News Online - 19/5/98
- ^ http://www.newcastle.gov.uk/vnev.nsf/shoptext/shopmark?opendocument Markets - Newcastle City Council
- ^ http://www.answers.com/topic/marks-and-spencer-p-l-c Marks and Spencer plc - answers.com
- ^ http://www.paddingtonwaterside.co.uk/timeforpaddington/ti_news_detail.asp?newsID=63 M&S launches new ‘Look behind the label’ campaign - Paddington Waterside Partnership - 21/02/2006
- ^ http://england.shelter.org.uk/howtohelp/howtohelp-682.cfm Marks & Spencer raises money for Shelter this Christmas
- ^ http://www.foodnavigator.com/news/ng.asp?id=66333-marks-spencer-fairtrade-coffee Marks & Spencer dives into ethical consumer market - Fletcher, Anthony - 10/03/2006 - Food Navigator.com (Europe)
- ^ http://news.bbc.co.uk/1/hi/business/4660410.stm M&S set to launch Fairtrade range - BBC News Online - 30/01/06
- ^ http://www.guardian.co.uk/marks/story/0,,1804124,00.html Steve Sharp: Shy marketing whizz creating sparks at Marks - Martinson, Jane - The Guardian, 23/06/06
- ^ http://news.bbc.co.uk/1/hi/business/4329412.stm
- ^ http://news.bbc.co.uk/1/hi/business/3715654.stm
- ^ http://www.marksandspencer.com/gp/node/n/45867031/026-7667460-4435653?ie=UTF8&mnSBrand=core Shared Services Recruitment Page - Company Website
- ^ http://www.liveherenw.co.uk/working/man/sha.asp Living and Working in the North West - Working in Manchester: Shared Services
- ^ http://www.lexdon.com/article/HSBC_and_Marks_&_Spencer/92.html Lexdon Business Library - HSBC and Marks & Spencer complete the sale of M&S Money
- ^ http://www.investhk.gov.hk/PageControl/ShowDynamic.aspx?act=newsdetail&newsid=76 UK's leading retailer launches Asian Sourcing Office in Hong Kong Invest HK - 28/09/05
- ^ http://www.marksandspencer.com/gp/browse.html/ref=sc_fe_c_1/026-7667460-4435653?ie=UTF8&node=51065031&no=51237031&mnSBrand=core&me=A2BO0OYVBKIQJM Marks & Spencer announces pre Christmas opening hours - Press Release - 8/12/06
- ^ http://icwales.icnetwork.co.uk/0750expats/expats/tm_headline=-m-s--opens-for-24hrs-and-other-department-stores-extend-hours-to-boost-slow-trading-&method=full&objectid=18289095&siteid=50082-name_page.html M&S opens for 24hrs and other department stores extend hours to boost slow trading - Watson, Molly - icWales.co.uk - 20/12/06
- ^ http://www.guardian.co.uk/marks/story/0,,1941992,00.html Simply Food to triple in size with restaurant plan - Finch, Julia - 8/11/06 - Guardian Unlimited
- ^ http://www.ssp-intl.com/SSPInternet/Content/Brands/National.htm Select Service Partner - Company Website
- ^ http://news.bbc.co.uk/1/hi/business/6136684.stm Perils of the motorway pit stops - May, Maurice - BBC News Online - 10/11/06
- ^ http://www.igd.com/analysis/channel/news_detail.asp?channelid=1&channelitemid=16&articleid=3315 IGD Retail Analysis Retailer News - Marks and Spencer - M&S announces Simply Food/BP roll-out plan
- ^ http://www.top100graduateemployers.com/top100.html The Times Top 100 Graduate Employers - The Top 100 - Website
- ^ http://www.marksandspencer.com/gp/browse.html/ref=sc_fe_c_7_1_43456031_1/026-7667460-4435653?ie=UTF8&node=43876031&no=43456031&mnSBrand=core&me=A2BO0OYVBKIQJM Company Website - List of International Locations