‘I feel like they have lost me as a shopper,” says a disillusioned Steve Brand, leaving the Marks & Spencer store on Staines-upon-Thames high street. “I used to buy all my clothes from M&S but they keep changing the fit and I can never find my size.
“I stick my nose into Primark and the quality is not that bad, but it’s so cheap, which makes me think something is not right,” adds the 61-year-old. “Then I go into M&S and feel the same thing, and it’s three times the price, and you think: are they living on past glories?”
Last week brought a major reality check for the British retail institution after it was confirmed that the 135-year-old chain was losing its position in the FTSE 100. Demotion to the FTSE 250 is a slice of humble pie for a founding member of the blue-chip index in 1984, once considered a world leader not just in retailing but for its culture and treatment of staff. The loss of FTSE 100 status reflects what most of us already know – that one of the UK’s biggest household names is on the ropes. In the 20th century, M&S shaped how Britain shopped, with retail firsts ranging from food sell-by dates to then-exotic Indian and Chinese ready meals – but there have been fewer notable successes in the digital era.
Despite successive, costly management overhauls, the business is again in the throes of an expensive reinvention. A decade ago, M&S was making a £1bn annual profit but the figure for the latest financial year slumped below £100m after heavy restructuring costs relating to the overhaul spearheaded by Archie Norman, its chairman of two years.
Norman is breathing down the neck of Steve Rowe, the chief executive, who is back at the coal face running its clothing business after buying mistakes led to key products such as jeans selling out and the abrupt departure of its short-lived head of clothing, Jill McDonald, this summer. The share price is nearing a 20-year low, not least because of the perceived risks associated with this year’s £750m deal with Ocado that will propel M&S’s foodhall offerings online next year (and the £600m rights issue used to fund it).
Richard Hyman, an independent retail analyst, is worried that the company is still on the wrong path, with the Ocado move a distraction at a time when it is failing the existing customer base – people like Mr Brand.
“The core M&S customer is in their early 60s and they are not satisfying them. Try finding any natural fibres on the clothing floors today. Its core customers are not interested in lower prices if it means inferior, irrelevant product,” said Hyman.
That view comes through clearly from shopper Andrea Blackburn, who has emerged from the Staines branch empty-handed: “They are rubbish now. I have bought one thing in the past four years, when I used to buy something in [womenswear collection] Per Una very week.”
There are miniskirts – including the ones the television presenter Holly Willoughby, who curates seasonal collections for M&S, likes wearing – but Blackburn complains that there is nothing for 50-to-70-year-olds who want dresses and skirts that hang two inches below the knee.
“I’m a hairdresser and all my clients say the same thing. There is no BHS here any more and we are going to lose our Debenhams [in Staines]. They should get on the bandwagon and do something about it.”
Since Norman arrived, the store closures instigated by Rowe have been accelerated, with around a third of its 300 or so traditional “full-line” stores – which sell clothes, homeware and food under one roof – to close as it tackles a rump of shops where investment makes no sense while sales shift online. It has also embarked on major cost-cutting, chipping away at a management edifice built over decades.
1884
Michael Marks, a Russian-born Polish refugee, set up a penny bazaar at Leeds Kirkgate Market. Thomas Spencer, a former cashier from the wholesale company Dewhirst, joined him in 1894 to create Marks & Spencer.
1901
By 1900 Marks & Spencer had expanded to include 36 penny bazaar outlets, including 12 high street stores with the rest being market stalls.
1926
M&S became a public company – and started selling lingerie. The company claims that one in three women in the UK now buys bras from it, while it sells 60m pairs of pants a year.
1930
A new flagship store opens at Marble Arch in London. A year later the company opened a food department, selling fresh produce and canned goods.
1974
M&S goes international, with Indian and Chinese foods added to its range. A year later it opened the first stores in continental Europe, in France and Belgium.
1984
M&S was included from the start among the blue-chip companies on the FTSE 100 index, a run that was unbroken for 35 years.
1997
With internet shopping still in its infancy, the doyenne of the British high street set another milestone under long-time boss Richard Greenbury: annual profits hit £1bn. It took another decade for a repeat, but it has not been managed since.
1999
M&S introduced online shopping, with the dotcom bubble in full swing – but with a slide in sales starting.
2004
The company turned to Sir Stuart Rose, then chairman of the British Fashion Council, to come in as chief executive and repel a takeover bid by retail impresario Philip Green. Rose remained in the post until 2010, to be replaced by Marc Bolland.
2007
M&S shares hit a record high of £7.16, but the financial crisis meant that cash-strapped Britons swapped M&S’s more premium offering for budget retailers. Shares plunged to as low as £1.81 by September 2008.
2016
Bolland resigned from the retailer as clothing sales struggled, although he said he had delivered improvements to infrastructure. He was replaced as chief executive by Steve Rowe, the former boss of the chain’s food department.
2017
Archie Norman, previously hailed for turnarounds at Asda and ITV, became the latest chairman at M&S, accusing it of “drifting” for more than 15 years under previous management. He quickly launched a cost-cutting drive, with plans to close a third of the retailer’s core stores, which combine food, clothes and homewares.
2019
Shares fall below £1.80, the lowest since 2001 and worse than the financial crisis, with stalling food sales adding to woes. M&S agreed a deal in February with logistics specialist Ocado to deliver food to customers’ homes for the first time next year.
Where McDonald failed on fashion, M&S’s food boss, Stuart Machin, appears to have been more effective as its foodhalls become more important under the Ocado partnership, along with a programme of price cuts and new products. However, the food business’s problems were never as deep-seated as in clothing, where M&S is battling structural change as the buying habits of Britons change.
The emergence of problems in its clothing division – including “Jeansgate”, when a denim collection fronted by Willoughby sold out, leaving empty store rails for almost a month – was the first sign that the turnaround was not going to plan.
Hyman argues the decline of M&S’s clothing business – which has seen its market share fall from 13.5% in 1997 to between 9 and 10% today – was “inevitable” because it had shored up profits by farming out important areas such as sourcing and design: “The issues of Marks go way beyond getting some fashions wrong or not buying enough jeans. The old M&S had been systematically dismantled.”
M&S has been trumpeting plans to cut the size of its clothing range so it can put its substantial buying power behind blockbuster lines that shift by the hundred thousand. Clive Black at Shore Capital, which is M&S’s house broker, said “Jeansgate” was a “gulp” moment. “They had something that was selling well and did not have enough of it – and too much of the stuff that was not selling.” The M&S buyers were still spreading risk by buying lots of lines in smaller quantities because “no one gets fired for that”.
“It was not tenable to go on the way they were going, and that comes from the top,” said Black. While management prevaricated, the high street landscape was reshaped by the likes of Primark, Zara and H&M, and brands such as Boohoo and Asos online.
Next door to the Staines M&S is a branch of the Swedish chain H&M, where this autumn’s fashions can be bought at half the price. Inside, Celia Dotson is trying on a long, leopard-print cardigan before collecting her kids: “I love H&M. It is not as cheap as Primark but is bang on trend for things I will wear for a season. I go to M&S for a coat I’ll wear for a couple of years. I would buy more there but it is more expensive. I am on a nursery nurse’s wage so won’t spend megabucks on things I’ll wear for one season.”
This year’s high street crisis has seen stored-up problems spill over, with big names such as House of Fraser and Debenhams seeking rescue deals while Sir Philip Green – who famously tried to buy M&S twice – faces his Waterloo after Topshop owner Arcadia slumped to a £177m loss last year. However, the turmoil is a long-term opportunity for M&S, if it can find its fashion pulse again.
In the City, the M&S saga has been likened to a “Shakespearean tragedy of Wagnerian length” but one senior industry figure sees cause for hope that it can return to the FTSE 100.
“I think M&S matters – to staff, to customers and to many high streets up and down the UK,” the source said.
“It still has a special place in around 15 million households, and all of that despite 20 years of not doing a good job. There is the core of something special to work with – but that is just your entry fee, and the company has got to recognise that is all it is.”
