Once again, M&S finds slow and steady does not win the race

Following today’s release of Marks & Spencer FY figures for 2019/20,

Sofie Willmott, Lead Retail Analyst at GlobalData, a leading data and analytics company, comments:

‘‘Despite M&S working through its transformation plan over the last few years, its UK performance continued to deteriorate in FY2019/20 and since then COVID-19 has caused sales to nosedive (down 32.7% in the past six weeks). It is positive news that the retailer is grasping the opportunity presented by the pandemic and learning lessons about how quickly it needs to react but as is often the scenario with M&S it is too little too late and it should have adjusted years ago like many of its competitors did. If its online channel had been prioritised when digital sales were booming, it would have already shifted shoppers online and been able to reap the benefits now. Consequently, despite clothing & home online sales increasing by 6.4% in the past six weeks this has had very little impact on a business that is so reliant on stores, with total clothing & home sales down 75.0%.

M&S’ joint venture with Ocado which looked expensive at the time of the deal, could be the retailer’s saving grace which M&S clearly recognises given it is planning to sell a selection of clothing & home lines via the platform, alongside 6,000 food lines. With online food & grocery set to be the fastest growing area of retail this year – spend is forecast to rise 25.5% – the deal could not have come at a better time for M&S as it can piggyback on the high demand for Ocado’s services.

Although food has outperformed within the business (recently and in FY2019/20), sales fell 8.8% in the past six weeks demonstrating how M&S has not been able to capitalise on demand for essentials like other grocers have. Despite focusing on improving value for money over the past year, M&S is still perceived as somewhere to buy a special treat, food for tonight or food on the go. For the majority of consumers, it is not a retailer to visit for a big weekly shop and as shopping habits have shifted this way given availability issues and desire to shop infrequently, M&S’ performance has not matched up other grocers’. In addition, its stores are not as conveniently located with many of its branches on high streets and in shopping centres which have experienced the steepest footfall declines.

Non-essential sectors have been deprioritised by many consumers concerned about spending in recent months but M&S’ clothing & home sales show that its customers have not been willing to shift from spending in stores to online – at a low point, clothing sales fell to just 16% of their level a year ago. M&S is planning to introduce brands online and in large stores, clearly inspired by close competitor Next which has seen this strategy drive its growth over the past year. However, M&S is yet again too late. Next has built a robust, seamless online platform which appeals to both partner brands and shoppers and M&S does not have this to offer to either.

M&S has lots of new faces joining its leadership team over the next few months and their biggest priority must be online. In all retail sectors, online will continue to outperform with channel shift accelerating this year as a result of COVID-19. In FY2019/20, its online clothing & home sales fell 0.2%, and it cannot rely on Ocado to drive clothing sales. Improvements must be made to its own website to try to entice shoppers and achieve some growth this year.”

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