Third lockdown doesn’t bode well for M&S as it struggles to adapt

Following today’s release of Marks & Spencer figures for Q3 FY2020/21;

Emily Salter, Retail Analyst at GlobalData, a leading data and analytics company, comments:

M&S has reported a tale of two halves, with a healthy performance in its food division managing to prop up total UK sales of £2,529m while clothing & home floundered, paying the cost for its inability to adapt fast enough to changing shopping habits. After a terrible Christmas for clothing & home in 2019, 2020 leaves little to be desired despite an improved performance compared to H1 (-40.8%). M&S’ recovery is slow versus other apparel players as it continues to be hurt by an online platform unable to make up for lost store sales (-46.5% in the period), unlike competitor Next due to its agile market-leading online proposition, and a lacklustre product offer.

“The retailer’s focus on value in food has started to pay off, with decent sales growth especially considering dampened footfall on high streets and that many of its travel hub locations will have been closed. M&S’ focus on value is smart, especially considering the COVID-induced financial insecurity faced by many consumers, but it is something it cannot compete with the likes of Tesco on, so it must showcase its more unique, innovative products too. Its partnership with Ocado will have boosted sales and will become even more important as the UK endures another lockdown.

“Though M&S’ Q3 clothing & home performance was improving prior to the November lockdown (-16.8%) and following it (-19.4%), the closure of non-essential stores potentially until the end of March will see this recovery wiped out as it pays the cost of being a digital laggard. Its Never the Same Again programme is vital now, and the focus of M&S’ actions must be to better adapt to shopping habits. For instance, it was late to the party to introduce brand partnerships such as Nobody’s Child and Ghost which launched with little fanfare. M&S should focus on elevating and boosting awareness of these brands instead of potentially buying a similarly struggling Jaeger which would be costly to turn around and do little to boost the retailer’s fortunes. Additionally, the extension of its Goodmove activewear line to menswear and childrenswear after nearly a year of launching it in womenswear is too little too late, with little to distinguish the product in a crowded market.”

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