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BRUNEL BUSINESS SCHOOL

Module Code
MG1011
Module Title
Introduction to Management Inquiry
Module leader
Dr Lynne P Baldwin

Student ID number
0912339
Student name

Degree Programme (e.g. Business Business and Management (Accounting)


and Management (General))

I understand that the School does not tolerate plagiarism. Plagiarism is


the knowing or reckless presentation of another person’s thoughts,
writings, inventions, as one’s own. It includes the incorporation of
another person’s work from published or unpublished sources, without
indicating that the material is derived from those sources. It includes the
use of material obtained from the internet. (Senate Regulations 6.46)

By completing the above details, I confirm that I adhere to the School’s


Policy on plagiarism.
Marks and Spencer: A Critical Report

This is a critical report based on Marks and Spencer, a British retailer. This report
will discuss for main topic areas which are:

• Business strengths and weaknesses


• Development of new products and services
• Competitors
• Marketing strategies

Marks and Spencer is one of the leading retailers in Britain with more than 895
stores across the globe, in 41 different countries. Over 600 of the stores are
based in the UK, whereas over 295 stores are based internationally [1][2]. They
are an upmarket food retailer, as well as the largest clothes retailer in the UK. As
of 2009 they hold the title of 43rd largest retailer in the world [3]. It specialises in
retail of food and clothing, but has branched out into retail of home ware,
technological products and furniture. It is currently listed on the London stock
exchange [4].

The following charts and diagrams are illustrations of M&S’s financial position and
market position. These diagrams will help to analyse within the report the causes
and effects of the current financial position that M&S are in:

Figure 1. % of Market Share in UK (Volume)

Source: http://annualreport.marksandspencer.com/operating-financial/uk-core-
business/

Figure 2. Sales Turnover (£)millions

Source: http://annualreport.marksandspencer.com/financial-statements/group-
financial-record.aspx

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Figure 3. Sales Growth (%)

Source: http://annualreport.marksandspencer.com/financial-statements/group-
financial-record.aspx

Business Strengths and Weaknesses

The first aspect of the business I will be talking about is the business strengths
and weaknesses; that is what makes the business good and what makes it not so
good. To start off I will be talking about the business strengths. One of the
potencies of the business is that it has had year on year sales growth between the
period 1996 to 2009, with the exception of 2005 where it saw a decline in
turnover from the previous year (Fig.3). This was due to its participation in weak
trading conditions as well as significant price cuts in order to clear surplus stock
[5]. One of the businesses other strengths which may not be found in competitors
is of its strong relationship with its suppliers, many of which are UK based, which
allows the business to operate in a manner similar to vertically integrated
companies [6]. It’s also been argued that M&S have been an iconic retailer of
British quality goods [7]. Nonetheless the business still retains the title as the 43rd
biggest retailer in the world [3] which is quite an achievement on its own.
A weakness of the business that could be noted is the refusal of the company to
accept credit cards other than that which had the M&S brand up until 2001 [8].
This would have affected its ability to compete with the other top retailers as the
likes of Asda, Tesco and Sainsbury’s were accepting credit cards from third party
companies. This had a serious impact on the business as customers would go
elsewhere for their shopping because they were required to have an M&S card,
which most didn’t. This automatically forced the business to surrender some
market share to its competitors.

Development of New Products and Services

Marks and Spencer initially started off as a ‘Penny Bazaar’ selling items costing no
more than a penny [9]. However, now the chain accommodate products from all
ranges from menswear, womenswear, kidswear to technological, home ware and
even furniture. An example of its fashion branch would be the ‘Per Una’ range,
which is aimed at the younger female market. It has done relatively well for the
company [10]. However the company has seen a sharp fall in consumer spending
of the ‘Per Una’ brand, due to the likes of customers switching to the cheaper
Primark line [11]. But it seems that M&S prioritise their clothing lines which can
be seen in Figure 1, as they have a substantial market share in clothing. However
this probably hinders their efforts, if any, in trying to boost the sales of their food
sector. Currently only having volume market share of 3.9%, they are significantly
behind competitors such as Tesco and Asda. M&S also had a financial branch of
the business that dealt with credit cards, insurance, savings and loans, but was
sold off to HSBC, with the agreement of joint representatives at the board of M&S
Money [12]. The company has also ventured into business dealing with British
Petroleum which sees its Simply Food stores as the kiosk point of BP’s petrol
station forecourts, which currently sits at around 116 small stores linked to a BP
petrol station [13]. So M&S have a wide range of products and services however
they are not able to compete with their competitors due the latter’s economies of
scales in all departments.

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Competitors

M&S have several competitors in the retail market. These are the likes of Asda,
Tesco, Sainsbury’s, Morrison’s and even the ever growing Lidl. Tesco hold the
biggest market share in terms of the retail market with 31.4%, followed by Asda
with 17.1%, Sainsbury’s with 15.7%, Morrisons with 11.2%, Somerfield with 3.9%,
Waitrose with 3.8%, Aldi with 3.0%, Lidl with 2.3%, Iceland with 1.7% and finally
Netto with 0.7% [14]. However M&S still boast the title of the biggest clothes
retailer in the UK, thanks to their wide range of clothing lines such as the Per Una
brand [10] as well as other lines of fashion of which M&S has a different target
market for each. But as stated before in this report, if M&S are to increase their
market share in the retail market as a total they must find ways to market their
food lines and home ware and technological brands effectively.

Marketing Strategy

M&S have embarked on several marketing strategies to try and build up their
market share. One of these marketing strategies has been venturing into high
profile television campaigns in which several products are emphasised using slow
motion footage with an actor’s voice in the background resounding the words
“This is not just food, this is M&S food”[15]. This advertising campaign was very
popular however this was imitated by Waitrose and Aldi, which made it lose its
originality. M&S have even changed their logo in order to rein in the customers it
seems. Originally the clothing brand was of St. Michaels and St. Margaret’s. Now
however the branding has changed to simply an M&S logo. This could have been
done to bring together the customer base and target audience without divide.

Conclusion

Marks and Spencer’s was formed as a partnership in 1894 and 115 years on is the
biggest clothes retailer in the UK. It may not have as big a market share like other
companies in retail, but it is still a respectable figure in the retail world, being the
43rd biggest retailer globally. It has amassed a huge number of stores across the
world, and has ventured into many markets; most being in the recent decades
and it will always be seen as Britain’s supermarket. However in order for it to
compete efficiently it may have to abandon its roots of British supply even further
and look to cut costs as well as dropping profit margins in order to ease
customers back through the front doors.

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References:

[1] Marks and Spencer, 2009. Where We Are [Online]. Available at:
http://corporate.marksandspencer.com/aboutus/where/uk_stores. Accessed:
08/12/09

[2] Marks and Spencer, 2009. Where We Are [Online].


Available at:
http://corporate.marksandspencer.com/aboutus/where/international_stores
Accessed: 08/12/09

[3] Deloitte, 2008. Wal-Mart remains largest global retailer, according to Deloitte
survey [Online].
Available at: http://www.deloitte.com/view/en_IE/ie/news/ie-pressreleases-
en/press-release/b84fb247c4efd110VgnVCM100000ba42f00aRCRD.htm
Accessed: 08/12/09

[4] London Stock Exchange, 2009. MARKS AND SPENCER PLC [Online].
Available at: http://www.londonstockexchange.com/exchange/prices-and-
news/stocks/summary/company-summary.html?
fourWayKey=XS0188430721ZZGBPMISC
Accessed: 08/12/09

[5] Sky News, 2005. Marks and Spencer braces for profits fall [Online].
Available at: http://news.sky.com/skynews/Home/Sky-News-
Archive/Article/20080641182992
Accessed: 08/12/09

[6] Emeraldinsight, 1994. “Britain’s Leading Retailer: Quality and Value


Worldwide [Online].
Available at: http://www.emeraldinsight.com/Insight/ViewContentServlet?
Filename=Published/EmeraldFullTextArticle/Articles/0010320307.html
Accessed: 08/12/09

[7] Chislett.H (2009) Marks in Time: 125 Years of Marks and Spencer, Weidenfeld
& Nicolson Illust.

[8] Ciao, 2001. “Marks and Spencer Store card fading value” [Online].
Available at: http://www.ciao.co.uk/Marks_Spencer_Chargecard__Review_5001590
Accessed: 08/12/09

[9] Marks and Spencer, 2009. Marks in Time – the beginning [Online].
Available at: http://marksintime.marksandspencer.com/Main/#/era=TheBeginning
Accessed: 08/12/09

[10] BBC News, 2005. M&S sales rise but Davies resigns [Online].
Available at: http://news.bbc.co.uk/1/hi/business/4329412.stm Accessed: 08/12/09

[11] Daily Mail, 2008. Per Una guru George Davies leaves M&S after ‘personal
turmoil’ [Online].
Available at: http://www.dailymail.co.uk/news/article-1087086/Per-Una-guru-
George-Davies-leaves-M-amp-S-personal-turmoil.html
Accessed: 08/12/09

[12] Lexdon – The Business Library, 2004. HSBC and Marks & Spencer complete
the sale of M&S Money [Online]. Available at:
http://www.lexdon.com/article/HSBC_and_Marks_&_Spencer/92.html

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Accessed: 08/12/09

[13] BP, 2005. Marks & Spencer launch a new trial Simply Food concept at BP
Connect forecourt sites [Online]. Available at:
http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7010783
Accessed: 08/12/09
[14] FlexNewsFood.com, 2008. UK Retail Market Brief [Online].
Available at: http://www.flex-news-food.com/files/UK.retailDEC.2008..pdf
Accessed: 08/12/09

[15] The Guardian, 2008. ‘Food porn for every hedonist in the world’ [Online].
Available at: http://www.guardian.co.uk/business/2008/jul/04/marksspencer
Accessed: 08/12/09

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