Marks and Spencer has become an emblem of the decline and fall of the British high street. It fits the well-worn narrative almost too perfectly, the once-mighty hero, vainly limping along the slow road to obsolescence, its P&L as grim as its flowery frocks.
Pre-tax profits this year were less than 5% of what they were a decade ago in real terms, at £66.8m. The bottom line wasn’t helped by the heady costs of CEO Steve Rowe’s ‘transformation’ programme, which involves closing a third of the M&S’s 300 clothing stores over the next four years.
That’s bad, but it’s lazy to assume that defeat is inevitable. M&S’s story isn’t over yet and, indeed, Rowe’s transformation may yet turn out to be a bold retreat, rather than a desperate rout.
Rowe’s logic is essentially to sacrifice his dogs to save his stars. The poor performers in M&S’s portfolio are not only losing money in and of themselves, but also dragging down nearby clothing stores that actually have a chance of success.
‘It’s about making sure we have the right estate, a modern estate, that is fit for customers’ needs in the future,’ Rowe said at a press conference, pointing to the transfer of customers from already closed stores to nearby alternatives.
So far, so sensible. As Winston Churchill said, however, wars are not won by evacuations. The long-term survival of the Marks and Spencer ultimately depends on offering products that people want to buy, in a way that they want to buy them. Closing stores and cutting costs now will not achieve that, but it will buy some time for Rowe to attempt to shape the company into something that can.
His vision for M&S centres on growing food, building online clothing and home sales and improving vital back-end functions like logistics and customer analytics. He also wants to simplify the company’s culture, which he said had become ‘inward looking and too corporate’, so that it could become ‘faster, lower cost [and] more commercial’.
If it works, this last point to the plan could be the most important. M&S won’t ever become a trendy fast fashion store like Zara or H&M, but it can perhaps compete with them for younger customers if it unlocks the talent and creativity of its workforce.
Unfortunately, it’s rather hard to unlock anything while stores are shutting and people are losing their jobs. If Rowe can circumvent that particular Catch-22, it will be very impressive indeed.
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