INTERNET MARKETING NEWS
We must get back to being a value retailer
Marks & Spencer is focusing on boosting its appeal to families and “getting back” to being a “value-at-heart” retailer as part of a turnaround plan aimed at transforming the retailer into a digital-first business.
Work across both its clothing and home, and food businesses is aimed at widening its appeal to attract more customers more often. In clothing, that involves improving its style credentials and availability, as well as making its stores more contemporary and digital, with plans to pilot new formats in the autumn.
In food, while CEO Steve Rowe says it has a “fantastic brand based on innovation and quality”, it wants to increase market share by investing in lower prices, boosting its family appeal and trialling new formats. This includes slightly bigger and more accessible products so it “becomes more of a weekly shop”. The joint venture with Ocado to begin selling M&S food online will also help the retailer tap into the “fastest-growing part of the food market”.
Chairman Archie Norman, speaking at a media briefing this morning (22 May), said: “We think of ourselves as a value for money business, not a low-price business.”
He added: “We need to get back to being a value-at-heart retailer.”
Over the past year, M&S says it has removed 70% of its “confusing” promotions and instead invested in lower prices on more than 400 lines, meaning its price positioning is the “most competitive” it has been in four years.
While Rowe admitted there is still a price differential with the big four supermarkets, he believes that difference is “backed up” by its focus on quality and the different ingredients and recipes it uses.
We need to get back to being a value at heart retailer.
Archie Norman, M&S
Norman added: “We don’t like the idea of being a premium retailer. Our pricing is in line with the big four, adjusted for quality. [We want people to say they get] great value for what they pay for.”
To communicate these changes and begin speaking more to families, M&S has brought back its ‘This is not just food’ campaign and launched its sponsorship of Britain’s Got Talent on ITV.
Work to improve that value positioning does appear to be paying off. According to YouGov BrandIndex, consumer perceptions of the value of its food offering have increased by 2.2 points over the past 12 weeks, although it is still just 23rd in a list of supermarket brands. That has not come at the expense of perceptions of quality, which are up 2.7 points to a score of 59.7 and ensuring it stays top of the list.
Turning ‘data pots’ in to a ‘data lake’
Work that is being done to its Sparks loyalty programme that aims to shift its focus away from discounts should also help in this area. Rowe said a revamped version of the scheme should launch later this year and is one of the areas of priority for chief data officer Jeremy Pee, who joined in December last year.
READ MORE: M&S boss – We’ve got to fix confusing Sparks loyalty scheme
Data is a key area for M&S, which has reams of information on its customers but has so far failed to align it across the business. It is hiring data scientists and putting staff through data training, and hopes work to create a single view of the customer can improve its digital marketing and communications with customers.
“[We want to] make sure we are exploiting data. [We need to turn] our data pots into a data lake that can be mined by everyone in the business,” Rowe said.
While improving its data function will help M&S better understand its customers, it doesn’t expect to find a definitive M&S customer. With more than 32 million shoppers, M&S reaches a broad church, although Norman said there is a group of consumers it needs to appeal to if it wants to return to growth.
“[We are not] a niche retailer, we do not have the luxury of being able to say, ‘this is the M&S customer’. What we do know is there is an epicentre. It’s about working mums and dads, people who are a bit time-poor, they’ve got money so they are not totally driven by discount and price, they are looking for a bit more quality and wearability, they have kids,” he said.
“We strongly believe that if we appeal to that type of person, that’s where our quality/price/value for money balance starts to come into play. If we have great, stylish clothing for a 35-year-old mum, we’ll appeal to the 55-year-olds too. If you try and do it the other way round, it ain’t going to work.”
Despite all the work at M&S, the business continues to struggle. Group revenue was down 3% to £10.4bn for the year to the end of March, while profits before tax and adjusting items fell 9.9% to £523.2m. Food like-for-likes fell 2.3% over the full year, but were up 0.4% in its fourth quarter and clothing and home saw like-for-likes down 1.6%.
Norman admitted that given all the work that has gone on behind the scenes, the results were “frustrating” because they suggested progress hadn’t been made. However, he likened its work to an “egg and spoon race”.
“We are early on in what we intend to do. It is like an egg and spoon race, the faster you run the more it wobbles, although every wobble is an opportunity to improve as well.
“It is frustrating because we can see what we could achieve but at the moment do we have a lot to show for it? In terms of the bottom line we don’t, but we believe we will. Our ambition is not to tweak the short-term numbers, it is to be Britain’s fastest-changing retailer.”