RUTH SUNDERLAND: Its shares have soared by 30% this month, so is retail giant Marks & Spencer finally on the road to recovery?
Something is afoot at Marks & Spencer. There is an unfamiliar feeling at the store chain, which has been in crisis for as long as most people can remember – and it looks suspiciously like hope.
Since the start of the year, the battered shares have risen by 36 per cent. They were up by 30 per cent in August alone, thanks in part to an optimistic update on profits.
When it comes to false dawns, M&S has form – and it should be said that the shares are still languishing well below where they were five years ago. So is it different this time? Do we, the shoppers and small shareholders of Britain, dare to hope the country’s much-loved retailer has finally turned a corner?
Fight back: Chief executive Steve Rowe with Marks & Spencer staff in London
Chief executive Steve Rowe is determined to make it happen. A central plank of his recovery strategy is using technology to compete with fashion rivals such as Zara, Next and Asos.
In defiance of conventional wisdom, which holds that bricks and mortar shops are an expensive millstone, he believes he can use M&S’s branches to gain an edge.
He wants to offer a blended shopping experience by combining physical stores and online, in a way that is not open to pure internet operators.
If he is right, it calls into question the gloom surrounding high streets, where retailers complain of high rents and business rates, both of which Marks’s online rivals largely escape.
In recent years, M&S womenswear sales have lost ground to competitors such as Zara, H&M, Next and online fashion operators such as Asos.
But Rowe hopes to fight back. One big idea is to become the first large chain to offer delivery of clothes on the same day.
While some of the fashion retailers have same – day deliveries in London, M&S wants to offer the service nationwide.
The idea is that orders will be made on the website, picked from nearby shops and delivered to customers’ homes.
The company last year launched a new business unit known as MS2 to bring together online, data and digital capability to ramp up fashion and homeware sales.
The retailer is using five stores – Kew, Harrogate, Epsom, Cribbs Causeway in Bristol and White City in London – as test beds for new technology.
Innovations in shops include digital click and collect, so that customers no longer have to queue at a desk to receive their goods
Instead, they can use a self-service digital screen to tap in their details, then an assistant brings them their parcel, a process which is much quicker.
Collaboration: Fashionista favourite Ghost has been a best-seller for M&S
A trial in 22 M&S stores is being rolled out to a total of 78 branches by Christmas.
Another experimental service is video-powered retail. Customers dialling in from home can connect with staff in the shop to receive advice on menswear, lingerie and homeware.
And new barcode scanners are being tried out so if a customer can’t find a garment to fit, they can scan the QR code into a special screen.
It will then locate the item in the correct size either elsewhere in the store, in a nearby shop, or on the website, so it can be ordered for delivery the following day. M&S has had a torrid time over the past few years, even before the pandemic struck. Its fortunes fell so low that in 2019 it was ejected from the elite FTSE 100 index.
Chairman Archie Norman, formerly in the same role at broadcaster ITV, warned a year earlier that the retailer was on a ‘burning platform’ and has ‘no God-given right to exist.’
Rowe, who believes the business has reached a turning point, has been buoyed by a recent update to the stock market, in which M&S raised its profit forecast for the first time this century.
The food business, which has a £750m partnership to supply groceries to Ocado, has performed well with sales nearly 10 per cent higher than pre-pandemic levels.
Revenues in clothing and home increased more than 90 per cent on 2020, though they were still down 2.6 per cent compared with 2019.
A key plank of the fashion revamp is a curated selection online from external brands, including Cornish knitwear company Celtic & Co, footwear retailer Jones Bootmaker and outdoor specialist Craghoppers.
The most popular so far is fashion label Nobody’s Child, along with a successful collaboration with fashionista favourite Ghost.
In lingerie, brands such as the functional Sloggi and frothy lace wisps from Damaris are on sale alongside M&S’s own ranges.
Stores, particularly in the capital, suffered badly in the pandemic. In some central London outlets more than half of sales are to overseas tourists, who have been absent due to Covid.
Others that catered to City workers have been hammered as commuters worked from home.
Online sales, where M&S is the second-largest clothing retailer in the UK behind Next, compensated, but only to a degree.
Regardless of its difficulties, it still has a substantial swathe of the market.
It has more than 250 clothing and home shops, plus 13.5m visitors a week to its website, which accounts for around half of total UK fashion sales.
Sceptics question whether good old Marks & Sparks can move fast enough on tech to achieve its aims on the tech front and whether its counterintuitive belief that stores are an asset, not a liability, will hold true.
Britain’s shoppers will have their fingers crossed that this time, the retailer really has found the formula for recovery.