“The fashion market in the Middle East is more than $30bn, and online share is less than 1%”

Marks & Spencer Middle East Digital Strategy

2013

Market Potential, Demand and Attractiveness

SWOT – Customers, Competition, Growth Forces

Strategic Plan

Performance Plan

1 Executive Summary

2

5

3

4

Agenda

Immediate Steps and Timeline6

Executive Summary

The strategic opportunity is to develop our MENA region focused digital strategy, resulting in $370K in new e-Commerce revenues by the end of Year 4 (est. 2017)

63% of retail shoppers expect a more digitally integrated experience over the next 2 years, while the MENA e-Commerce opportunity is predicted to be $1.5T by 2016

Strategic Alternatives• Continue on existing path

OR• Off load to M&S UK with local support provided

OR• Do not enter into e-Commerce arena

Strategic RecommendationAllocate $345K in Year 1 towards strategic digital development reaching operating break even by the middle of Year 1 (est. 2014)

Source: http://www.mediapost.com/publications/article/190447/consumers-want-mobile-enhanced-retail.html#axzz2HSsgs0FO

2013 Market potential

72.5m MENA

internet users

66% search for

products online

33% make online

purchases

6 average purchases per year

$230 average price of

purchase

$21.7B estimated

B2C commerce

opportunity

Existing Market Share

Potential Market Share

100 0

47.8m potential

customers in the MENA

300m population in

the MENA region

100 162013 Market Development Index

2013 Share Development Index

Source: Market Based Management / Wamda.com

Highly attractive opportunity, where our share can develop along side the market

Signals to enter and operate in the MENA market with confidence

Source: McKinsey & GE

Com

petiti

ve

Posi

tion

Unattractive Average Attractive

Category Attractiveness

Weak

Average

StrongCash generator

Disinvest Phased withdrawal

Proceed with care

Proceed with care

Try harder

Cash generator Growth leader Leader

Double or quit

Snapshot of internal key strength and growth areas – SWOT (1/2)

Strengths

Committed and knowledgeable executive team

Extensive experience launching digital platforms

Attractive and loyal customer base

Dedicated budget Aggressive growth plans Known and trusted brand to

create easier digital conversions

Weaknesses

ᵪ Limited digital properties in nascent stages

ᵪ Lack of dedicated digital teamᵪ Absence of existing benchmarks

for measuring successᵪ Lack of advanced data and

analytics

Development of a highly engaged target audience through our strategic digital plan will strengthen our competitive advantage in the market

Snapshot of external key strength and growth areas – SWOT (2/2)

Opportunities

Internet and mobile internet penetration rapidly increasing in MENA

B2C ecommerce to grow by 35% through 2015

In store & offline activation through CRM and integrated profiles

Emerging ‘MENA fashion’ community

mCommerce & social commerce

Threats

ᵪ Global entrants into MENA ecommerce opportunity

ᵪ Absence of familiarity with online shopping

ᵪ Weak payment providers ᵪ Lack of trust in MENA

ecommerce (aftercare services)ᵪ Customer hesitation with online

payment due to safety concerns

Category attractiveness is high; we must

remain aware of new entrances, market trends and voice of

customer

Source: http://www.just-style.com/analysis/debenhams-outlines-expansion-plans_id115927.aspx

DebenhamsDebenhams

LandmarkLandmark

BarneysBarneys

High

Medium

Low

Perceived threat Description

Souq.comSouq.com

MarkaVIPMarkaVIP

Namshi.comNamshi.com

Our competition is aware of the market attractiveness and is entering

• Globally better than predicted online sales; locally building eCommerce team since 2011

• Started building web team in 2012, launched UAE eCommerce site in Nov.

• Recently expanded its international shipping to over 90 countries, ten of which are in MENA.

• The Middle East’s largest e-commerce site, is growing through acquisitions

• Private online sales club has announced $15 million in investment over two different funding rounds

• In two separate rounds of funding have raised upwards of $20m lead by JP Morgan Asset Management.

Our immediately addressable customer spends with discretion and expects a high level of customer service

Home 1%

Ladies28%

Lingerie25%

Mens23%

Childrens13%

Foods5%

Beauty5%Title

Based on internet averages marksandspencerme.com is visited most by the following demographic:

• Gender: Females• Age group: 35 - 44• Education level: College

educated• Additional: Browse the

site from work

Source: M&S Internal / Alexa.com

Potential MarketTotal Market Accessible Market Realistic Share

1.45M potential M&S e-

Commerce customers

72.5M MENA Internet

Users

Growth facilitation is necessary for apprehensive consumers in this young and growing segment

7 key forces that restrict a market from realizing its potential

5 customer adoption forces affecting new market penetration

1. Feel the need2. Observation3. Buying Decision4. Mitigate Risk5. Trail-ability

TargetCustomer adoption

1. Lack of awareness2. Lacks desired performance3. Consumers lack skills to use4. Insufficient infrastructure5. Unaffordable6. Unrecognized need7. Unavailability

Source: Market Based Management

Multifaceted digital strategy to be integrated across departments

Our strategic plan will create tactical touch points to build extensive customer profiles and use robust monitoring, analytics, and data to facilitate decision making

Offline/In Store

Community building

Mobile

Direct digital

Paid placement

Branded web properties

Marketing

Public relations

In store management

Buying

Visual merchandising

IT/Agency

Lifetime Customer

StrategyResult Department

High awareness

Community Building - Maneuver digital awareness of M&S to a top consideration for MENA retail shoppers

Tactical examples and tools used include:

Visual Content Blogger/Magazine Outreach Article Marketing Social Media channels Link building

44% of users are more likely to engage with brands if they post pictures

Tactically position community building to effect • ‘Free’ and Paid Social Media • Search Engine Optimization• eCommerce conversionsby creating third party vetted and internally developed awareness, trust, and conversions

Source: ROI Research

Paid Placement - Expand our market share with observable brand placements to create measureable, predictable, and instant awareness

Tactical examples and tools used:

Ad Words Mobile Ad networks Ad Sense display ads Social promoted stories Social display ads

Enhanced with QR codeStandard magazine Ad

Offline/In-store - Create the strongest interconnected experiences bring customers closer to our brand and ultimately a buying decision

Tactical examples and tools: In-store item pick up VR/Augmented Reality Unique Campaign Landing Pages Coupons or check-in offers On-site Interactivity Mobile ‘gamification’

Source: http://pushsci.com/2011/10/01/mobile-what-not-to-measure/#.UPKGkaHF00w

Drives Information Capture and mCommerce

Opportunities

Mobile is estimated to influence $230 Billion of total brick & mortar and online sales

Tactical examples and tools used:

Internal fashion blog Live customer chat Live customer phone support Customer feedback section On-site & off-site search engine optimization Multi-fulfillment option shopping cart Couponing Customer capture Community management Mass media integration

Source:http://www.emarketer.com/Article.aspx?R=1009585

Branded Web Properties - Develop to a MENA online market share player maximizing reach, customer service, and sales

The highest response measured at 48% of online shoppers said they trusted brand websites over all other forms of digital media.

Our site goals:

High performing Customer friendly Encourages trialability

Tactical examples and tools used:

Social media promotions Mobile applications Mobile notifications Text messaging Email marketing

Direct Digital - Improve retention and increase repeat purchases for customers of Marks & Spencer

Can be used in conjunction with Seasonal, Product

Releases & Anniversaries

Source:https://www.emarketer.com/Coverage/Email.aspx

67% of CMO's still rated email the most successful digital marketing tactic

E-Commerce financial projections show promising new revenue stream from our immediately addressable market

Year 1 Year 2 Year 3 Year 4 Year 5

Traffic Needed @ 1% 117,935 130,908 145,307 161,291 179,033

Total Transactions 1179 1309 1453 1613 1790

Average Net Checkout $230 $230 $230 $230 $230

Sales Revenues $271,250 $301,088 $334,207 $370,970 $411,777

Year 1 Year 2 Year 3 Year 4 Year 5$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

eCommerce Sales Revenues

Fixed CostsDatabase Programmer $ 4,632.15 Front-End Developer $ 4,087.19 Community Manager $ 3,269.75 Advanced Analytics $ 2,043.60 ME Audience Tool $ 2,043.60 Hosting $ 190.74

Variable CostsPaid Ad Spend $ 4,904.63 Graphic Design $ 2,452.32 Mobile App Development $ 2,179.84 Campaign Related Mobile/Web/Email dev $ 2,997.28 Monthly cost $ 28,801.09 Annual cost $ 345,613.08

The right mix of fixed and variable costs will determine break even and payback periods

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12$0

$5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

Series1Series2

Source: Industry Average Pay Scale and Marketing Spend

Revenue

Fixed Costs

Performance will be measured using industry best practice and internally developed metrics

Monitoring and measuring thorough data and analytics

New customer acquisition Customer Retention Traffic Database growth Social metrics Sales

• Market potentialHighly attractive market with growing demand

• Identifying Opportunities through SWOT analysisMarket forces will provide signals to convert customers

• Develop digital strategy to capitalizeCreate awareness and facilitate new revenues

• Costing and ProjectionsInvest to grow our market share

• Performance MeasurementDevelopment measurement to gauge effectiveness

To recap - here is how we will sell the strategy to management and M&S UK

Digital strategy will roll out to compliment 2013 regional store openings

Reach▪ Internal team ▪ Internal team

▪ Various stakeholders

▪ Management, M&S UK

▪ Internal team

▪ Management

▪ HR

60-90 Days60 Days

Remaining of 2013

▪ Budget released▪ Performance standardsResources

required

Desired outcome

▪ Leverage previous M&S best practices in new strategy

▪ Introduction of M&S digital campaign to MENA market

▪ Build strong audience profile

▪ Talent acquisition

Focus▪ Internal data review

▪ Determine benchmarks

▪ Set performance goals

▪ Complete handover of existing tactical campaigns

▪ Develop tactical campaigns in-line with 2013 store openings and agreed goals

▪ Capture local data (Ipsos, Nielsen)

▪ Begin sourcing process

▪ Obtain management sign off on strategy

Prelaunch

Roll outStabilization

21

▪ Strategy sessions▪ Personnel plan

▪ Digital team

Mobile commerce (m-Commerce) is estimated to grow globally to $31 Billion by 2016

Social commerce expected to reach $30 billion in the next 5 years

Source: http://money.cnn.com/gallery/magazines/fortune/2013/01/10/2013-social-networks.fortune/5.html http://www.strangeloopnetworks.com/resources/infographics/mobile-infographics/the-growth-of-mobile-commerce/

Position our workplace, team, and brand as the most forward thinking and innovative retailer in the MENA region

Thank You & Questions

Appendix

Snapshot of internal key strength and growth areas – SWOT (1/2)

Development of a highly engaged target audience through our strategic digital plan will strengthen our

competitive advantage in the

market

Strengths

Committed and knowledgeable executive team

Extensive experience launching digital platforms

Dedicated budget Aggressive growth plans Known and trusted brand

to create easier digital conversions

Weaknesses

ᵪ Limited digital properties in nascent stages

ᵪ Lack of dedicated digital team

ᵪ Absence of existing benchmarks for measuring success

ᵪ Lack of advanced data and analytics

Snapshot Improving our digital competitive position through creating more value

SuperiorTechnology

Superior Offering,

Branding & Positioning

SuperiorOperations

Superior Target

Superior Customer

Superior Access

Superior Inputs

Superior Collabora-

tors

Superior Data & Insights

Integrated eCommerce

72% of existing product mix is driven

by highly sought female demographic Strong & customer

focused MENA distribution

Apply M&S Customer Values to our digital channels

Best in Class CRM &

Analytics

Snapshot of external key strength and growth areas – SWOT (2/2)

Category attractiveness is high; we must

remain aware of new entrances,

market trends and voice of customer

Opportunities

Internet and mobile internet penetration increasing in MENA at exponential rate

B2C ecommerce to grow by 35% through 2015

In store & offline activation through CRM and integrated profiles

Emerging ‘MENA fashion’ community

mCommerce & social commerce

Threats

ᵪ Global entrants into MENA ecommerce opportunity

ᵪ Absence of familiarity with online shopping

ᵪ Weak payment providers ᵪ Lack of trust in MENA

ecommerce (aftercare services)

ᵪ Customer hesitation with online payment due to safety concerns

Value is destroyed through substitutions, obsolescence and new entrants

Power of BuyersHIGH

Substitution & Technological Obsolescence

HIGH

Threat of new entrants

HIGH

Competitive rivalryHIGH

Power of Suppliers LOW

Attractiveness of MENA ecommerce opportunity will create extensive new competition

Consumer preferences are shifting, but at what rate? Will online ever overtake the shopping mall in MENA?

• Compliment in-store purchases while still driving revenue

• Competition is entering

http://searchenginewatch.com/article/2232614/10-Reasons-Why-Public-Relations-is-a-Must-do-for-SEO-in-2013

The latest Google changes have put a real emphasis on high quality, unique content that is linked to by quality sites.

"The future of SEO is not in the technology, it’s in the ability to tell stories that readers and Google will find interesting… and that’s public relations.”

“Authentic and relevant link building, aimed at driving engagement, informing publics and building mutually beneficial relationships should be a part of every public relations and SEO effort,"

Public Relations Society of America (PRSA)

Promotions will provide tremendous ROI effecting; social media, SEO, SEM, written & visual content, and eCommerce to drive conversions

Online fashion community deep dive

http://www.forbes.com/sites/chrisperry/2012/01/23/why-every-cmo-should-celebrate-cmad/

Social Media Tactical Deep Dive

Community Management Strategy/ Investor in Customer Relationships

1. Channels informed based on community insights2. Outreach and involvement w/ active and influential members of community?3. Is your content in line with known market needs and expressed community interests4. Community building online and in-person participation in major events5. Actively design and manage it as customer insight and service outpost

Pinterest is 4 largest generator of traffic and offers affiliate links – revenue generation - the act of pinning can signal buying “intent.”

Paid visual content will provide us with awareness for potential brand followers to connect with our brand in a meaningful way

http://www.slideshare.net/TheOnlineProj/how-much-does-a-facebook-fan-cost-in-the-arab-world-15809461

Social Media Tactical Deep Dive

Paid Social Strategy

December 2012, 44 million Arabs are using Facebook. Nielsen predicts fb reaches its intended audience 90-95% of the time compared to 35% on average

Qatar has the highest average cost per fb fan, while Eqypt has the lowest average cost.

Fashion industry has one of the higher average costs per fan compare to most major industries

SEO & Content Strategy Development

14 APPROACHES TO CONTENT

1. Research important questions.2. List good / bad examples.3. Passionately tell a story.4. Highlight recent trends.5. Survey best practices.6. Compile proven tips.7. Point out a problem.8. Recognize who.9. List what.10. Warn when.11. Show where.12. Debate why.13. Demonstrate how.14. State the so what?

Paid digital placement (ex. banner ads & ad words) will provide instant awareness, strong analytics and a highly measurable marketing spend

Tactical examples and tools include Ad Words, Mobile Ad networks, Ad Sense display ads, social promoted stories and social display ads

Integrating digital components to real world and offline (In-store, ATL/Mass Market campaigns) will increase the all campaign effectiveness, maximizing return on investment

Many people prefer using their mobile devices for shopping even while at home... mobile isn’t just about ‘on-the-go’ convenience when it comes to shopping

63% of consumers expect more mobile shopping experiences in the next two years

72% use a smartphone to locate a store

66% use a smartphone to look up/compare pricing

According to one study, 92% of mobile video viewers also share videos with others.

http://www.mediapost.com/publications/article/190447/consumers-want-mobile-enhanced-retail.html#ixzz2HqfH2zvV http://www.emarketer.com/Article/Nearly-All-Mobile-Video-Viewers-Mobile-Video-Sharers/1009586

Brand websites are the content online shoppers trust most

Live chat can boost conversion rates 10-20%

92% of companies who blog multiple times per day have acquired a customer from their blog.

On-site testimonials have been shown to improve conversion rate by 34%.

http://www.emarketer.com/Article.aspx?R=1009585 http://conversionxl.com/53-ways-to-increase-conversion-rate/

Speed and usability, 400 milliseconds could mean a 5-9% increase in visitor retention for your business.

Proper placement and awareness is vital in the vast expanse of the internet

http://www.slideshare.net/HubSpot/the-state-of-seo-and-internet-marketing-in-2012

3 billion searches per day in Google

75% + of all clicks go to organic results not paid ads

More than 50% of search queries have no ads at all

Google bought Twitter’s data and pulls Facebook ‘s API, social signals are a much bigger part of the Google algorithm

Email marketing is still the most effective direct digital marketing tactic

Tactical Deployment Practices

Build and segment your contact list for better results

Craft strategic content and offers that increase your response rates

Leverage your email content across multiple marketing channels

Measure of email marketing success is vital not only to understand e-Commerce but also offline effectiveness. Email marketing is a great tool to drive more in-store conversions and tracking this is important

http://thenextweb.com/me/2012/04/29/souq-com-the-middle-easts-largest-e-commerce-site-acquires-the-regions-first-private-shopping-club/http://www.alexa.com/siteinfo/marksandspencerme.comhttp://www.emarketer.com/Article.aspx?R=1009307http://www.internetretailer.com/2005/07/21/multi-channel-buyers-spend-298-per-purchase-online-era-study-shttp://www.internetretailer.com/2009/08/27/customer-retention-cited-as-most-valuable-retail-measurement-sthttp://www.internetretailer.com/2012/08/15/consumers-spend-more-and-make-more-purchases-online-q2http://www.majalla.com/eng/2011/09/article6895http://www.intelligent-commerce.net/Gulf_Cooperation_Council_B2C_eCommerce_Overview.pdfhttp://blog.hubspot.com/blog/tabid/6307/bid/33959/6-Ways-Social-Media-Marketers-Should-Capitalize-on-the-Visual-Content-Revolution-INFOGRAPHIChttp://m.arabianbusiness.com/dubai-online-retailer-wins-new-us-investment-484811.htmlhttp://visual.ly/how-mobile-impacting-retailhttp://smallbiztrends.com/2013/01/pinterest-tools-measure-impact.htmlhttp://techcrunch.com/2012/09/06/report-pinterest-beats-yahoo-organic-traffic-making-it-4th-largest-traffic-driver-worldwide/http://blog.hubspot.com/blog/tabid/6307/bid/33959/6-Ways-Social-Media-Marketers-Should-Capitalize-on-the-Visual-Content-Revolution-INFOGRAPHIC.aspx#ixzz2HI7zGvY0http://blog.hubspot.com/blog/tabid/6307/bid/31550/20-Fresh-Stats-About-the-State-of-Inbound-Marketing-in-2012.aspxhttp://unbounce.com/conversion-rate-optimization/cro-and-seo-together-at-last/

Sources