FASHION INDUSTRY: ASSIGNMENT 1

BUSINESS REPORT

Manchester Metropolitan University

Hollings Faculty

Department of Apparel

International Fashion Promotion

Fashion Industry

Assignment 1: Business Report

13138366

Year 1 Level 4

Introduction ....................................................................................................... 1

Background to the Retailer ................................................................................ 2

Current Trading .................................................................................................. 2

Retail Strategies ................................................................................................. 3

Market Levels .................................................................................................... 3

Market and Retail Analysis ................................................................................. 4

Sourcing and CSR Strategies ............................................................................... 5

Future Strategies ............................................................................................... 5

Store Appraisal .................................................................................................. 6

Conclusion ......................................................................................................... 7

References ......................................................................................................... 8

Table of Figures.................................................................................................. 9

Appendices ...................................................................................................... 10

Contents

M&S:

Quality, Value,

Service, Innovation,

Trust

Mark & Spencer

A huge and influential company that keeps changing and developing since 1884.

Words by Asia Gentili

INTRODUCTION. The aim of this report is to analyse how the well-known British company Mark&Spencer works and engages with customers in an always-innovative way, from the supply chain to the in-store experience. This report will go through the introduction of new technologies in communication channels and products development, keeping an eye on the engagement with social and environmental issues. Particular attention will be paid to financial strategies and market position to match up to the competitors within the retail industry.

Marks&Spencer (2013)

Marks&Spencer (2013)

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Tesco

Asda

M&S

Next

Sainsbury’s

Morrisons

Waitrose John Lewis

Debenhams

Primark

Earnings

Products

Offer

Fig.1

Marks&Spencer Archive (1910)

Marks&Spencer Archive (1910)

BACKGROUND TO THE RETAILER. The first bazaar was opened in Leeds in 1884 by Michael Marks. The Slogan was “Don’t ask the price, it’s a penny”. In 1894 the partnership with Thomas Spencer started to give the company its shape, based on 5 key principles: QUALITY, VALUE, SERVICE, INNOVATION, TRUST. The years under the First World War were difficult for everybody, but M&S was able to cope with the difficulties and to adapt its market to the demanding needs. In the 1920s the company adopted the revolutionary policy of buying directly from suppliers, which is still part of Marks&Spencer sourcing strategy. As years passed, M&S followed the innovative trends in fashion as well as in other sectors, like beauty or food. The diffusion of freezers and microwaves brought to the

introduction of frozen ready-meals, still popular, like pizzas or lasagnes. Sir Richard Greenbury ruled M&S through the 1990s, and in 1998 it became the first British retailer to make pre-tax profits of over £1 billion. To keep distinguishing from the competitors, the improvement of new quality product and new apparel lines to attract customers is Marks&Spencer main concern. CURRENT TRADING. Marks&Spencer

is a variety store that offers a wide range of products within four main sectors: Home, Food, General Merchandise and Clothing, with the majority being own-brand collections (KeyNote, 2013:32). As shown in appendix 1 the Group Revenue for the taxation year 2012/13 has been of 10,026.8 £m for the whole company, whereof 8,951.4 only in UK. The UK turnover is split between Food (54%) and General Merchandise (46%) whose profit has not been satisfactory this year, with a downturn of 2.4%. In spite of the alarming sales decrease in the Clothing sector, experienced during the last few years, M&S

remains the UK first clothing retailer but it “needs to address fashionability in the short term” (Mintel, 2013) not to lose its leadership. We can identify the following companies as M&S direct competitors: Tesco, ASDA, Next, Sainsbury’s, Waitrose, John Lewis, Primark, Debenhams and Morrisons. As the Interbrand Best Retail Brands 2013 Report illustrates (Fig.1), M&S is still relevant within the retail industry comparing products offer and earnings per year.

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1. Marks&Spencer

2. John Lewis

3. Next

4. Taveda Investments

5. Debenhams

6. Primark

7. Burberry

8. New Look

9. TJX UK

10. Matalan

Fig. 2

Marks&Spencer

(2013)

RETAIL STRATEGIES. Marks&Spencer is completely aware of the multi-channel com-munication’s crucial importance as the most effective way to reach

customers. Apart from the more common E-Commerce, M&S offers two modern shopping channels: M-Commerce ad S-Commerce. While several competitors count on an effective E-commerce strategy, the majority of Marks&Spencer customers do not shop online, probably due to its middle-aged target market with a more traditional approach to shopping. M-Commerce refers to iPad and tablets technology, used in the company stores to buy or check the products available in stock, to receive advice about interior design choices simply sending pictures of the space to furnish. In Beauty departments, virtual makeover counters allow customers to upload their own pictures and try make-up products on before making the purchase. S-Commerce includes all the promotional techniques related to social media and their influence. On Facebook, M&S UK official page has 1.5 million likes and provides a continue update of offers, discounts, new products in and new initiatives. Specific pages for the most important stores (e.g Marble Arch or Covent Garden in London) are available with pictures and reviews, as well as a link to the main website. However, there is no specific information about opening and closing times, offers or new products in those particular stores, which could increase the turnout. Official pages are also available for several foreign countries such as Ireland, Turkey, Greece or France. M&S is also present on Twitter, Pinterest, YouTube, Tumblr, Google+ and LinkedIn. Recently the M&S app has been launched for Apple and Android and has immediately reached the top position in iTunes Free UK Lifestyle Apps with 580,000 downloads. (Marks&Spencer, 2013).

The Youtube channel is directly linked to M&S TV, a channel that provide a sort of “backstage” of the company projects and initiatives, such as Plan A (see SOURCING & CSR section) or innovations in product or food development. However, the person concerned of all these facilities is the customer and Marks&Spencer must take in account average age (40-60) and possible poor technological inclination, providing a strong support by the members of the staff, particularly in store. MARKET LEVELS. As a variety store, Marks&Spencer fits in different sectors of the market. Both its Food department and the General Merchandise one are characterised by high quality and innovation, with continuous attention dedicated to product development, new technologies and materials. As its slogan claims, it is based on “QUALITY, VALUE, SERVICE, INNOVATION, TRUST” and it has built a loyal customer base throughout the years.

According to Hughes (2013) M&S is the first UK retailer in 2013 for sales (Fig. 2), with a group revenue of over £10 billion of which £4.1 only from General Merchandise (including Clothing). As shown in Fig.4, Womenswear sector is mainly supported by the Lingerie Department (26.8%), while sales in other sectors continue to fall with little evidence of improvement (The Guardian,

2013). As the Market Report 2013 shows, blouses were the most purchased in 2012 and a current trend for M&S, to follow lingerie, in particular sports bras, up 19% and dressing gowns, up 12%. Trousers and chinos are preferred to skirts, then jumpers,

Marks&Spencer (2013)

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Marks&Spencer Statistics 2013

Womenswear

Menswear

Kidswear

Lingerie

General Statistics 2012

Womenswear

Menswear

Kidswear

Other

Fig.3 cardigans and dresses. In Menswears as well as in Womenswear, trends are formalwear orientated with a good response from heritage departments such as Coats, Outerwear and formal Jackets. As for 2012 general trends, socks and underwear are on the highest-ranking in Marks&Spencer Menswear sales, up 3%. Kidswear sales decreased in the last few years, as clothes exchanges websites (e.g Circle of moms, Moms Exchange, Mom365) were created to give families the opportunity to swap their clothes rather than buy new ones. However, Marks&Spencer has experienced its best ever year in Schoolwear and Occasionwear sales, in particular “boy and girl” bridesmaids dresses. (Marks&Spencer Annual Report, 2013)

MARKET AND RETAILER ANALYSIS. There are several driving market that can have an impact on the industry. They are usually structured in the so called PEST (political or legal, economic, socio-cultural and demographic and technological) model, to help retailers to analyse the “macro-environment”. Political and Legal: Marks&Spencer has proved and tested all its toys following the Toy Safety Directive, published on 30 June 2009 (European Commission, 2009). In the label, the suitable age to use that particular toy is specified to help customers in the purchase. In legal matters, Marks&Spencer owns all the rights of its brand (“Terms and Conditions”, appendix 2) and it is registered data user under the Data Protection Act (1998). Economic: Even if retailers have started to recover and the situation is becoming more stable, recession has influenced the industry in the last few years. According to Mintel (2010) the downturn has been a benefit for value retailers, while midmarket retailers, such as Marks&Spencer, has suffered more and the improvement has been slower. As far as unemployment is concerned, the company has setup a program called “Mark&Start”, intended to help young and hard-pressed

people finding a job in the company. In regard to exchange rates, M&S has set the same percentage for each currency and 0% commission on foreign currency. Socio-cultural and demographic: M&S is a member of Ethical Trading Initiative (ETI) since 1999, to improve working conditions within its supply chain. Apart from all the projects included in the Plan A, M&S is committed to preserve animal welfare in partnership with WWF. About changes in customer sizes, Marks&Spencer models represent a wider range of sizes and their Plus Collection goes from size 20 to 28. (more than Primark, whose largest size is 20). Technological: Marks & Spencer is trialing RFID tags within the supply chain as the next generation of barcode. RFID uses a microchip combined with an antenna to transmit product item numbers wireless (Burns, D. et al., 2011). They are useful during the transportation to check products without unpacking boxes. (Grose, et al., 2012). As discussed in the above paragraph, the huge success of social media and multi-channel communication has had a crucial impact on M&S which is one of the most technological retailer within the industry.

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STRENGHTS

•High Quality Products •Customer Loyalty •Open minded business approach •Environment Engagement

WEAKNESSES

•Weak fashion appeal •Middle-aged Target Market •Ineffective E-Commerce

OPPORTUNITIES

•Global Expansion •Collaborations (e.g. Vogue) •Multi-channel effective strategies

THREATS

•Fast-Fashion Development •Strong Online Competition

The external factors are not the only criteria to analyse in an honest company appraisal. With a SWOT analysis (Strengths-Weaknesses-Opportunities-Threats) it is possible to understand what the company is doing and what it should do to improve results and performance.

SOURCING AND CSR STRATEGIES. In order to provide products in a quicker and more cost-effective way, M&S sourcing strategy is “direct”. The company does not use agencies or intermediaries to monitor its supply chain, but it works closely with it. Strong relationships between sourcing managers, suppliers, buyers, merchandisers and designers are crucial to reproduce all the forecasted trends, market analysis and style requirements in the best product for the customer. Besides, M&S follows a “direct buying” process in which design and buying teams are appointed to work closely with the suppliers in the research and purchase of raw materials. (Grose, V. 2012:62) Corporate Social Responsibility (CSR) represent the stated intentions and actions

undertaken by the company to behave responsibly with its sourcing and supply chain. In 2007, Marks&Spencer founded “Plan A” setting out 100 commitments to achieve in 5 years and some of those objectives have been reached successfully: the aim to become CO2

neutral became truth in 2012, when M&S gained the status of CarbonNeutral® company, also encouraging their suppliers to reduce greenhouse gas emissions. More than 45% of the whole merchandise is composed by “Plan A products”, that is to say organic or made from recycled materials, purchased from fairtrades. Another project is “Zero Waste to Landfill”, aimed to reduce waste and promote recycle. In June 2012, M&S launched a programme called “Farming for the Future” to help talented young people coming into UK agriculture in order to gain the skills to be “agriculturalist”. Relevant company’s collaborations with charity associations such as UNICEF and Oxfam, with on-going initiatives like the “M&S and Oxfam Clothes Exchange”, which has raised over 3£ million for Oxfam, saving more than 5 million items from going to landfill. Furthermore, Marks&Spencer donates 50p each 1£ saved from recycled coat hangers, totalling £630,000 a year, donated to UNICEF. FUTURE STRATEGIES. Looking into the future, Marks&Spencer keeps thinking about environment and sustainability. As Clem Constantine, Director of Property & Store Development at M&S, says (M&S TV, 2013: min 0:10), it is all about “Doing the right thing”. The objectives are: reducing

refrigeration by 80% by 2020 and construction waste by 50%, asking

more commitment and awareness of ethical issues and procedures to the suppliers and opening new “learning stores” (e.g Cheshire Oaks, Fig.4). They consist in stores

Marks&Spencer (2013)

Fig.4

Marks&Spencer (2013)

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These tables represent the Natural Resources utilised and the Percentage of Customer’s

engagement with the plan (Plan A Annual Report, 2013)

Gentili, A. (2013)

Fig.5

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where it is possible to test and prove new technologies and solutions to save and recycle, both in the UK and internationally. As far as its global expansion strategies are concerned, the company will continue to reach new countries and focus on franchises, still present in over 17 countries. In order to keep up with the fast changing technological world and its demanding consumers, in Spring 2014 the company’s brand new website will be launched, with more style advice and a better organised “Shop Your Way” option, with free next day deliveries. Important collaborations with popular fashion magazines and celebrities are intended to regain competitiveness within the fashion marketplace and for next Spring-Summer collection, M&S is working with Vogue on a capsule-collection of five easy-to-wear pieces. In 2014 the “Graduate Scheme and Business Placement Programme” will offer to 200 graduates the opportunity to work with the company in retail management roles or in specialist schemes to join the business permanently by April 2014. (Marks&Spencer, 2013).

STORE APPRAISAL. In order to make the in-store experience more effective possible, for both the customers and the company, the art of visual merchandising must be taken in account. M&S store format design is easy to shop in, with specific areas for any personality and style. Furthermore, there are new impact “Welcome Zones” highlighting the latest trends and original designs for departments like “Coat Shop”, “Dress Shop”, and “Trend Zones” (Fig. 5) to show outfits which can be put together. Usually, M&S stores are quite huge, arranged on multiple floors with clear direction infor-mation and visual displays located at the front of each department to find products in a quicker way. The majority of M&S selling

points offer services such as cash machines or cafés. Marks&Spencer pays particular attention to the effectiveness of its Customer Service, creating a relaxing environment: customer service personnel is always ready to help, with smiling approaches and useful advice, even if the number of staff present should be increased and balanced to satisfy the incredible customer flow. As a trusted

company, Marks&Spencer offer a high quality and safe-proofed childrenswear collections, with particular interest in children (and parents) tastes. During Christmas time, new collections come out to make it even more funny and joyful, like the brand new collection of 25 Christmas jumpers for kids from 3 months to 14 years old, 10 for girls and 15 for boys. This collection is available online but not necessarily in each store, as well as the whole range of sizes. Prices go from £5-

£10 to £50-£75, with an average price of £15-£25. The main colours are grey, blue and red, with funny typical Christmas-inspired

Marks&Spencer (2013)

THIS ANALYSIS CAN BE

SUMMARIZED IN A FEW

KEY FUNDAMENTALS

ELEMENT OF

MARKS&SPENCER

BUSINESS EXPANSION

toward different

countries but maintaining its distinguished

quality.

MULTI-CHANNEL

experiencing new multimedia platforms

and studying new trends in customer behaviour QUALITY

with new materials, certified sources and

new technologies

SUSTAINABILITY

with continuous challenges and

particular care for environmental

issues

pictures, like reindeers, Santa, snowflakes, and so on. On average, there are more than 10 pieces available in stock for each size but due to the chaotic Christmas shopping, most sizes are sold out and the quantities available go from four to eight pieces at most both in store and online. Eight jumpers up to 25 are hooded with button fastenings, while only six are available in gift boxes, including little extras like paper masks, hats or funny accessories. These particular jumpers are 100% cashmere, with printings, such as foxes, raccoons, deer or bears, with prices from £50 to 75£. All the items have regular length and fitting, long or ¾ length sleeve with crew, round or funnel neck. The materials are cotton, viscose, acrylic, polyester, polyamide, cashmere and wool, with ribbed trims and machine washable. They are all available online for “free Next Day Store Collection” or in alternative, they can be bought with “Home Delivery” (see appendix 3) both in UK and internationally (see appendix 4). CONCLUSION.

Gentili, A. (2013)

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References

Davis Burns, L, K. Mullet, K., O. Bryant, N (2011). The Business of Fashion. 4th ed. New York: Fairchild Books. 616.

Dillon, S. (2012). The Fundamentals of Fashion Management.1st ed. Switzerland: AVA Book. 176

Grose, V. (2012). Concept to Customer. 1st ed. Switzerland: AVA Book. 176

Hughes, K. (2013) Market Report 2013. 10th ed. Key Note.

Interbrand (2013). Best Retail Brands 2013. Available from: BestRetailBrands.com

Mintel (2010) Fashion: Impact on the Recession. Online. 4th December 2013. Available from: http://academic.mintel.com.ezproxy.mmu.ac.uk/display/528295/

M&S TV (2013). Plan A Property. Online. 29 November 2013. http://www.marksandspencer.com/MS-TV/b/311612031?ie=UTF8&intid=gft_mstv&pf_rd_r=1MCZ7GK1QXANC8DM1F7C&pf_rd_m=A2BO0OYVBKIQJM&pf_rd_t=101&pf_rd_i=42966030&pf_rd_p=469024773&pf_rd_s=footer-2

Marks&Spencer (2013) ‘MARKS & SPENCER OPENS SCHEMES FOR 200 GRADUATES AND UNDERGRADUATES’. Online. 25 November 2013. http://corporate.marksandspencer.com/media/press_releases/schemes_open_for_200_graduates_and_undergraduates

Marks&Spencer (2013). Annual Report 2013. Available from: http://annualreport.marksandspencer.com/

Marks&Spencer (2013). Plan A Report 2013. Available from: http://annualreport.marksandspencer.com/downloads/

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Table of Figures

Gentili, A. (2013) Christmas Jumpers. Marks&Spencer Trafford Centre. 3rd December 2013.

Gentili, A. (2013) Trend Zone. Marks&Spencer Trafford Centre. 3rd December 2013.

Marks&Spencer (2013) Autumn 2013 Collection. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Cheshire Oaks. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Cotton Farmers. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Fairtrade Cotton. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Fairtrade Cotton. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Kids SS2013. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) London Style Bus in Hamburg. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) M&S app. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Plan A. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Prawn Cocktail. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013) Visual Makeover Counter. Online Image. Available from:

http://corporate.marksandspencer.com/media/media_library

Marks&Spencer (2013). Plan A Annual Report. Online. Available from:

http://planareport.marksandspencer.com/

Marks&Spencer Archive (1910) Marks&Spencer Bazar. Online Image. Available from:

http://www.mandslibrary.co.uk/thumbnail.aspx?tab=4&nodeindex=5&sectionid=121&toplevel=450

Marks&Spencer Archive (1910) Marks&Spencer. Online Image. Available from:

http://www.mandslibrary.co.uk/thumbnail.aspx?tab=4&nodeindex=5&sectionid=121&toplevel=450

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Appendices

Appendix 1

Appendix 2

General terms and conditions This site is owned and operated by Marks and Spencer Group plc ('Marks & Spencer', 'we' or 'us'). Registered office: Waterside House, 35 North Wharf Rd, London W2 1NW. Registered number 4256886 (England and Wales).

Ownership of rights All rights, including copyright, in this website are owned by or licensed to Marks & Spencer. Any use of this website or its contents, including copying or storing it or them in whole or part, other than for your own personal, non-commercial use is prohibited without the permission of Marks & Spencer. You may not modify, distribute or re-post something on this website for any purpose.

Appendix 3

52 weeks ended

30 March 2013 £m 31 March 2012 £m % variance

Group revenue 10,026.8 9,934.3 +0.9

UK 8,951.4 8,868.2 +0.9

International 1,075.4 1,066.1 +0.9

INTERNATIONAL DELIVERY We deliver clothing, homeware and beauty products internationally. See below for exceptions* We have dedicated international sites for customers in the Netherlands, Luxembourg, France, Germany, Mainland Spain, Ireland, Belgium, and Austria. Find out more. Find out more about International Delivery to your country, including how long it takes and how much it costs. Read our International Returns Policy *Household electricals, lighting, Your School Uniform, furniture, gift vouchers, magazine subscriptions, food, wine and flowers cannot be delivered internationally.

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DELIVERIES

UK standard delivery within 5 days £3.50

UK next or nominated day delivery £4.95

Find out more about all delivery options and timescales.

FREE UK NEXT OR NOMINATED DAY DELIVERY when you spend £150 or more. Enter FREENDAY at checkout.

Find out more about free nominated day delivery.

RETURNS

FREE to UK stores excluding Outlet and Simply Foods.

FREE to post back to us from the UK using the pre-paid returns label in your parcel.

Please note, made to order items and bedding can only be returned in accordance with your legal rights. Please contact us for more information.

Find out about our international delivery service to over 50 countries

Appendix 4

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