The Global Trade Distribution Processes of Marks and Spencer - Essay Example

?The Global Trade Distribution Processes of Marks and Spencer Background of the Company Global trade distribution is a significant issue in the current competitive business environment. This is owing to the fact that a company’s profitability is dependent on its ability to manage its global trade processes. To prove this, the paper studies one of the global retailers based in the UK Marks and Spencer. Mark and Spencer plc is one the proficient players in the UK retail market with over 20 million customers per week (Brook Intelligence Centre, 2013). The company was started in 1884 and it is based in Westminster city in the UK. It has 766 stores in the UK in major shopping centres, airports, railway stations, retail parks and service stations (Brook Intelligence Centre, 2013). The company has a huge presence in the international market and has stores in Europe, Asia and the Middle East. M&S sells through different channels including in store ordering, telephone, home catalogue and online. Operating Segments The company specialises in various forms of trade. First, the company sells home products, clothing as well as food that are sourced from over 2000 suppliers from different parts of the world. (Brook Intelligence Centre, 2013) The entity is also the leading retailer in lingerie, women wear, and its market share has grown rapidly in all other market segments. The company aims to become a multi channel retailer will various sources of revenue ranging from mobile to internet channels in the UK and across the global market. The company also offers financial services through the M&S Bank that was started in 2012 including loans, travel, cards, insurance, savings and investments (Brook Intelligence Centre, 2013). Shop Formats The company’s outlets are designed in an attractive way and since they are spacious, the shopping experience is simply amazing. There are core shops that include M&S Food Halls and a collection of the company’s clothing line. It is important to note that that the type of merchandise that is sold in a particular store and its space depends on customer demographic and location of the store. Outlet shops on the other hand are located in outlet centres and retail parks and most of the offer a discount of approximately 30 percent. Finally, M&S Simply Foods supply groceries and home ware (Brook Intelligence Centre, 2013). Company’s Global Trade Strategy The company came up with a three-year strategy in November 2010 to change the company from a conventional retailer into a global multi- channel retailer. The first phase of the plan was from 2010 to 2013 that focuses on the UK market (Brook Intelligence Centre, 2013). The second phase focused towards developing the company’s presence in the international market. In November 2010, the company set out to increase its revenue by ?1.5billion to ?2.5billion over the next three years (Brook Intelligence Centre, 2013). However, due to the decline in the economic environment, the company expects to achieve a decline in revenues (Brook Intelligence Centre, 2013). Focus on the UK As earlier explained the company’s plan for 2010-2013 focused on business in the UK. This involves enhancing the brand name in its areas of operation. Branding takes centre stage of all advertising campaigns. Owing to the fact that the market is becoming increasingly competitive, the brand is meant to draw attention to the value and quality offered in their product. The women swear sector has been underperforming as shown in the SWOT analysis discussed later in the paper. The company has come up with new store designs at the end of 2013. With regards to the food section, the company mainly focuses on freshness, convenience and freshness. In 2012, M&S started working on delivering a better shopping experience for their customers through the new store layouts (Brook Intelligence Centre, 2013). The new store designs offer improved navigation and better brand differentiation. The stores have been designed according to local demographics. Multi-Channel The company aims at increasing the number of customers across all its distribution channels. M&S aims to establish a framework for future international growth. The Groups online distribution has been successful since it was launched; however it targets to increase its online sales in future. Therefore, improvements have been made on the online store to make it more attractive by including delivery options and diversifying the range of products available on the online market (Cairns, 2008:111). The company has launched an online market offering 40 percent discounts on clothing prices and launched several apps to boost their online sales. The company has also taken steps towards becoming a multinational retailer by launching the first international website for Irish and French markets. By the end of 2012, the company had made considerable progress in ten online global markets (Brook Intelligence Centre, 2013). The new strategy is aimed at developing the company’s global trade thus reducing its reliance on the UK economy. Supply Chain Transformation The company is in the process of completing its ?1bn programme which was started in 2009 to revamp its IT and distribution systems (Brook Intelligence Centre, 2013). These changes will decrease the company’s stock but at the same time will help cut down on cots by streamlining the number of distribution centres. This initiative is aimed at increasing the company’s annual benefits. It is based on three major elements. The first one is a new supply chain that is fast, reliable and will improve customer service. This is by minimising reliance on service full vendors, opening more efficient distribution centres and moving into modern distribution centres. Secondly, the company has come up with new management systems that are aimed at transforming its business and IT systems to simple and modern systems that focus towards improving customer service and availability of M&S products and services (Ross, 2004:23). Finally, the company has launched a new multi-channel platform and e-commerce distribution centre as part of its global multi- channel framework. SWOT Analysis Strengths To start with, the company is a market leader that is known to be the leading retailer of clothing, food and house wares in the UK. The company has a 26.8 percent in the lingerie market and 11. 2 percent in clothing and foot wear. The company also has an increasing market share in all other sectors (Brook Intelligence Centre, 2013). The company has a strong foothold and presence in the local and international markets. The company has over 700 stores in the UK and more than 400 stores globally in over 50 territories (Brook Intelligence Centre, 2013). Most of the UK citizens can access an M&S stores that are conveniently located for easy access. Weaknesses The women wear market which is the largest source of revenue for the company has been on the decline. In addition to, other sectors have been going through the same. In general, the brand has been on the decline as customers opt for cheaper and more luxurious and fashionable alternatives (Helpman, 2011:67). The company has been facing increasing completion that together with changes in the retailer market have adversely affected the company’s performance. The company has been facing increased criticism by tax bodies over the structure of its tax system. In addition to, the company has been charged with tax avoidance claims. Opportunities The company’s online retail continues to grow and its multi- channel strategy has already shown prospective success (Mathur, 2010:56). In addition to, the international market has been doing well and the company aims to expand it further. Threats The company is facing increasing competition from US based retailers (Helpman, 2011:67). Additionally, there have been changes in the customers’ preferences as they opt for cheaper and more luxurious brands. The above discussion gives an up to date outlook on the global trade distribution processes at M&S one of the leading UK retailers. It is clear that the company spends invests a lot of time and resources in developing its distribution networks to improve customer satisfaction. The retailing giant has done its best to improve its distribution in the international market and through various platforms. The company continues to be the leading UK retailer and is seeking to expand its distribution to more territories in the global market. References Brook Intelligence Centre (2013) Marks and Spencer PLC: company profile, viewed 15 Nov 2013 from . Cairns, P., Doherty, A.M., Alexander, N. & Quinn, B. (2008) ‘Understanding the international retail divestment process,’ Journal of Strategic Marketing, vol. 16, no. 2, pp. 111- 128. Helpman, E. (2011) Understanding global trade, Harvard University Press. Mathur, U.C. (2010) Retail Management: text and cases, I. K. International Pvt Ltd. Ross, D.F. (2004) Distribution: Planning and control: managing in the era of supply chain management, Springer. Read More