The Success of Marks and Spencer: a Well Planned Strategy - Research Paper Example

Marks and Spencer Introduction Marks and Spencer or M&S is one of UK's leading retailers for stylish, high quality and great value clothing, quality food and home appliances. The company proudly claims1 that with the help of more than 75000 employees and 2000 suppliers from around the world, it is able to cater to more than 21 million visitors through its stores each week. The company also takes pride in the fact that it is doing the business in a responsible manner, thoughtful about the environmental concern and taking due care to make sure that the company is able to reduce the carbon footprints. In fact it has set for itself a target of becoming carbon neural and sending no waste to landfill by 2012. Working with customer focused approach and adherence to brand values like quality, value, service, innovation and trust, the company has been able to create a niche for itself in the highly competitive retail sector. Reasons behind Success of Marks and Spencer A Well Planned Strategy: The Company has been focusing on providing quality products to its customers with matching service standards and shopping environment. M&S has marked for itself five key growth areas2, namely; i. Continuing investment towards growth of the core UK retail business, by regularly introducing new goods and services. ii. Strengthening the UK property portfolio iii. Driving the M&S Direct business iv. Keeping up efforts for expanding the International business v. Integrating the environment care plan, known as Plan A or 'eco plan' into every aspect of their business, so that the company can continue to grow in a sustainable manner. Interestingly, M&S calls it Plan A, because it believes there's no Plan B, if we don't act responsibly now. Table: Operational CO2e (in 000 t) emissions at M&S3 Usage 2006/07 2007/08 % Change Stores and office energy usage 279 235 -16 Store and office refrigeration and air-conditioning gases 125 136 +9 Logistics transport and dedicated home deliveries 54 57 +6 Warehouse energy usage 48 30 -37 Warehouse refrigeration gases 6 5 -17 Business travel 5 6 +7 517 469 -9 The Glorious past: It is said that journey of 100 miles begins with one single step. That was exactly the case with M&S, when a stall was founded in 1884 in an open market in Leeds, UK with the name Marks' Penny Bazaar. The company has not looked back since then. Despite a number of ups and downs, the group operates 665 stores in UK with over 291 franchisees in over 40 countries. Satisfied Customer: Today we are in an era when marketing communication techniques have seemingly overshadowed all other forms of approaching the customer. But it is worth noting that grabbing customer attention is not a big deal, retaining customer loyalty requires sound strategies at the top. A satisfied customer often takes pride in becoming a goodwill ambassador for the company. The emphasis of M&S on quality and customer satisfaction has helped in retaining the customer base of the company. Committed workforce: Organisations are not passive components. They are live, full of activity and environment-responsive like living beings. With time organisations acquire a character and develop a typical personality and we tend to make an image of the employee depending on the organisation he/ she works for. This very personality of M&S seems to have considerably influenced the functions of the company as it is known as an employee friendly company thus earning the loyalty of the workforce. Basis of Competitive Advantage The retail sector is highly competitive with likes of ASDA Group, Debenhams, Sainsbury, Matalan, NEXT, Tesco, Gap, Wal-Mart etc. giving intense competition to M&S. But the fact that the company was able to showcase revenues worth 9,022 million (approximately $18,113 million) during the financial year (FY) ending March 2008, with an increase of 5.1% over 2007 goes on to prove that M&S has been able to create a formidable space for itself in the market. Some of the strong points of M&S, which give it a competitive edge are; i. Strong market position: It is a market leader in general merchandise (GM) sector in the UK with large network in UK ii. Strong Brand Identity: M&S has been a reputed brand for decades. It is known to offer high quality products at reasonable prices with the five key values namely, quality, value, service, innovation and trust iii. Renewed emphasis on International Market: M&S has also been vigorously strengthening its international market by entering into strategic tie-ups with reputed retail companies in the international market. For example, in order to tap the vast Indian middle class market, the company entered into a joint venture with Reliance retail in April 2008 for setting up at least 50 stores over the next five years4. iv. Competitive Pricing Policies: M&S has successfully implemented its price restructuring across product categories and brands in FY2008. The pricing structure was also reviewed by the company to attract larger number of customer. In fact the company has been able to achieve success by way of leveraging the economies of scale. v. Growth in Online Retailing: The internet community is spreading quite fast with almost all companies making sure that their online presence is able to supplement their business further. As per a study, the amount of money spent online by consumers in the UK increased by 35% to 14.7 billion ($29.5 billion) in 2007 (Datamonitor, 2008). In order to retain the competitive advantage, the company needs to keep up its forward looking policies, retain the customer base and keep the momentum as far as implementing environment friendly policies are concerned. Reasons behind the downturn in Late 1990s and early 2000s The late 1990s and early 2000s really proved quite challenging for the company as it kept on loosing profits and customers. It started in 1998 when the sales figures saw a downturn and company had to resort to cost cutting exercises like looking for overseas locations to see cost effective production. Therefore, the mismatch in production cost with the sales figures happened to be one of the reasons for the downturn. Another reason was the top heavy organisational set up prevailing at that time which led to a decision of curtailing a number of management jobs by the company. Company was also forced to review the customer focus strategies as well after the downturn. References: 1. Datamonitor (2008). Company Profile - Marks and Spencer Group plc. Datamonitor Europe, London. 2. Marks and Spencer (2009). Available online at http://corporate.marksandspencer.com/ (January 31, 2009) 3. Roy, Saumya (2008). Marks and Spencer, Reliance join hands. Available online at http://www.livemint.com/2008/04/19001216/Marks-and-Spencer-Reliance-jo.html (January 31, 2009) Read More