Consumers falling out of love with M&S

As M&S announced declines in both total and like-for-like sales in its core general merchandise category in Q1 2012-13, it also revealed a shake-up in its management structure, including a key exit. The retailer needs to inspire female shoppers and execute its existing strategy more successfully to regain its prominence.

M&S dominated the UK clothing market in the 1990s, and was the prime destination for women of all age groups for clothes shopping. In 1997 it accounted for 16% of the womenswear market; now its share is around 11%, despite adding significant amounts of new clothing space (at least 93 000m²) in the meantime. Indeed, the fact it is still leader in the clothing market is underpinned by it having more space than any of its competitors; the next largest by share, Next, has around half the area of M&S in clothing,

The main factor behind its decline is that the competitive landscape has changed over the past decade, and women are shopping elsewhere, be it in supermarkets, department stores, value retailers, online, or more inspiring specialists such as White Stuff, Zara, Topshop, and Hobbs. While M&S has retained its typical loyal shoppers, these shoppers are aging, and M&S is not attracting younger shoppers to replace them.

Sales down

Clothing accounts for the majority of its general merchandise sales, which were down 5.1% in Q1 2012-13, with like-for-like sales down 6.8%. Some of this decline was attributed to poor merchandising decisions, which indicates a lack of confidence in the company's buying team. Furthermore, there has been speculation for months that executive director of general merchandise Kate Bostock was looking for a role elsewhere, which was bound to unsettle the buying team even further.

Following these latest figures it comes as little surprise that she is leaving "by mutual consent" in October.

The challenge for M&S is to inspire women to shop there again. To this end, the company is bringing in Belinda Earl as style director. She was very successful as CEO of Debenhams in differentiating and developing its house ranges as standalone brands, something M&S has been trying to do with its brands for years, albeit with little success.

Execution has been M&S' main problem. The retailer needs to communicate individual brand personalities clearly to shoppers in its stores, its marketing must encourage women to visit its stores and website, and its stores must be easy to navigate and find products in. These are all pillars of its existing strategy, but customers see little evidence of them. Belinda Earl's challenge will be to deliver this quickly, which may be difficult given she will only be working two or three days a week.

©Verdict Research 2012