Marks and Spencer: How company was ‘overwhelmed’ in 1980
Founded more than 130 years ago by Michael Marks and Thomas Spencer, Marks and Spencer became a high street favourite selling high-quality British-made products under its ‘St Michael’ brand. This popularity peaked in 1998 when M&S became the first British retailer to make a pre-tax profit of over £1billion. But a year later, those profits were halved – forcing the company to make unprecedented changes – such as turning to overseas suppliers – and since then bosses have implemented a “radical” plan to turn their attention away from the clothing side of the business.
And textile expert Niki Tait explained in her analysis of the situation at the time why she had some concerns.
She stated in 2000: “It was the bastion of the industry, it sold quality British-made goods to a predominantly British market, the middle market – never those looking for high fashion or cheap goods, but those who felt comfortable, for all manner of reasons, in buying British.
“It sold sensible practical clothes for the family, to go to work in, do the housework in, relax in and be comfortable in.
“If you listen to its customers in the street, pub, hairdresser, little of what is in the shops at present matches what they want.
Marks and Spencer came under fire
The company was founded in 1884
“The problem, they say, is not one of price, or shop layout, or even the fact that credit cards are still not accepted within the stores.
“It is the fact that M&S has had the arrogance to sit back with over-confidence in its position as Britain’s number one retailer and not see the other stores catch up and overtake it.”
Ms Tait stated that M&S’s decision to drop the St Michael brand and switch to foreign suppliers to produce some of its goods signified the issues that its customers had.
She added: “They no longer offer the clothes their customers want to buy.
“A well-known industry figure summed up his feelings on M&S: ‘It is a dinosaur: a huge body, small brain, moves slowly and lives in the past’.
READ MORE: ‘No one understood’ why M&S ‘chopped’ UK suppliers for ‘low-cost’ foreign alternatives
Marks and Spencer has since implemented a ‘radical’ plan
“With the dropping of the St Michael logo and the introduction of the designer ‘Autograph’ range, the company hopes to lose both this ‘lived in the past’ image and the harmful speculation into its future.
“The UK high street is today dominated by a small number of super-powerful retailers (more so than anywhere else in the world) with only a handful of major UK retailers absorbing 80 percent of market share.
“If one sneezes, many people get the flu, just as demonstrated by this simple change of policy in one company.”
Ms Tait finished her analysis by pointing out that despite the issues, Marks and Spencer were still highly profitable.
She continued: “The whole change in policy seems to have come about as a panic measure in response to a definite loss of confidence and has been reflected in share prices hitting a near nine-year low.
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M&S enjoyed the height of its success in the Eighties and Nineties
“But is this fair, since Marks and Spencer is still a profitable company?
“Between 1995 and 1998 its profitability was extremely high (an unsustainable position most say), rising gradually from 13.5 to 14 percent.
“This dropped suddenly in 1999 to 6.6 percent and is still dropping, but the company still managed to turnover £8.224million, almost the same as in 1998, with a total operating profit of £512million.
“This drop in profitability has to be a concern, but is the decision to purchase an increasing amount, so quickly, from the low-cost countries the correct response?
“Many do not think so, and there have been many questions of late within the UK industry as to the real competitive nature of overseas purchasing.”
After the switch to foreign suppliers, M&S launched the rebrand with the help of George Davies – the founder of Next.
More Marks and Spencer Foodhalls ave since been prioritised
Profits went up initially, but after just three years M&S bought out Mr Davies for £125million and financial problems returned.
On November 9, 2010, chief executive Marc Bolland revealed plans to strengthen the company’s overall brand image, which involved the discontinuation of its ‘Portfolio’ fashion brand and the sale of electrical products.
But on January 7, 2016, it was announced Mr Bolland would step down and be replaced by Steve Rowe, head of clothing.
In 2018, Stuart Machin was appointed Managing Director of Food to change the overall direction of the business.
M&S core shops now typically feature a selection of the company’s clothing, homeware and beauty ranges and an M&S Foodhall.
Today, 615 of its 959 stores only sell food products.