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Marks & Spencer is a British retailer with over 800 stores in more than 30 countries around the world. It is the largest clothing retailer in the UK, aswell as being a food retailer. Most of it’s domestic stores sell both clothing & food, and since the year 2000 Marks & Spencer have started to expand into other ranges such as homewares, furniture & technology.
Marks & Spencer became the first British retailer to make a pre-tax profit of over £1 billion “BBC News online 1998” Though a few years later Marks & Spencer were hit by the “credit crunch” which has had a dramatic effect on the company as they struggle in the current economical climate.
There are plenty of observers who will claim that Marks & Spencer is dying, and I’m inclined to agree. I’m not suggesting that the retail monolith is going bust, or is about to be bought by Wal-Mart and rolled into one brand with Asda. It’s just that the old M&S is dying and a new Marks & Spencer is forming. The latest blow came when Marks & Spencer announced it would sever its cosy, 30-year-old supply agreement with its fourth largest supplier, William Baird. Marks & Spencer first started to buy direct from manufacturers in the Twenties, a rather radical initiative in those days, when wholesalers were taken for granted. Since then, Marks & Spencer has been a mainstay for the UK retail industry. Marks & Spencer’s has increasingly moved overseas in recent years, to take advantage of the higher margins offered.
In this report I am going to be looking at the Political, Economical, Sociological, Technological and Environmental factors that have affected Marks & Spencer and how they have overcome their problems.
Political Factors
The government sets regulations for companies to abide by such as Health & Safety British Standards such as, planning for hazard identification, risk assessment and risk control. If companies do not abide by these regulations they will be fined or even in some cases be forced to close down. Marks & Spencer did not abide by the British Standards as they were charged for neglecting health & safety regulations after a door fell on an employee. George Blair was allegedly injured after a warehouse door in their store at Braehead, near Glasgow was left hanging on loose fixtures. Marks & Spencer are alleged to have ignored repair requests, allowing the door to fall into disrepair. Marks & Spencer pled not guilty to this; there is still no outcome of this trial.
Also according to “BBC News 30th January 2006” Marks & Spencer would be the first major retailer to go down the Fair-trade route on both clothing and food. The fair-trade policy, which they have launched will include, cut salt and fat in M&S foods, recycled packaging and animal welfare protection. Marks & Spencer Chief Stuart Rose stated, “Customers want good value, but they care more than ever how food and clothing products are made”.
Economical Factors
Currently the economic outlook is very uncertain and this is more than likely to affect retail sales, as people do not have the spare cash to spend on luxury items such as clothing and food luxuries. Marks & Spencer have been hit by this and have recently closed a number of stores and have had to make job cuts of 2% of their 70,000 staff. And also to show what affect the recession has had, they took the decision to have two days of 20% discounts in the run-up to Christmas. They have also recently introduced a 20% of all Wine and Champagne to keep up with their competitors. Marks & Spencer have had to change the way they market themselves so that they can try and stay ahead of the recession.
Sociological factors
In the last few year’s society has changed. In 2006 as stated by the Guardian, Chief Executive of Marks & Spencer Stuart Rose wanted to stretch the company brand, for example he considered selling food online as part of a plan to become a multi-channel retailer, this was obviously to keep up with the competitive market such as Asda. Asda and Marks & Spencer appeal to different markets in terms of social class and other demographics; this has a major influence on the way they respond to current issues.
In response to the current cheap clothing industry supermarkets have increasingly over the last few years caught up with fashion trends, helping them to rival the high street clothing stores with their less expensive versions. Marks & Spencer is no exception to this and they have bought their clothing ranges up to date to keep up with the latest trends and to keep their customers interested. “Consumer purchases are influenced by cultural, social, personal and psychological characteristics. For the most part, marketers cannot control such factors, but they must take them into account”. Armstrong, G and Kotler, P (2007) Marketing: An Introduction, 8th Ed. Prentice Hall.
Technological Factors
Technology is vital in the retail market. “Companies must manage their brands carefully. First the brands position must be continuously communicated to consumers. Major brand marketers often spend huge amounts on advertising to create brand awareness and to build preference and loyalty”. Armstrong, G and Kotler P (2007) Marketing: An introduction, 8th Ed. Prentice Hall. For Marks & Spencer to continuously communicate to consumers they need to be heavily into advertising, which they are. They have Celebrity icon Myleen Class as the Face of Marks & Spencer who appears on the adverts on the TV and she is also on their website modelling the M&S clothing, also other M&S girls include Twiggy, Erin O’Connor and Noemie Lenoir too, so their adverts appeal to women not only in their 20’s but also to the more mature lady so they are covering all areas with their advertising campaign. Also their website is very appealing with bright colours and very easy to use, it is also constantly updated with the new M&S brands.
Legal Factors
Legislations are always changing. Marks and Spencer carry out re-training & update every year, they keep up to date with new laws or legislations, and with issues regarding Health & Safety they also ensure that their legal protection is updated. For re-training Marks & Spencer invite business changes to the business, tax changes to the business & products changes amongst many other things. Marks & Spencer invite objectives/methods that need to be changed and new training, and also on going development.
An example of legislation is the “Fair Packaging and Labelling Act (1996) – Provided for the regulation of packaging and labelling of consumer goods. Requires that manufacturers state what the package contains, who made it, and how much it contains”.
Here is an example from Marks & Spencer’s website to show that they are adhere to this legislation,
“Packaging helps to protect the product between being produced and used by the customer. It prevents product wastage, carries important instructions and information on ingredients and helps the product look its best in the store”.
Environmental Factors
With the current environmental climate as it stands, issues are being promoted daily on the television, in magazines and newspapers and on the radio. All companies, industries and organizations are being pressured to change their ways when it comes to the materials they use and how they manufacture. Marks & Spencer have established their own Green Policy which they call “Plan A” The chief executive of Marks & Spencer states that it is called this because there is no “Plan B”. Marks & Spencer has today announced a 100-point five-year plan to re-engineer itself to become a carbon neutral, zero-waste-to-landfill, ethical-trading, sustainable-sourcing, health-promoting business. “BBC News January 2007”
Conclusion
In my opinion Marks and Spencer’s have been highly successful and competitive with a drive to provide a high quality service for many years. The economic change has forced Marks and Spencer to compete against cheaper products, younger, more fashion conscious clothing chains and more recently a recession, which has hit shoppers hard. Without previous pressure to improve M&S has never before had to rethink its policies in such a way as it does now. Political, economical, sociological, technological, legal and environmental policies all have to be considered in a competitive world, Marks and Spencer now have a rival their competitors and fight to survive. The business needs a complete overhaul, management needs to be streamlined, the marketing mix needs to be changed and the business structure needs to be re-organised to make it more efficient in its business strategy and to make it more appealing to shoppers.
