Back-to-basics at M&S! How traditional retail tactics are driving success

News broke last week that Marks & Spencer will re-enter the FTSE100 this month, after notoriously tumbling out of it four years ago amid plummeting profits, particularly in fashion. 

As a result, in 2019 it was demoted to the FTSE 250.

But, after a turnaround strategy under the guise of CEO Stuart Machin appears to be paying off, shares at the British high street retailer have soared 80% so far this year, with a market cap topping £4.3bn.

Shrugging off the good news, Machin called the FTSE100 re-entry “just another day” saying “if we do right by our customers, we’ll do right by our shareholders.” 

M&S gets back on track

In an unscheduled trading update last month, the retailer told investors that like-for-like food sales growth of over 11% and like-for-like Clothing & Home sales growth of 6% in the first 19 weeks of the year would deliver “significant improvement against previous expectations.”

And the British retailer revealed that the first 19 weeks of the year had seen ‘continued market share growth’ in both the Clothing & Home and Food businesses, and good progress on the programme to reshape M&S.

This follows better-than-expected adjusted pre-tax profits of £482m in the year to April 1 at the 139-year-old retailer, as reported in May.

Sales rose 9.6% to £11.9bn for the year, boosted by strong performances in food and clothing. Food sales rose by 8.7% to £7.2bn, whilst clothing and home sales grew 11.5% to £3.7bn, beating analyst forecasts.

Retail gets back to basics

Machin has been overhauling the retailer’s store portfolio, shuttering some stores and repositioning others to key city locations. A strategy which has focused on ‘the right stores, in the right place, with the right space.’

This has included opening a new M&S store in Leeds’ White Rose shopping centre, which at 96,600 sf ft is a flagship for the North and the first iteration of the retailer’s new look in the region.

In addition to store relocations, including a new 70,000 sq ft space in a former Debenhams retail unit at shopping centre, Liverpool One. 

‘A tale of two retailers’ 

But, whilst Marks & Spencer’s clear focus on strong, customer-focused retail is paying off, this comes in stark contrast to rival John Lewis, which is said to be facing “extreme challenges” on its flagship property scheme. 

As part of a plan aimed at diversifying the company away from retail, led by John Lewis Partnership chair Dame Sharon White, the company plans to construct 400 flats above a West Ealing Waitrose, alongside two other housing scheme projects.

But the retailer has reportedly been told that the turnaround project will cost more to build than it’s worth on paper. 

Planning documents are understood to have revealed that the West Ealing development could result in a negative return of £57m for the business, with property consultants calling “the financial viability of the scheme extremely challenging”.

Critics of Dame White’s strategy say the John Lewis Partnership, which owns department store John Lewis and upmarket grocer Waitrose, should focus on its core retail businesses, rather than getting distracted with projects that have little synergy with its core offer.

How traditional retail tactics are driving success at M&S

M&S has been going back to the drawing board when it comes to in-store retail, using traditional methods such as clear category communication and simple colour coding to help customers identify products.

“This isn’t rocket science,” says retail expert and Rethink Retail Top 100 Influencer Ian Scott, “but so many retailers fail to implement it all the way through the shopping journey. 

“Category communication is the crucial link between browsing and buying”, he notes on a post via LinkedIn.

At the M&S Liverpool street store, there is a great example of simple, clear category messaging in the denim department, says Scott. 

He explains: “This use of colour coding is often employed by retailers, but too often, it isn’t followed through properly. Here M&S uses a tall screen to introduce the types of jeans. Each type has an image, title and colourway. Combining all three ensures that information is absorbed,” he adds.

Critics of M&S in the past have said the shop floors were just a mass of product, with no clear differentiation between category areas or in-house brands. And as Scott says, ‘it is not rocket science’, but despite this so many retailers get these simple basics wrong.

In a tough economic market, with retailers competing more than ever for share of wallet, businesses need to double down on what makes them good and do it even better. 

At M&S, this strategy appears to be paying off and the retailer is reaping the benefits. High street stalwart Next has not deviated away from this strategy and continues to be one of the great successes of the British high street. 

But others are losing their nerve, clawing at other areas that could bolt-on revenue to their struggling businesses, but in doing so losing sight of what makes them great in the eyes of their customers. 

What are the core basics of great retail?

Even major high street names need reminding of the core basics of retail, so we’ve highlighted some of the key things to bear in mind when trying to create a positive shopping experience for customers and drive business success.

1. Customer-centric approach

• Understand your target audience and their needs
• Provide excellent customer service, including friendly and knowledgeable staff
• Personalise the shopping experience where possible

 2. Product selection and merchandising

• Curate a well-balanced product assortment that aligns with your target market
• Ensure products are displayed attractively and are easy-to-find
• Implement effective merchandising techniques, such as cross-selling and upselling

 3. Store layout and design

• Create an inviting store layout that encourages exploration
• Use strategic placement of signage, displays and lighting to highlight products
• Consider the flow of foot traffic and optimise high-traffic areas

 4. Pricing strategy

• Price products competitively while maintaining profitability
• Offer promotions, discounts and loyalty programmes to incentivise repeat business
• Clearly communicate pricing and discounts to customers

 5. Inventory management

• Maintain appropriate stock levels to prevent over or understocking
• Implement efficient inventory tracking systems to reduce stockouts and excess inventory
• Continuously analyse sales data to make informed stocking decisions

 6. Online and Omni-channel integration

• Develop a strong online presence, with an easy-to-navigate website and mobile app
• Integrate online and offline experiences for seamless shopping (e.g. click-and collect, in-store pick-up or returns)
• Leverage social media and digital marketing to reach a broader audience

 7. Data analytics and technology

• A strong handle on data analytics and technology is crucial in today’s market of data-first retail 
• Utilise data analytics to gain insights into customer behaviour and preferences
• Implement technology solutions that enhance the shopping experience, such as self-checkout options or mobile payment systems

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