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Marks & Spencer

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Marks & Spencer
Company typePublic (LSE: MKS)
ISINUS57069PAD42 Edit this on Wikidata
IndustryRetailer
FoundedLeeds, England (1884)
HeadquartersUnited Kingdom London, England
Key people
Michael Marks, Founder
Stuart Rose, Chief Executive
ProductsClothing, food, household items, coffee shop, furniture, technology
RevenueIncrease £7.71 billion GBP (52 weeks to 1 April 2006)
Number of employees
70,550
Websitewww.marksandspencer.com

Marks & Spencer plc (known also as M&S, Your M&S and sometimes colloquially as Marks and Sparks, Marks or Marks's) is a British retailer, with several branches outside of the UK. It is one of the most widely recognised chain stores in the UK and is the largest clothing retailer in the UK by turnover (ASDA claimed first place by volume in 2004), as well as being a multi-billion pound food retailer. Most of its shops sell both of these categories. It also has a third line of business selling homewares such as bedlinen, but this is far smaller than the other two.

In 1998 it became the first British retailer to make a profit before tax of over £1 billion [1], though a few years later it plunged into a crisis which lasted for several years. As of 2006 it is growing again, and rapidly increasing profitability, but it is now less than one quarter of the size of the UK's largest and most profitable retailer, Tesco.

History

Early Years

Marks and Spencer was formed in the late 1800s, when Belarusian born Michael Marks had his store combined with his new business partner; Thomas Spencer, who was working as Dewhirst cashier and still to this day Dewhirst is the biggest supplier to Marks and Spencer also known as M&S. The official first Marks and Spencer store opened in 1904. Then when founders Michael Marks and Thomas Spencer passed away, the Chairmen title was given to Marks’ son Simon Marks. Simon Marks then worked with his friend Israel Sieff and with their joint efforts, Marks and Spencer became more publicly known and profits increased as a result. They then became a Public Limited Company (PLC) after adopting the revolutionary policy of buying directly from manufacturers. In 1926 the company then started selling textiles and in 1928 the St Michael Trade Mark was registered. In 1930 M&S opened a flagship store at Marble Arch, London. Then Café Bars were introduced in many stores. These provided cheap, hygienic and nutritious mass catering. This was a valuable resource during the war making efficient use of scarce food. And further part of the expanding of M&S, in 1931 a food department was introduced selling produce and canned goods. By 1956 all goods were sold under the St Michael label and the St Michael Trademark was used on Chocolate. In 1964 Simon Marks died after 56 years service to the Company and Israel Sieff took over as Chairman. In 1974 Asian food was introduced into the stores and in 1975 M&S opened up stores in continental Europe, then for years later in The Republic of Ireland. By 1999, Online Shopping was brought in and the company grew with new sales of fashion clothing. The original firm was a chain of "penny bazaars", founded by a Russian-born Polish-Jewish immigrant, Michael Marks in Leeds with a loan of £5 from Issac Dewhirst, a wholesaler. The site of the first stall is still marked to this day, with a green and gold commemorative clock in Leeds Kirkgate Market. His first full store was opened in 1894 at Stretford Road, Hulme, in Manchester. Marks entered into a partnership with Tom Spencer who was working as Dewhirst cashier. Dewhirst went into manufacturing and remains the biggest supplier to M&S. M&S became a household name thanks to the efforts of Marks' son, Simon Marks, and his friend, Israel Sieff.

20th century

M&S made its reputation in the 20th century on a policy of only selling British-made goods. It entered into long term relationships with British manufacturers, and sold the goods under the "St Michael" brand (trademark registered in 1928), which was used for both clothes and food. It also accepted the return of unwanted goods, giving a full cash refund if the receipt was shown no matter how long ago the product was purchased. It has now adopted a 90-day returns policy.

Unlike most of its rivals M&S resisted the lure of television advertising when ITV was launched in 1955, preferring to rely on its reputation to draw in customers. It was not until the mid-1990s that the first TV commercials for M&S clothing were broadcast.

The company put its main emphasis on quality, but for most of its history, it also had a reputation for offering fair value for money. When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of 'British Quality Goods.' Its business model required suppliers to commit to long term contracts solely to M&S. This approach often led to an over reliance by manufacturers on the portion of trade they did with M&S. Accordingly, when the M&S fashion buyers changed suppliers on some aspects of the company's retail clothing offering, manufacturers were left dangerously exposed — many became insolvent. This has resulted in a change of climate and no longer is a contract to supply M&S held up as the panacea it once was.

In 1988, the company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain.

File:Gastropub readymeal 1.jpg
Gastropub ready meal at Marks & Spencer

1997 Onwards

M&S's profits peaked in financial year 1997/1998. At the time it was seen as a continuing success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure as head of the company, profit margins were pushed to untenable levels, and the loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also a burden, as rival retailers increasingly imported their goods from low-cost countries, but M&S's belated switch to overseas suppliers undermined a core part of its appeal to the public. In addition, as an ageing and famously bureaucratic company, it was losing touch with potential younger customers, who were reluctant to shop with it.

These factors combined to plunge M&S into a sudden slump, which took the company, its shareholders, who included hundreds of thousands of small investors, and nearly all retail analysts and business journalists, by surprise. The company's share price fell by more than two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to £145 million in the year ended 31 March 2001.

Since the late 1990s M&S has experienced serious boardroom instability and has made a number of attempts to revive its business, with only partial success. In 2001, with changes in their business focus such as the introduction of the "Per Una" clothing range designed by George Davies, accompanied by a redesign of their underlying business model, profits recovered somewhat and M&S recovered some of its market share, but it soon became apparent that problems remained. Other changes to tradition included accepting credit cards and opening their stores on Sunday.

In 2004, M&S was in the throes of an attempted takeover by Arcadia Group & Bhs boss, Philip Green. On July 12 a recovery plan was announced which would involve selling off the financial services business to HSBC Bank plc, buying control of the Per Una range, closing the Gateshead Lifestore and stopping the expansion of its Simply Food line of stores. Philip Green withdrew his takeover bid after failing to get sufficient backing from shareholders. Philip Green's offer to the shareholders in 2004 of £4 a share, has been recently made to look feeble by M&S's current revival. Since June 2005 the share price has almost doubled from 319p a share to a high of 632p in May 2006.

Chairmen

When Stuart Rose took charge of the business in 2004 he was appointed as 'Chief Executive but not Chairman.

Paul Myners was appointed Chairman in 2004: he has finished his reign at the last AGM in July 2006, to be replaced by Lord Burns, a prominent figure in the City and a former permanent secretary to the Treasury.

Financial performance

Until 1999 M&S's financial year ended on 31 March. Since then, the company has changed to reporting for 52 or 53 week periods, ending on variable dates.

Year ended Turnover (£ M) Profit before tax (£ M) Net profit (£ M) Basic eps (p)
1 April 2006 7,797.7 745.7 520.6 31.4
2 April 2005 7,490.5 505.1 355.0 29.1
3 April 2004 8,301.5 781.6 552.3 24.2
29 March 2003 8,019.1 677.5 480.5 20.7
30 March 2002 8,135.4 335.9 153 5.4
31 March 2001 8,075.7 145.5 2.8 0.0
1 April 2000 8,195.5 417.5 258.7 9.0
31 March 1999 8,224.0 546.1 372.1 13.0
31 March 1998 8,243.3 1,155.0 815.9 28.6
31 March 1997 7,841.9 1,102.1 746.6 26.7
31 March 1996 7,233.7 965.8 652.6 23.3

Corporate Social Responsibility

Look Behind the Label

In 2006 the Look Behind the Label marketing campaign was introduced [3]. The aim of this campaign was to highlight to customers, the various ethical and environmentally friendly aspects, of the production and sourcing methods engaged in by M&S including:

  • Fairtrade Products
  • Substainable Fishing
  • Environmentally friendly textile dyes

The company is also looking at how stores can be made more environmentally friendly and in particular the materials used when fitting out stores, for example using flooring made from natural rubber. As well as looking to source electricity from environmentally friendly sources.

Charity

For Christmas 2006 the company has introduced a range of products to support the housing charity Shelter [4] predominately in the food to go range including a range of seasonal christmas sandwiches.

Fairtrade Products

All Coffee and Tea sold in M&S stores is now Fairtrade [5], in addition the company offers clothing lines made from Fairtrade Cotton in selected departments [6].

Marketing

Branding

In the late 1990s, The St Michael brand was discontinued in favour of Marks & Spencer.

St Michael Logo

When Steve Sharp joined as marketing director in 2004, after being hired by new Chief Executive Stuart Rose, he introduced a new promotional brand under the Your M&S banner, with a corresponding logo [7]. This has now become the company's main brand in its advertising, online presence and in-store merchandising. The clean font and modern colours of the new image are somewhat incongruous alongside the traditional M&S signage and associated fittings that still adorn the stores themselves. In fact the only thing they have in common is the use of M&S traditional green in the ampersand of the new logo. This may seem confusing at first, but the new look has been instrumental in the company's recent resurgence, particularly with the success of a new clothing campaign featuring the celebrated model, Twiggy, and younger models associated with the bohemian styles of 2005-6, and the TV ad campaign for their food range featuring Dervla Kirwan and the tagline "This is not just food, this is M&S food".

New Store Format

A new store format designed by Urban Salon Architects, has won much praise and is in the process of being rolled out across all stores, of which, 35% have been completed.

Several of the 'Luton' format stores have received what is known internally as a "Light Touch" re-fit, which is a temporary update to interiors in stores which have had recent investment in them, or where stores are in areas that are likely to be subject to re-development. Areas covered by this refit may include new mannequins, carpets replaced by laminate flooring, and some new decals, to rejuvinate the old store formats until the full new look overhaul can be undertaken.

The full new look makeover is a drastic reworking of store design, including the gutting of old stores, and installation of a brighter, more spacious, modern and contemporary design, replacing carpets and laminate floors with white tile throughout (black tile in Foods) thus opening the floor instead of having pathways, having new contemporary white mannequins in new designs and poses, new displays and kit such as new design clothing rails, product stands (formerly known as "Lutons"), display and product walls, window display styles, larger fitting rooms (replacing old curtained booths baring fleur-de-lys designs, with new contemporary doored compartments baring black and white model photoshoots), glass walls, till points, and general total updating of decals, designs, equipment, lighting and new black or beige uniform shirts for customer assistants and red shirts for section managers.

Products

Collections

Menswear

  • Collezione
  • Blue Harbour
  • Blue Harbour Vintage
  • Autograph

Ladieswear

  • Autograph
  • Plus Collection
  • Petite Collection
  • Maternity
  • Per Una
  • Limited Collection
  • Classic Collection

Per Una

per una three hearts logo.

per una is a range of female clothing sold at Marks & Spencer.

Launched on September 28, 2001 as a joint venture between Marks & Spencer and Next founder George Davies. The brand name means for one female in Italian. All Per Una items include the three hearts logo, inspired by a postcard seen by Davies while on holiday in Italy.

Per Una has been a major success for the company [8], and in October 2004, Marks & Spencer bought the brand in a £125 million, two-year service contract with George Davies[9].

Home Technology

In 2006, M&S has opened a Technology Department in 13 flagship stores, and a smaller selection of Technology goods in other large stores.

Head Office Locations

The headquarters of M&S was for many years in Baker Street, London; during World War II these offices were used by the Special Operations Executive for secret missions in Occupied Europe. In 2004 the company moved to a new headquarters in Paddington Basin, London.

As well as the main offices in London there a number of other Head Office sites across the UK:

  • Stockley Park - IT Services
  • Salford Quays - Marks and Spencer Shared Services Ltd is located here and provides HR and Finance Administration to Stores and Head Office [10][11]

International Buying Offices

The company has overseas sourcing offices in Hong Kong, India, Bangladesh, Turkey and Sri Lanka [13].

Stores

Locations

M&S have over 450 stores located throughout the UK, providing nearly 12.5 million square feet of selling space. This includes their largest store located on Oxford St., near Marble Arch, London, which has around 170,000 square feet of sales floor. Outside London, the next biggest store is then located in Warrington, at Gemini Retail Park.

In addition they have a growing international business, with 192 stores managed under franchise in 30 territories mostly in Europe, the Middle East, Asia and the Far East, and wholly-owned stores in the Republic of Ireland and Hong Kong.

The newest store to open is "Bolton Middlebrook", in Horwich, which opened on October 5 2006 complete with the new look, and will be the benchmark for new stores, especially Retail Park stores, with many new ideas including mobile order points.

In the run up to christmas 2006 from the 18th - 23rd December, a total of 22 Marks and Spencer stores were open for 24 hour trading including the recently opened new retail park stores at Bolton Middlebrook and Abbey Centre Belfast[14] [15].

Simply Food

There are 187 Simply Food stores selling predominately food with most carrying a small selection of general merchandise. Chief Executive Stuart Rose has announced plans to expand the number of these stores to a total of 400 [16].

A number of these stores are run under franchise agreements:

  • Moto has stores at several of its motorway service stations [18]
  • BP has 11 forecourts with a Simply Food offer [19]

People

Training and Development

Customer Service Training

M&S staff are trained in customer service techniques using a customised programme based around the Mary Gober MethodTM. This is known internally as 'Your M&S - Our Service Style - The Mary Gober MethodTM'.

'Our Service Style' is defined as follows "We are friendly, helpful, courteous people, who are knowledgable and enthusiastic about taking care of our customers".

This definition is derived from principles originally identified by the business in the 1950's as being key to good customer service.

Our Service Style training was originally delivered in large seminars hosted by Mary Gober, which all staff attended. Its delivery to staff continues through in store coaching and training programmes.

Staff members who have been trained in Our Service Style can be identified by a brooch/pin of a starfish on their uniform once attended a course led my Mary Gober Herself.

Graduate Training Scheme

Marks & Spencer ranked number 22 in The Times Top 100 Graduate Employers 2006 [20].

International Business

A Marks & Spencer store in Hong Kong.

All international stores are operated under franchise with the exception of the stores in Hong Kong which remain in company ownership.

International Store Locations

There are currently franchise stores located in the following locations [21]:

Correct as of 16/12/06

History of the International Business

The expansion into France began with stores opening in Paris at Boulevard Haussmann and Lyon in 1975, followed by a second Paris store at Rosny 2 in 1977. Further expansion into other French and Belgian cities followed into the 1980's. Although the Paris stores remained popular and profitable, the whole of the Western European operation did not fare as well and all the stores were closed in 2001. Branches remain in some European countries, such as the Czech Republic.

M&S expanded into Canada in 1973, and at one point had 47 stores across Canada. Despite various efforts to improve its image, the chain was never able to move beyond its reputation in Canada as a stodgy retailer, one that catered primarily to senior citizens. The stores in Canada were smaller than British outlets, and did not carry the same selection. In the late 1990s, further efforts were made to modernize the stores and expand the customer base, and unprofitable locations were closed. Nonetheless, the Canadian operations continued to lose money, and the last 38 stores in Canada were closed in 1999.

The first M&S store in central Asia was built in Kabul, Afghanistan in the 1960s. The store was later shut down.

References

  1. ^ http://news.bbc.co.uk/1/hi/business/96531.stm Marks & Spencer profits top expectations - BBC News Online - 19/5/98
  2. ^ http://www.answers.com/topic/marks-and-spencer-p-l-c Marks and Spencer plc - answers.com
  3. ^ http://www.paddingtonwaterside.co.uk/timeforpaddington/ti_news_detail.asp?newsID=63 M&S launches new ‘Look behind the label’ campaign - Paddington Waterside Partnership - 21/02/2006
  4. ^ http://england.shelter.org.uk/howtohelp/howtohelp-682.cfm Marks & Spencer raises money for Shelter this Christmas
  5. ^ http://www.foodnavigator.com/news/ng.asp?id=66333-marks-spencer-fairtrade-coffee Marks & Spencer dives into ethical consumer market - Fletcher, Anthony - 10/03/2006 - Food Navigator.com (Europe)
  6. ^ http://news.bbc.co.uk/1/hi/business/4660410.stm M&S set to launch Fairtrade range - BBC News Online - 30/01/06
  7. ^ http://www.guardian.co.uk/marks/story/0,,1804124,00.html Steve Sharp: Shy marketing whizz creating sparks at Marks - Martinson, Jane - The Guardian, 23/06/06
  8. ^ http://news.bbc.co.uk/1/hi/business/4329412.stm
  9. ^ http://news.bbc.co.uk/1/hi/business/3715654.stm
  10. ^ http://www2.marksandspencer.com/thecompany/workingwithus/ouroppurtunities/sharedServ/index.shtml Shared Services Recruitment Page - Company Website
  11. ^ http://www.liveherenw.co.uk/working/man/sha.asp Living and Working in the North West - Working in Manchester: Shared Services
  12. ^ http://www.lexdon.com/article/HSBC_and_Marks_&_Spencer/92.html Lexdon Business Library - HSBC and Marks & Spencer complete the sale of M&S Money
  13. ^ http://www.investhk.gov.hk/PageControl/ShowDynamic.aspx?act=newsdetail&newsid=76 UK's leading retailer launches Asian Sourcing Office in Hong Kong Invest HK - 28/09/05
  14. ^ http://www2.marksandspencer.com/thecompany/mediacentre/pressreleases/2006/com2006-12-08-00.shtml Marks & Spencer announces pre Christmas opening hours - Press Release - 8/12/06
  15. ^ http://icwales.icnetwork.co.uk/0750expats/expats/tm_headline=-m-s--opens-for-24hrs-and-other-department-stores-extend-hours-to-boost-slow-trading-&method=full&objectid=18289095&siteid=50082-name_page.html M&S opens for 24hrs and other department stores extend hours to boost slow trading - Watson, Molly - icWales.co.uk - 20/12/06
  16. ^ http://www.guardian.co.uk/marks/story/0,,1941992,00.html Simply Food to triple in size with restaurant plan - Finch, Julia - 8/11/06 - Guardian Unlimited
  17. ^ http://www.ssp-intl.com/SSPInternet/Content/Brands/National.htm Select Service Partner - Company Website
  18. ^ http://news.bbc.co.uk/1/hi/business/6136684.stm Perils of the motorway pit stops - May, Maurice - BBC News Online - 10/11/06
  19. ^ http://www.igd.com/analysis/channel/news_detail.asp?channelid=1&channelitemid=16&articleid=3315 IGD Retail Analysis Retailer News - Marks and Spencer - M&S announces Simply Food/BP roll-out plan
  20. ^ http://www.top100graduateemployers.com/top100.html The Times Top 100 Graduate Employers - The Top 100 - Website
  21. ^ http://www2.marksandspencer.com/thecompany/our_stores/world.shtml Company Website - List of International Locations
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