Wednesday 23 May 2018

Marks out of ten

Marks and Spencer have had a shocker.,f_auto,ar_3:2,q_auto:low,c_fill/!/image/image.jpg

Marks & Spencer has reported a sharp fall in annual profits as it revealed a deterioration in clothing sales and huge store closure costs.
Pretax profits at the retail giant slumped 62% to £66.8m after a £514.1m bill for restructuring costs that included £321m to pay for a store closure plan. 

100 stores to close over four years. A mix of lease expiry and poor performers and duplicate space.

Here at C@W we have used M+S as a test for retail. Everyone knows them. And most readers use them. Or, more accurately, used them.Because M&S have been on a journey. To nowhere good.

If I could find the evaluation that my old firm did as a training exercise on M&S, i'm fairly certain the same conclusions would apply. Even fifteen years later on.
Too much space. Too many employees. Too old. Too unfashionable, or even too weirdly unfashionable. Using a ladies style no lady wants to wear. Too expensive. Too poor quality. 

And to that list, a decade plus on, too much competition. The decline of their neighbourhood has declined the overall retail footfall. The rising rents and rates. The incredible percentage increase of minimum wage at a time of falling profits. And ..the avalanche that was always going to sweep retail away, too much online competition.

M&S has relied on its superb food offering to carry the rest of its brand for a long time. But the decline of the supermarket has finally caught up with Marks too.

The really odd thing about retail at the moment, is that those happy few doing well, are doing all the wrong things. Primark are opening larger and larger stores. They don't operate online. If you want their stuff, you have to come to town. And people are happy to do so.
H+M are also opening what today are considered large stores.

 Its easy to suggest that because anyone can buy anything from Amazon they will. But Amazon is never the starting point for a cheap price. Ebay can give you anything copied and made in China, shipped from China, exempt of customs and subsidised by a universal postal agreement. And all cheaper than it can be made or shipped in this country.

Asos, the fashion online giant, is unaffected by the Chinese seller. Asos sell their Asian imports here. 
Toys R US collapse was at the same time as 'The Entertainer' revealed its usual, annual, 3-5%growth.
The Entertainer does do online, yet does not open its High Street stores on Sundays.
{A whole other discussion - Are the doors closed savings higher than the doors open trade?}

When we have examined the case study of a lost way retailer, Marks, before, comments have revealed little love for the once mighty giant. With 'terrible fashions' being top gripe.
Even the once visionary link up they had with Tesco was under fire last time.

Has anything improved since last time we looked? Marks share-price has risen up quite happily today.Investors hoping costs will come under control and losers will be dropped.

Or is retail having its own managed industrial decline? Will M+S be the last pit closeure of the high street in 2030?


andrew said...

Spent 10 years asking what WHS is for and why does it exist.
The WHS SP and profits have paid me no heed.

After the zombie apocalypse cockroaches will still go into WHS and occasionally buy a new stapler
...and some close to sell-by chocolate.

Spent 10 years buying pants from M&S and saying 'dont like the clothes but like the fact that they do not put mayo in their sarnies'

I forecast an apocalypse for high st rental prices and that is what i think M&S holders are optimistic about.
After all, (and this disproportionately affects big shops) why should a town centre high st shop 5000sqm cost more than a out of town warehouse 5000sqm.

dearieme said...

A youngish friend worked for M&S for a while. He found the management overmanned with rather dim people who were dedicated to finding reasons not to change anything. Indeed, in their own cases, not to do anything.

Jan said...

Apparently they are expanding online and going towards bigger stores and out of town. I can't see that working. According to their CEO their biggest sellers are jeans and lingerie.

Bill Quango MP said...

..Their lingerie has always been big and jeans are a big seller.
But their jeans have gone off a lot recently.
For a while they were riding the cotton traders/ crew/fat face, parents of hipster wave. Fat face and crew denim is terrible. Really terrible. While their shirts and tops are good.

M+S has trousers. Dull, dead, old man pants that it sells very reasonably, in sizes no other retailer will stock. So it has that. And it had jeans on the back of that too. 'Man's' jeans. For real 50 plus men.

But they have become thinner. And more expensive. To the point that you might as well get 4 pairs for the same price from Primark.
Two pairs same price from Matalan.
Or a better brand from Gap.

That's a difficult place to be. Too expensive. Not good enough. Not trendy enough.
That's BHS territory.

M+S are a LOT better company with far better management than old BHS. But they have spent 10-12 years not yet managing to escape the trap.

Raedwald said...

They did very good 'site suits' - men's machine washable suits made out of some sort of plastic (presumably) that sparkled faintly in the sun. At one site meeting I, the QS, the Civils, HVAC and PS were all in either dark grey or navy M&S washable suits of identical cut .. only the designer wore clothes that would be ruined during the walk-around.

I've still got a couple stuffed into a bag somewhere. Quick wash on gas mark 4 and they'll be as good as new.

K said...

M&S has some of the worst vanity sizing. Their XS is sometimes the same as a M or L from Asos, Topshop, etc. The actual style is irrelevant if nothing fits.

Anonymous said...

The food was good in the 90s, everyone else has kept moving and MKS food is fine no longer special. The service is astonishingly bad. I have a mini coop, sbry and mks food near me. Both coop and sbry will make sure someone jumps on the till if the queue is more than 1 person. MKS, as a queue forms the staff run and hide in the back. Clothes - I think that is the scary/weird bit you have to run through to make it to where you can pick up some juice in the bigger stores.

Electro-Kevin said...

I did that ebay thing and bought a TV simulator from China (for security.)

What turned up performed more like an extreme version of lighting strip in a discotheque. Talk about draw attention to my house !

It seemed to be trying to show me all the clever things it could do.

James Higham said...

High Street’s dead.

Anonymous said...

I think dearieme (9.22) nailed it. Weak management that looks for the safest option, and appoints unthreatening people to the ranks below.

All these things are explained in the original edition of "Parkinson's Law" (1958). What we see at M&S is the middle stage of Injelitis.

Don Cox

purplepangolin said...

Re appointing unthreatening subordinates, I heard it characterized as "As hire As, Bs hire Cs"

Nick Drew said...

A big oil co I once worked for analysed its entire worldwide management cohort using the Myers Briggs metric

(there are 16 personality-types in the MB scheme)

to the Board's horror (but not, I think, surprise), 80% fell in just 2 of the categories

Like recruits like

I left shortly after that ...

Thud said...

I shop in their huge Cheshire oaks shop and its quite a pleasant experience. The main thing I noticed was that I'm a spring chicken compared to 90% of customers a majority of which look as if they will be gone within 5 years.

Anonymous said...

I think that their coffee must be really good, it must be, I can never get a seat when I enter their cafeterias or do people just go to marks to spend all day gasing in the cafe?

The food is worth a visit, socks and undies maybe but trousers are all bum freezers, the women's stuff is Victoriana.

You'll see kids in the food hall, though rarely spotted in the clothes depts and probably coz if their caught, they'll never hear the last of it from virtual mates on tweeterville or what evah.

Though fukc nose why people enter H&M, Primark, Matalan their stuff is shit. Surely we can do better than Thailand, China and Bangladeshi made stuff?

And notwithstanding the overeheads; rates, rental charges, crap management, etc....that's where M&S fell, they tried to trade DOWN.

Raedwald said...

Ah Nick - as an INFJ , I was always happy that my ultimate boss realised the value of having one of us on the team, which gave me a one-off position and licence to critique thwe firm.

Wildgoose said...

How the mighty have fallen.

I remember a friend at University saying that it was his ambition to be rich enough to be able to do all his shopping at Marks&Spencer.

You paid more, but in return you got quality goods.

Not any more. Or rather, you still pay a premium, but the goods are no different and no better than can be bought more cheaply elsewhere.

The final straw for me was buying socks sized 12-14, struggling to pull them on to my size 11 feet and have them last only two to three washes before they were disintegrating.

Sainsbury's still have a good clothing line, but clothing as a whole appears to have become thinner, with poorer stitching and is just generally more "disposable" than it was in the past.

Charlie said...

"clothing as a whole appears to have become thinner, with poorer stitching and is just generally more "disposable" than it was in the past"

That's because it's much cheaper than it was in the past. Despite years of a falling pound sterling, have you noticed much of an uptick in the price of our imported clothes?

Real quality is still available; it's just much more expensive than the rubbish peddled by the big high street chains. You can't pay M&S prices for a shirt - what, £25, £30? - the cost of a pub lunch and a couple of pints - and expect to get something that will last.

Electro-Kevin said...

"Though fukc nose why people enter H&M, Primark, Matalan their stuff is shit. Surely we can do better than Thailand, China and Bangladeshi made stuff?"

Because people only want to wear them a couple of times before changing their look.

I buy a couple of pairs of shorts and T shirts for the Summer and chuck them away at the end.

Even expensive gear starts to look tired after one season, so why bother with it ?

I went into M&S menswear recently and the mannequins were all dressed like Cyril the Swat out of the Bash Street kids.

This shop is only for guys who want to get beaten up.

CityUnslicker said...

There is a good point above re the age range. Not that oldies will die off, that is always true but, you, others of us fill there shoes.

BUT, linking to my earlier post of the week on pensions - when the current generation die out the following ones wont have the gold-plated pensions and so will not be able to afford M&S food or clothing.

So they are screwed long-term.

dearieme said...

Mind you, their moussaka is rather good. Do they still sell a table wine made of Pedro Ximenez? Golly it was good when we drank it a few years ago.

I asked my wife what else - i.e. apart from food and drink - "we" had bought there over the last few years. Some knickers, a couple of tops, and a spatula.

andrew said...

@anon on the error was m&s traded down...

I completely agree. And that is why i stopped buying there.

However austin reed,jaeger,dunn&co and others disagree.

As others mentioned, i was happy paying about 30 for an m&s shirt in the mid 90s.
An m&s shirt is still 30 but not the same quality. The equivalent is around 60 (say) today.

You can easily get cheap anywhere and readily find shirts for the 5%.
It just seems the upper mid range has disappeared in the last 20y (or it is i dont look in sherman/khors/zara).

Electro-Kevin said...

I caught them mid hop when I when to exchanged size. The one I was given was packaged the same but not the same shirt - notably inferior.

Anonymous said...

Nick - So which Myers Briggs personality type are you on?

Sebastian Weetabix said...

Ah, Myers-Briggs! What a load of pseudo-scientific shite.

One company I had the assessment at I was ENTP (“the visionary” - just as well since I was running the R&D programme). The next time I had it (new job, had to go through the HR guff) I was apparently INTJ (“the mastermind”). Extrovert to introvert in one fell swoop, suddenly consumed by a checklist mentality... not being schizophrenic I conclude it is guff.

Bill Quango MP said...

Back in January when I wrote about the worrying visual signs at Toys R Us, another name that we flagged up in the comments, for also having the same sad faced stock and shelves.. was -


Electro-Kevin said...

One cashier told me that the stock in my local branch was that rejected by Australian customers. It did look like an expensive jamboree.

Nick Drew said...

Anon @ 9:26

Nick - So which Myers Briggs personality type are you on?

I've been writing on this blog for long enough for you to be able to judge for yourself!

Ans = "didactic bastard" - certainly nothing with an 'F' in it