M&S Case Study
s Case Study: Marks and Spencer
Where now for an icon of British retailing?
History and background
Early history
Marks and Spencer (M&S) was founded by Michael Marks and Thomas Spencer in 1884 - he called his business 'penny bazaars' with signs reading "Don't ask the price, it's a penny" (the forerunner of stores like Poundland today?) The company went public in the 1920's and by the 1970's M&S had established itself as a British institution with locations in every major town and with 99% of products branded as M&S goods.
By the late '80's the company had over 700 stores in the UK, 300 stores in over 40 countries and prided itself on offering high quality clothing, home decor products and premium quality food at premium prices. Over 21 million people visited M&S stores in the UK each week and it was the leading provider of women's clothing and lingerie in the UK. One executive said, "Our business model is that of a brand that doesn't own factories. We behave like a brand house, but one that has stores."
Rise and falls
However, attempts to expand the company further were not successful. In 1988, M&S acquired American retailers Brooks Brothers and Kings Supermarket but both were sold off by the mid 2000's. Historically, M&S had relied primarily on UK based clothing suppliers but found themselves struggling to compete against competitors increasingly sourcing low cost goods abroad.
M&S recovered by 1994 thanks to drastic reductions in costs, improved operating efficiency, geographical expansion and an international franchise programme. Revenues peaked in 1998 at £8.2billion and an operating profit of £1.1 billion. However, profits declined once more due to: * the continuing cost of using primarily British suppliers and eroding customer loyalty torn between the British based company and the appeal of lower prices elsewhere * the feeling that M&S had lost touch with its core customers in terms of the style of clothing
Where now for an icon of British retailing?
History and background
Early history
Marks and Spencer (M&S) was founded by Michael Marks and Thomas Spencer in 1884 - he called his business 'penny bazaars' with signs reading "Don't ask the price, it's a penny" (the forerunner of stores like Poundland today?) The company went public in the 1920's and by the 1970's M&S had established itself as a British institution with locations in every major town and with 99% of products branded as M&S goods.
By the late '80's the company had over 700 stores in the UK, 300 stores in over 40 countries and prided itself on offering high quality clothing, home decor products and premium quality food at premium prices. Over 21 million people visited M&S stores in the UK each week and it was the leading provider of women's clothing and lingerie in the UK. One executive said, "Our business model is that of a brand that doesn't own factories. We behave like a brand house, but one that has stores."
Rise and falls
However, attempts to expand the company further were not successful. In 1988, M&S acquired American retailers Brooks Brothers and Kings Supermarket but both were sold off by the mid 2000's. Historically, M&S had relied primarily on UK based clothing suppliers but found themselves struggling to compete against competitors increasingly sourcing low cost goods abroad.
M&S recovered by 1994 thanks to drastic reductions in costs, improved operating efficiency, geographical expansion and an international franchise programme. Revenues peaked in 1998 at £8.2billion and an operating profit of £1.1 billion. However, profits declined once more due to: * the continuing cost of using primarily British suppliers and eroding customer loyalty torn between the British based company and the appeal of lower prices elsewhere * the feeling that M&S had lost touch with its core customers in terms of the style of clothing