Marks and Spencer

PAGE OF CONTENTS

Introduction 2

Marks and Spencer (M&S) - Background 3

M&S the wrong way 3

M&S on its way up again thanks to technology 4

M&S stands out from the crowed 5

What is competition doing? 5

M&S Differentiation and focus, the difference between success and failure 5

M&S recognises its mistakes and trying to change 6

REFERENCES 8

Introduction

This mini case will mainly focus on Marks and Spencer's (M&S) food department sector. The case will highlight some of the current and future strategic issues that this department is facing and is likely to encounter in the future.

The case will also to some extent look at some of the company's competitors, the pressures the company is facing especially in the food department sector, the effect of the external environment on the company's positioning and look at likely changes to affect M&S in the future.

And also, highlight some issues happening inside M&S, which are not giving competitive advantages.

Marks and Spencer (M&S) - Background

According to their website, Marks and Spencer was founded in 1884, they described themselves as one of the UK's leading retailers of clothing, food, home ware and financial services, serving approximately 10 million customers a week in over 300 UK stores. The company also trades in 30 countries worldwide.

Some of the company's core objectives when Michael Marks found it in partnership with Tom Spencer in 1884 include the values of quality, service, innovation, and trust which are still prevalent today .

Marks and Spencer was always considered to have a great management support that helped in its growth. However, Marks and Spencer's fortune started to turn around in 1997. Marks and Spencer had now become a perfect example of a company that had a successful strategy but failed to adapt to changing environment and is now suffering from what people will say, strategic wear out. According to Drummond and Ensor, "Strategic wear-out occurs when an organization no longer meets customer needs and the pursued strategy is surpassed by competitors ".

M&S the wrong way

Marks and Spencer's downfall could be due to a lack of effective management. This led the company lose sales, profits and eventually their customers. When M&S realised the seriousness of the situation they were in, the company decided to replace its top managers in a bid to change the firms' fortunes and the same time M&S decided to make a complete review on its marketing strategy and business plan. The rejuvenation of M&S recently lead to new strategies to be implemented including the launch of their new food stores called Simply food™.

The strategy behind the Simply Foods store is to help regain M&S customers' trust and loyalty, and hopeful venture into new segments of the Market. It has done so by opening 150 stores that only sell food products. These stores add around 15% to its food space (Wiggins, E., 2003). They have been opened in strategic locations such as BR hubs, market towns in the north that do not justify a Neighbourhood store, petrol station forecourts and now a motorway service station test (Key Note, 2004) .

Although for a while M&S performance in the food sector was growing and turning to be one of the companies' strength, however the Simply Food chain brought about problems that were completely new to the company. This included new competitors, new markets, new marketing strategies and so on. Strong competitors were always one of the major threats the company faced. Within the food sector Simply Food was now competing with major well-established competitors such as for example, Tesco, Sainsbury's, and Waitrose (OCR, 2002).

Tesco and, Sainsbury have accelerated their competition by taking advantage of the Internet technology, which enables consumers to shop from home through the Internet, and hence the food is conveniently delivered to their home. Although M&S launched the Simply Food stores, the company did not take advantage of the fast growing Internet technology, which might have resulted in increased competitiveness for the new food stores.

Another problem M&S faced, was that the firm felt it was not attracting enough new customers, and they were beginning to lose touch of their old customers through competitors like Tesco, Sainsbury's and Waitrose. This resulted in the company coming up with newer strategies such as the bargaining of prices with suppliers in order to stay competitive.

M&S on its way up again thanks to technology

M&S implementation of the Radio Frequency Identity (RFID) in some of its stores has been at the forefront of the company's technology development success. M&S is currently using a mobile scanner, which is fitted to shopping trolleys and is and allows products to be scanned at much greater speeds than the usual bar code readers. However there has been privacy concerns with this new device from the public. But M&S in order to avoid the privacy concerns uses what it called 'intelligent labels' that hold just the number unique to each product. When scanned against an M&S database, the tag would only give information related to the product's size, style or colour.

This new system according to ZD Net UK [online], will allow M&S to further its goal of 100% stock accuracy by ensuring the right goods are delivered to the right store at the right time . This surely will give M&S competitive advantages as cost will be reduced and accuracy increase which may lead to greater productivity and efficiency.

It has to be recognized that apart from all the downfall of M&S, it seems that M&S is once again recognizing the value of customers and the company is now trying to tailor