Marks & Spencer was founded in 1884 and has since grown into an international retailer with over 1,200 stores worldwide. The document discusses M&S's history, financial performance, and strategies. It notes that while M&S's general merchandise sales increased 1.7% in 2014, its gross margin decreased due to competitive pressures. The summary also highlights that M&S aims to improve its womenswear and launch new product lines to attract younger customers, while maintaining its core customer base of older shoppers. M&S's new website launched in 2014 drove a 23% increase in online sales. Overall, the document provides a comprehensive overview of M&S as a retailer with a focus on its financials, customers, and

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Marks & Spencer
Business Report
The value of the UK fashion market in
2014 is estimated to be at £26 billion, an
increase from £21 billion 5 years ago (British
Fashion Council, 2014). On top of this,
research on women’s clothing (Mintel, 2014)
has shown that womenswear is still
dominating the clothing market, accounting
for 49% of expenditure on clothing and
accessories. This information provides us with
an enhanced insight into the clothing market
and its creative process, proving their
important value to the UK economy.
Therefore, it is necessary to take an interest in
specific clothing retailers and their
contribution to the economy, through the
trading process. Thus, this article will be
based on Marks & Spencer’s success within
the clothing market, discussing various
subjects, from their financial status to their
corporate social responsibility.
Michael Marks and Tom Spencer began
a successful partnership together in 1894 to
create a business focused on five main
principles – Quality, Value, Service,
Innovation and Trust. Their first warehouse
was built in 1901 at Derby Street,
Manchester, which became the company’s
first registered address and headquarters. The
business continued to develop and by 1915,
they had 145 stores. (Marks and Spencer
Company Archive, 2012).
“Don’t ask the price, it’s a penny”
(Michael Marks, 1884)
Michael Marks & Tom Spencer

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In the period of time between the two wars,
1920-1940, Marks and Spencer’s strategy
was to adapt the business in order to compete
effectively in the market. Therefore, they
introduced a clothing department, “we
reinvented ourselves and responded to
people’s needs... we made ourselves unique by
offering clothing that was well made but
affordable” (Marks and Spencer Company
Archive, 2012). Since the beginning of the
clothing department, the bra has become
Marks and Spencer’s most iconic product.
During the period of World War II, Marks
and Spencer faced challenges due to
restrictions to the creative process, there was
also the likelihood of stores being targeted;
over 100 M&S stores were hit by bombs, 16
of which were destroyed. However, Marks
and Spencer still managed to succeed, stating
“we learnt a lot, particularly how to offer
quality under any circumstances” (Marks and
Spencer Company Archive, 2012). The 1950’s
era brought glamour back to the United
Kingdom, as well as introducing new, daring
styles which previously would not have been
considered, this style was called the ‘New
Look’ (Marks and Spencer Company Archive,
2012). Nowadays, with much more
competition in the clothing department, M&S
have continuously collaborated with various
designers such as Patricia Fields, George
Davies and Paul Smith in order to maintain a
steady position in the fashion retail market.
(Marks and Spencer Company Archive, 2012)
“2006sawLimitedCollectionintroduce‘fast
fashion’toM&Squickly bringing catwalk
trends to customers”
(MarksandSpencerCompanyArchive,
2012)

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As a whole, Marks and Spencer’s global
retail sales of general merchandise in 2014
was at £6.1 billion, which is an increase of
1.7% from last year. 45% of Marks and
Spencer’s revenue is generatedthrough
general merchandise sales (M&S corporate,
2014). This is a clear sign of improvement
and it shows the possibility that Marks and
Spencer’s clothing department will continue
to progress and develop, “Whilst our General
Merchandise performance is not yet
satisfactory, our clothing business is
beginning to show clear signs of
improvement, with new ranges consistently
well received by customers” (M&S Annual
Report, 2014). Despite the positive increase in
global retail sales, the gross margin for
general merchandise has decreased, this is
due to both the fashion industry’s highly
competitive market, and it may also be a
result of promotional costs, (M&S Annual
Report, 2014). Yet, if Marks and Spencer
invested in a large amount of promotion this
year, next year’s annual report may
demonstrate a positive effect; there is a
possibility of an increase in sales due to more
customer awareness as a result of the quantity
of promotion in 2014. According to M&S’s
2014 annual report, the highlights of the
general merchandise department is that the
revenue remains at £4.1 billion. Also, they
have evaluated their market share of each
segment; market share for menswear has
remained at 11.6%, kidswear market share
has also stayed level at 6.4%, M&S remain the
market leader for lingerie with 27.1% market
share, an increase of 0.3% on last year, which
makes their share “three times that of our
nearest competitor” (M&S Annual Report,
2014). However, due to the vast amount of
competitors in the womenswear market,
Marks and Spencer’s market share has
decreased by 0.4%, yet they still have 9.7% of
this market share despite ongoing challenges
and difficulties in such a competitive market.
“This year has been a key milestone
towards realising our strategy.” (Robert
Swannell, Chairman). In terms of retail
strategies, 2014 marks the year that Marks
and Spencer’s new website went live, and
with it came some positive figures; sales
increased by 23% ahead of the market, 16%
of general merchandise sales are generated
from the online business, which is an increase
from 13%, and on top of that, the UK website,
M&S.com, has more than 5.5 million visitors
each week (M&S Annual Report, 2014). Laura
Wade-Gery, (executive director, multi
channel e-commerce) explains in the annual
report that the new site, which went live in
February after two years of development,
offers a range of services aimed at customer
needs and wants. “The site brings our brand to
life with bold imagery and regularly updated
editorial content”
Screenshotsfrom
www.marksandspencer.com

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It is clear to comprehend that Marks and
Spencer are enthusiastic about their customer
and maintaining a strong relationship with
them. Therefore, it is key to M&S that the
wants and needs of the customer are always
taken into account, “It is crucial that we listen
to our customers to understand what they
expect from us and how the economy is
affecting their shopping behaviour” (M&S
Annual Report, 2014)
“Fashion retailers...should interpret what is
right for their target consumers’ age group,
salary range and likes and dislikes. This is
how to keep fashion relevant and individual
to the customer” (Grose, 2012). It is essential
that Marks and Spencer consider their target
market when they make decisions on retail
strategies. Research shows (Mintel, 2014) that
Marks and Spencer’s main customer base are
women aged 65 and over, followed by the age
range of 55-64, however, there is a decrease
in customers aged 35-54 years of age. Marks
and Spencer have recently launcheda new
maternity and baby wear brand which will
have an area in six stores as well as being sold
online and in catalogues, this suggests a
strategy to target a younger age range that are
settling down and having children, but also
continues to target their main customer age
range; the over 65’s who are likely to spend
money on their newborn grandchildren.
2014 showed that the clothing market slowed
in terms of volume, as opposed to the growth
in terms of value. Despite the increase in
consumer confidence, it was not reflected in
sales. Therefore, M&S deviseda strategy
focused on the re-launch of womenswear,
primarily looking into style, quality and
design, “The well-receivedre-launch was also
accompanied by a new, more inspirational
store concept.” (M&S Annual Report, 2014).
In order to become a more successful retailer,
future strategies for Marks and Spencer’s
general merchandise (M&S Corporate, 2014)
are to continue developing designs and
improve sub-brands. Marks and Spencer
intend on enhancing their product portfolio
in order to offer their customers a varied
choice both in store and online. If these
strategies prove to be successful, Marks and
Spencer may be able to turn around their
market share for womenswear and increase
it, this will depend on how thorough they
have been when devising these new strategies.
Since Marks and Spencer was founded in
1884, the business has grown from a single
market stall in Leeds to an international
multi-channel retailer with 798 UK stores,
and 455 International stores (M&S Corporate,
“Under M&SBabywe’veputtogether arangethatreflects the
exceptionalquality andsafetystandardsourcustomersexpect”
(StephanieChen, M&S Director of kidswear)

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2014). When evaluating the structure of the
market today, it is understood that Marks and
Spencer is a variety store, due to the wide
range of their product portfolio, selling food,
homeware, clothing, beauty products and
gifts. Segmentation and dividing the market is
essential for retailers, especially those who
need to compete efficiently. The importance
of this is for many reasons; the market needs
to be understood for research purposes, so
that the wants and needs of the customer are
attended to, and to recognize if a new
segment is emerging in the market. The keyto
success is understanding what influences
consumer behaviour and working to the level
of the market that the target customer is in.
When looking at how the market is divided, it
is acceptable to say that Marks and Spencer
are in the middle/mass market. The definition
of mass market (Investopedia, 2011) is “a
company that sells affordably pricedproducts
that appeal to a wide variety of consumers”.
However, it is possible to suggest that some
parts of the clothing department may be seen
as the value sector, for example, Marks and
Spencer’s school uniforms are relatively
cheap compared to other items of clothing
that are sold. For instance, a two pack of
unisex pure cotton polo shirts can be as cheap
as £5.00 (Marks and Spencer, 2014).
It is understood that consumer confidence
and consumer spending throughout this last
year has grown due to the prediction of Gross
Domestic Product increasing by 2.7% in
2014, along with that figure, inflation has
fallen and employment has slowly risen,
suggesting the possibility that the UK is finally
recovering from a previous recession (M&S
Annual Report, 2014). Despite the increase in
consumer confidence, spending is still
measured and consumers are remaining
sensible when it comes to expenditure, this is
shown to affect Marks and Spencer, “subdued
spending continued to affect the retail sector
this year, and saw deep levels of promotion”
(M&S Annual Report, 2014).
As well as the issue of consumer’s concern
still being on the recent recession, despite
positivity of the worst being over, Marks and
Spencer also face challenges due to
competitors, with Next being their main rival,
especially in terms of online shopping
(Mintel, 2014). Research into the clothing
retail market (Mintel, 2014) shows that

6. 6
where Marks and Spencer still has the highest
percentage of sales to over 65s, Next’s sales to
35-44 year olds highlight where Marks and
Spencer are struggling to succeed.
However, Marks and Spencer’s strengths lie
in other areas, for example, their new website
has proven to be a great success to them,
becoming the most popular specialist online
clothing retailer (Mintel, 2014). Further
success for Marks and Spencer is within the
underwear market, research shows (Mintel,
2013) that two fifths of women buy their
underwear from Marks and Spencer, the
main female customer’s age range is over 55,
yet there is still a key figure within the age
range of 35 – 44’s, this demonstrates Marks
and Spencer’s large and ranged customer
base in the underwear section. Their success
in 2014, maintaining the market leader for
lingerie with 27.1% market share, highlights
an area in which they continue to thrive.
“Every year, around eighty billion
garments are produced worldwide...when we
buy one of them, we...learn very little about
where it was made and assembled, and in
what conditions” (Siegle, 2011). It is
important as customers to make the effort to
discover where items of clothing are sourced,
the definition of sourcing (Jackson & Shaw,
2001) is ‘the process of selecting suppliers for
manufacturing and delivering products and
their components’. Marks and Spencer have a
project called Plan A which was launched in
2007, the goal of this project is that the
business becomes the world’s most
sustainable major retailer, “Plan A is our way
to help protect the planet – by sourcing
responsibly, reducing waste and helping
communites” (M&S Corporate, 2014). Part of
the Plan A project is ethical trading, they
source around 3000 raw material and service
suppliers around the world, and all clothing
products are labelled with the country of
origin. On top of that, they also have local
buying offices in countries such as Turkey,
Bangladesh, Vietnam and Sri Lanka, among
others (M&S Corporate, 2014).
Corporate social responsibility is “Corporate
initiative to assess and take responsibility for
the company's effects on the environment and
impact on social welfare” (Investopedia,
2011). .Marks and Spencer have an
agreement of principles with their suppliers,
including areas on working hours and
conditions, rates of pay and minimum age of
employment to be sure that all trading
remains ethical (M&S Corporate, 2014). Their
information on ethical trading also highlights
their views on animal welfare, stating “from
January 2006, no individual ingredients used
in M&S products have been animal tested”.

7. 7
Marks and Spencer, as we now know,
have both traditional bricks and mortar stores
and a creative and comprehensive website.
The layout in a Marks and Spencer store tends
to be spacious, mainly white flooring, ceiling
and walls in order for the clothing to be the
main attraction. It is likely that the space will
be filled with various mannequins as well as
clothing racks in order for the customer to
have a clear visual of a whole outfit put
together. Sub-brands, for example Per Una,
are made clear in different sections of the
store. In terms of labelling and pricing, the
price is not flashed everywhere as it would be
in a value sector retailer, it is likely to be
tucked inside the clothing so that interest is
shown in the product before price becomes a
factor. However, during a period of sales,
whether it be black Friday in December or
January sales, it is expected that price will be
on show much more.
In terms of the Marks and Spencer website,
the layout is clear with a bar towards the top
showing all the sections, whether it be
menswear or womenswear, the customer will
be able to clearly understand how to find
what they are looking for. A recognisable
search bar is also easy to see for those who
struggle to find their way around the site.
When taking into consideration a collection
that Marks and Spencer are currently
displaying, ‘winter warmers’ is ideal for the
winter season in the lead up to Christmas. The
products that are being offered in this
collection include coats, gloves, wraps and
boots.
The price of the products in this collection
vary from £7.60 - £249, the expensive coats
are a reflection of the quality that Marks and
Spencer pride themselves on. The website
provides the customer with an insight into all
the details including the fit and style, as well
as composition and care instructions. Other
online details include the price, colour, size
guide, delivery options and a section below to
read and write reviews.

8. 8
Hopefully, this report has given you
a greater insight into Marks and Spencer
as a mass market retail business. As we
can see previously in the report, their
financial figures indicate that they could
possibly continue to lose market share in
the womenswear department but future
strategies, as well as the previously
mentioned promotional costs, suggest the
opportunity of a turn around.
Only time will tell if the expenditure
and strategic decisions will prove to be
beneficial in the long run. However, what
is clear to understand about Marks and
Spencer is that they continue to focus on
those five principles that they were
dedicated to in 1894.
Quality, Value, Service,
Innovation and Trust
Holly Payne