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Saturday, 22 April 2017

M&S et cetera

Marks and Spencer has been an essential feature of every high street and shopping mall in the UK since time immemorial, as far as living humans are concerned. Over the past two decades, however, their star has been waning; and successive chief executives who have presented wondrous curricula vitarum have failed to re-established the predominant position that the company held at the time of the Queen's accession.

In particular, the firm has lost its leading place in clothing the country. To a considerable extent, the loss on the swings of fashion has been compensated by gains on the roundabout of food sales; but not completely. M&S was among the first firms to recognise that households with two working adults raising a family has limited time for food shopping and preparation but has more money in real terms that any previous generation. Hence wholly and partially prepared meals became a feature in which M&S was briefly the market leader. But so obvious was the success of that innovation that all the significant supermarkets emulated it, and now there is nothing special in range or quality about M&S prepared meals that gives them a natural advantage: beyond the fact that one generation of householders first began using M&S and have kept to the habit. M&S have the pricing disadvantage in that despite the large volumes of food they turn over they are also saddled with huge estates of shopping space, largely devoted to clothing: which is soon to become very much more expensive with the newly increased business rates from this month. For several years the firm has been cutting back on clothing and opening food-focused stores, and this week another new CEO has announced an acceleration of the move from clothing to food. Half a dozen major stores are closing, and this can be taken as a sign that the company has come to recognise that drastic action is necessary.

It looks another case of 'too little, too late'.

The rise of firms delivering ready-to-eat hot meals to the residence at a specified time is taking an increasing share of the market from those who are still affluent. Many families, however, are feeling financial constraint and are shopping around for their convenience food: something as good in quality as the M&S offering can be had of Morrisons, Tesco and the German discount stores at competitive prices. While Morrisons and Tesco have the albatross of significant estates of retail premises to deal with, the proportion of lossmaking space in their total register of assets and liabilities is proportionately less. The supermarkets are also ahead of M&S in the online arena, where they compete effectively with each other and with the bespoke hot food suppliers. M&S are discussing converting more shop space into food distribution, and even of opening new food stores: I have seen this locally, where the Co-op left their large Matlock property and M&S took it on just last year. While that shop was a local novelty it did well, but now the grind of competition is coming more into play.

Debenhams has announced yet another major review of the extent and siting of their stores, with promise of a radical redistribution; and Next, much fleeter of foot than Debenhams or Marks, is facing up to changes in the pattern of their customers' demand. Sainsbury's have extended their range hugely by taking in Argos, and making goods from their extended online catalogue available to customers by home delivery; or by collection, not just from Sainsbury's stores but from central places such as major railway stations.

M&S seems to be compounding rather than transcending decades of relative decline. This is sad, especially for longterm shareholders, but it looks like the hand of fate.

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