A surprise boost from M&S’ Christmas clothing sales sets the stage for its upcoming revamped marketing strategy to prove it is the start of a recovery rather than a fortuitous outcome of a stretched reporting period.
The retailer’s clothing sales have disappointed in past years despite constant attempts to turn it around. It’s why the uplift, which saw its clothing sales rise 2.3% in the 13 weeks to 31 December, surprised analysts with the business already deep into the latest attempt to recalibrate the brand and its products for younger shoppers. Combined with the performance happening within the best Christmas for the retailer in six years and its clear why investors might be excited at the prospect of the beleaguered retailer finally turning a corner.
However, there is a caveat; as M&S pointed out in its trading statement, total clothing and home sales were up 3.1% in the period, a 1.5% of which was due to the inclusion of five additional days of December sales. Rather than get carried away with the results, retail analysts have used the slightly skewed results to point out that there is still a long way to go for M&S if it is to really prove it has a sustainable turnaround strategy under chief executive Seve Rowe.
"Yes, the performance of Clothing and Home needs to be caveated by extra sales days and the cold weather following 2015's mild winter. But what matters is the numbers are up,” said John Ibbotson, a consultant at Retail Vision.
"M&S has struggled with clothing for many years now and this resurgence will be celebrated. But it cannot yet be called a victory. 2017 will tell us whether it's a festive flash-in-the-pan or the beginning of a genuine fightback. Steve Rowe's plan may be working but there is a long way to go yet. M&S has too many High Street stores in the wrong locations and huge competition on fashion and food, both online and in-store. To make matters worse, today's younger shoppers no longer have an emotional bond with M&S clothing, while older people are losing it. Talk of a new dawn for M&S clothing would be ridiculously premature, but this performance is without doubt a mini victory."
Little wonder then why all eyes will be on M&S latest attempt to market its clothes, which is being developed in partnership with Grey following the WPP shop’s appointment last year. Details of what to expect are vague but Rowe has talked up the importance of an emotional core to whatever it does as seen by the final work it produced with RKCR/Y&R over Christmas, which undoubtedly played a role in its festive boost. Beyond emotion, there M&S is likely to try and better compete on online, of which sales were up 13.9% over Christmas and could see it pull on the expertise of Grey Response, the revamped direct marketing and CRM arm of its ad agency.
Elsewhere, food sales, which has delivered strong results for the retailer, rose by 0.6%, which trailed the 1.3% rise at Tesco, while Sainsbury’s food sales dipped slightly.
Rowe, who replaced Mark Bolland as the retailer’s boss last year, has moved swiftly to stem losses, including slashing prices for a nearly a third of the ranges as well as increasing staff numbers on shop floors to lift customer service.