Marks and Spencer (M&S) marketing investment dropped by £11m (or 6.8%) over the past 12 months and will not likely increase in the year ahead. After a reshuffle of its marketing division, the retailer’s boss has said that it will now "exploit" digital channels to attract a younger generation of shoppers.
M&S’ profits for the year ending 31 March dropped off a cliff, down 62.1% to £66.8m, down from £176.4m the previous year.
“The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business,” said Steve Rowe, Marks & Spencer chief executive, of its performance.
“There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business.”
It announced yesterday (22 March) that it would shutter 100 underperforming stores over the next four years as it looked to make its store estate “more relevant” and better support the growth of its website.
The retailer’s online sales grew by 5% in the last year but that’s it’s falling behind competitors including Next and Debenhams which saw sales increases of 15% and 10% respectively.
“Although our online sales are growing, our online capability is behind the best of our competitors and our website is too slow” Rowe said.
“Our fulfilment centre has struggled to cope with peak demand and some of our systems are dated. In both businesses we need to revitalise our ranges and reassert our reputation for value for money.”
It is now aiming to double the online share of its clothing and home sales to over 33%.
As part of the vision to build a “faster, lower cost, more commercial M&S” Rowe said it is looking to “simplify” the brand’s culture.
“We need to change our organisation, move on from the structure of a single business led by functional directors. This created a top-heavy business that was inward looking and too “corporate”,” he said.
“We are moving to a family of accountable businesses each led by its own integrated management team.”
The first changes here came in the form of a marketing shake-up which saw long-running chief customer officer Patrick Bousquet-Chavanne depart to make way for divisional marketing bosses.
Day-to-day Sharry Cramond now runs food marketing, while Nathan Ansell will run the clothing and home marketing. They will report into M&S’s wider brand and corporate leaders, Jill McDonald – who joined from Halfords last year to head up clothing and home - and Stuart Machin who runs food.
Rowe said this restructure unites the M&S brand under “a common set of values, trading style, and shared infrastructure” and they will all now on the same customer data.
“Our focus remains to be an own brand retailer with quality, innovation, traceability and trusted value at our core,” he said. “At the centre we are building a streamlined corporate team including a very strong data analytics and customer insight function.”
Looking ahead, the first task of the new marketing function is to broaden the customer appeal. M&S admitted that is has lost its share of younger “family age” shoppers and recognised that it needed to “restore popular appeal.”
Of course, this isn’t the first time M&S has changed tactics in the face of dwindling sales. In 2016, it admitted it had neglected ‘Mrs M&S’ and that the key to rebuilding the business was reengaging with this “core” demographic of women aged 50+.
“If everyone shopped just once more per week it would put an extra £100m into pot,” he said of this group at the time.
Unfortunately, that seems not to have been the case. But over the coming months it plans to attract this young-family shopper by reducing the number of lines, buying more stylish product in greater depth and "emphasising value" throughout the clothing and home division.
Meanwhile, for M&S Food, it will do the same by readying a programme to refresh the offer with relevant innovation, improved value for money, and a refocusing on more popular family product.
“This will better exploit our unique credentials for freshness, taste, and traceability," it said.
Despite this ambition, M&S said marketing spend may continue to decrease as it shifts budgets towards digital platforms.
"We’ve brought the number down. There are different routes to market now. Digital marketing is much cheaper than the sort of traditional marketing methods," Rowe explained.
"And I know that Jill’s team and Stuart’s team are exploiting those. So, what we’ll do is make sure we get the right messages to our customers. And I would anticipate we’ll see further decreases."
Instagram is one channel it called out as a benefactor of the marketing budget it does have.
Bryan Roberts, retail analyst at TCC global, suggested that though the business "still lacks any sense of identity" this "back-to-basics approach should help it reclaim ground lost to stores less beholden to a seasonal structure."