Beleaguered retailer Marks & Spencer has inked a partnership with Founders Factory, a startup accelerator, that will give it access to emerging tech and business models as part of its latest turnaround plan.
M&S, which has reported two straight years of profit decline, vowed its AGM earlier this year that it would up its investment into technology as part of a wider plan to rebuild the business.
“Both I and Steve [Rowe, chief executive] and the board are under no illusions, this business has a burning platform,” said chairman Archie Norman earlier this month.
“We don’t have a God-given right to exist. Unless we change and unless we develop the company in the way we want to, in decades to come there will be no M&S.”
Though it has worked with startups in the past, this partnership – which sees it become the official backer of ‘Founders Factory Retail’ – is a more robust solution to finding and investing in emerging tech.
Founders Factory was co-founded by Brent Hoberman, founder of lastminute.com and Henry Lane Fox and is focused on launching and scaling start-ups across a range of sectors.
Lane Fox told The Drum that the move from M&S marked a real “sea change” in the business as the retailer's senior management team rethink the way it works with the tech community.
“There are well known issues that many retailers in the UK face, but it’s worth remembering that there are plenty of opportunities to win. M&S really does have a right to play – it has a strong brand, strong distribution and an enormous amount of proprietary data that it sits on,” he said.
“What it is looking for from young entrepreneurs is to be exposed to cutting edge technology and different business models and looking at how to leverage the brand into new services that could become major revenue drivers. There’s a sea change in the business; it’s embracing this way of thinking.”
Lane Fox said Founders Factory will work with leaders across the M&S organisation, not just the digital or “innovation” department, marking a key difference in its work with the startup sector so far.
“We’ve got a team of 60 people at Founders Factory, that will be growing to 70 in the coming months, who will be focused on this dedicated retail strand,” he added.
“M&S has a very collaborative atmosphere in senior management team at the moment. There’s buy-in at the highest level."
Little has been revealed on the startups that M&S will invest in. Founders Factory is still working through the best investment options before making recommendations to M&S in the coming weeks, though Lane Fox revealed those that can streamline some of its B2B operations are a key area of interest.
Prior to inking the partnership, M&S had been working with some tech companies already on the Founders Factory books, including Vidsy, which helps brands like Unilever and Barclays to create mobile-first video content.
Lane Fox said M&S has been using Vidsy to automate some of the production functions that currently sit within its advertising agencies.
It’s also been tapping into the services of data-visualisation company Flourish, which Founders Factory invested in two-years ago.
However, this has been on a much smaller scale and it has trailed retail rivals on forging a relationship with the startup community. Rival John Lewis, for example, launched its own accelerator scheme JLab in 2014 while Asos and Topshop launched simialr ventures in 2016.
However, among the benefits of working with a third-party on startup investment is the ability to look across sectors. Founders Factory counts L’Oreal and EasyJet among the other brands it has courted investment from and Lane Fox said it will work with with M&S on forging relationships with these other companies.
“Partnering with Founders Factory as its exclusive retail partner gives M&S access to a global network of start-ups and entrepreneurs which will provide disruptive thinking and questioning to the way we work at a time of critical transformation within the business," added M&S boss Steve Rowe.
"Founders Factory has a great track record in creating successful businesses and by investing in new innovative technologies and products we hope to change the way we work and operate.”
Since launching in 2016, Founders Factory has run over 60 pilots, with around 30% leading to large enterprise contracts.