M&S boss: shift to product marketing ‘the right decision’ but wider business must catch up
Marks & Spencer overhauled its marketing strategy last year to focus more on product and investment into digital and social channels, rather than “blockbuster” TV ads. It's a decision that was the right one, says chief executive Steve Rowe, but availability and supply chain issues plagued its success over the festive period.
M&S' bouyed by reaction to Holly Willoughby Christmas campaign
A trading update for the third quarter revealed a like-for-like food sales decline of 2.1% and a clothing & home sales fall of 2.4%, leading to a drop-in group revenue of 3.9% to £3bn. While the numbers were not positive, the response to the marketing shift from consumers was as Rowe talked up the “unashamedly commercial approach” to its Christmas advertising and subsequent record sales on lines that featured in the creative.
“The consumer is seeing through some of these big blockbuster campaigns,” said Rowe on a call with analysts today (10 January). “We thought focusing on the product was absolutely the right thing to do, both for clothing and home and food. That transfer into digital marketing has been the right thing.”
The catalyst for a shake-up was the overhaul of its marketing division last year. It ditched the top-down structure that had been led by now-departed group chief marketing officer Patrick Bousquet-Chavanne in favour of separate clothing and food functions, led by Nathan Ansell and Sharry Cramond respectively, who report into divisional managing directors.
Ansell brought in Holly Willoughby who starred in the product heavy Christmas TV ad and created ‘Must Have’ lists of her favourite items which were shared across social media channels.
The marketer told The Drum that at its peak it had “3 million customers in four hours find out about the ‘Must Haves’ campaign just through Instagram.”
Meanwhile, for Food, Crammond also funnelled budget into digital including an online video series featuring celebrities trying its new products.
However, ahead of Christmas both were acutely aware of the challenge of ensuring that the hero-products in these ads were available in-store.
At the time, Ansell said they were having “hourly calls” with merchandise teams and store managers to ensure they had availability.
But, the popularity exceeded expectations and Rowe stressed it plans to “do more” to ensure it’s taking advantage of sales spikes.
“Availability is still one of the key challenges in the business,” he said. “We’ve got a lot of work to do to improve the supply chain. In both areas of the advertised lines we didn’t fulfill the potential we had.
“I’m delighted with the reaction to both advertising campaigns – particularly the 'Must Haves' – but we’ve got to do more and make sure we’ve got enough of the merchandise [in-store] when we’re advertising it.”
Difficult market conditions
Aside from supply chain problems, Rowe said that a number of “well publicised difficult market conditions” affected its performance, including reduced consumer confidence, mild weather, Black Friday, and widespread discounting by competitors in November.
M&S stepped back from Black Friday promotions and reduced promotional activity in December by 37% and put 25% less stock into the sale.
“If you want to have trust and value in your business you cannot have one day of promotions. We think it’s the right thing things to do,” he said of the decision, despite competitors like John Lewis hailing events such as Black Friday beneficial to the business’ bottom line.
Rowe said it will continue to accelerate its store closure programme in the coming year as it pushes ahead with a plan to move a third of its business online within the next five years.
He surmised: “There are early signs of volume growth and we expect to see more momentum under a strong new management team as the year progresses.”
John Lewis also reported its Christmas trading figures today, revealing a 1% like-for-like sales increase on the previous year in a "positive" festive period where it saw a Christmas Eve sales record.