M&S to launch tougher turn around
Chairman Archie Norman said food halls had too many confusing promotions. Photograph: Alamy Stock Photo
Internal report of Archie Norman’s comments during store visit comes as underperforming retailer looks poised to launch tougher turnaround plan
The new Marks & Spencer chairman Archie Norman has told senior managers that the retailer needs to cut clothing prices and that too much of its fashion is aimed at the over-55s.
During a recent store visit, Norman, who was in charge at Asda when it launched its George clothing ranges, told staff that M&S needed to attract women in their thirties as well as women in their fifties, according to an internal document seen by the Guardian.
In the internal report, the famed business troubleshooter, who is two months into his post at M&S, criticised major aspects of both the chain’s clothing and food ranges during the visit. His observations included that its entry clothing prices were not low enough and that it is less fashionable than Zara.
The choice of Norman as chairman was always expected to be a catalyst for change at the 133-year-old retailer where profits are going backwards despite clinging on to its crown as the UK’s biggest clothing business. His views are expected to help shape the chain’s evolving turnaround strategy.
On Wednesday, the M&S chief executive, Steve Rowe is due to update the City on first-half trading and, with Norman’s input, is expected to announce a more aggressive shake-up of its store estate than the 30 closures announced last year as part of a plan to close 10% of its clothing floorspace. Pre-tax profits are expected to be down more than 10% at £201m for the six months to the end of September.
Norman, who is best known for turning Asda around in the 1990s, told managers there was a need for “urgent focus on getting the opening price-points right” after scrutinising clothing on sale, according to the document. M&S also needed to pull in younger shoppers, he told staff, as it was “buying too much for the over-55 customer” when it needed to “attract the 35+ customer back”.
Norman also complained that the retailer’s clothing buying cycles were too long and that its infrastructure and IT was “too dated” which will surprise investors given a multibillion-pound overhaul under the previous management team which included a £200m investment in a state-of-the-art automated warehouse in Castle Donington.
Since taking the helm 18 months ago Rowe, who began his retail career aged 15 as a Saturday boy at M&S’s Croydon store in south London, has prioritised improving retail basics, such as cutting clothing prices and running fewer promotions. He criticised his predecessor, Marc Bolland, for pushing up clothing prices and then relying on promotions to boost trade.
Last November, when Rowe set out a five-year turnaround plan for the business, he said 30 of M&S’s more than 300 “full-line” stores – which sell clothing, homewares and food – would close. A further 45 sites would be downsized or converted into food-only stores. Analysts think these targets have become more aggressive with the input of Norman and will be revised this week.
When his appointment was announced in May, Norman was frank about M&S’s troubled predicament pointing to “considerable challenges ahead in a rapidly changing retail landscape”. However, Norman brings a track record of success, having most recently turned around ITV, the UK’s largest commercial broadcaster, and Australia’s biggest retailer Coles.
Asda had been viewed as a “basket case” when Norman signed on as chief executive in 1991 but eight years later it was sold to US giant Walmart for 10 times its value when he took over. As non-executive chairman Norman does not have direct management
Archie Norman. Photograph: ITV/PA
responsibilities at M&S but his appointment, which was backed by frustrated shareholders, was always expected to be a major turning point for the underperforming retailer’s strategy.
Norman’s no-nonsense management style involves telling staff the “unvarnished truth” while simultaneously plotting a new course. The new chairman’s attention to detail is clear from the document as Norman is said to have even questioned how well its plethora of “mustard” coloured jumpers and accessories were selling given that other fashion retailers do not seem so keen on the colour.
Marks & Spencer said the author of the document had not been present at the store visit and that the document was put together only from the reports of those who were present. M&S added that many of the critical points raised had been misinterpreted.
According to the document, Norman also found fault with M&S’s food halls where the pace of trade has slowed this year. The report states that he highlighted how “too many” promotions were confusing customers, and said the price of staples such as eggs, milk and bread needed to be brought into line with competitors.
Shore Capital analyst Clive Black said the new management line up at M&S was “interesting and potentially exciting” for investors who have been urging management to make changes. “We view Messrs Norman and Rowe as a force for good for M&S shareholders ... the business has been in a downward spiral of profitability for many years.”
Reported by: theguardian online newspaper