Plan: 2010-2013:
1) Focus on the UK
Our first priority, from 2010 to 2013, is to improve our business capabilities in the UK. We will do this by developing the M&S brand, improving our stores, and focusing on our Clothing, Home and Food businesses.
Brand
The M&S brand is one of our key assets and we excel when we lead the market by originating special products that are unique to M&S. We are building on our brand strength by launching ‘Only at M&S’, a brand positioning which encapsulates our special qualities and communicates the extraordinary lengths we go to in order to deliver innovative ‘M&S only’ products.
Stores
We know that our customers can find our stores difficult to shop. We will address this by segmenting our stores better, for example by region or local demographics and by creating a more inspiring in-store environment. We will improve in-store navigation and present a more consistent packaging architecture across Food, Clothing and Home. We will also focus on more cross selling – migrating more of our customers between Food, Clothing and Home.
Clothing
Our research shows that customers lack clarity on the positioning of our sub-brands in Clothing. We plan to address this by increasing the role of the M&S brand so it becomes a brand destination of choice in its own right. We will continue to build on its outstanding quality and make demonstrable improvements to our core ranges as well as improving our style and fashion credentials.
We believe our sub-brands are real assets which our customers value. But they tell us that we need to develop these sub-brands giving them more distinctive identities, turning them from labels to real brands. We will deliver more clarity and remove duplication across the sub-brands by exiting Portfolio and transitioning the range to our core M&S brand. In addition, we will improve the in-store presentation of our sub-brands, introduce dedicated brand managers in order to manage the brands individually and provide clear support and targeted marketing strategies.
Home
Currently only 20% of our customers shop our Home department, representing a real opportunity to grow this part of the business. We will do this by offering a wider choice and making our core Home offer more accessible in our largest stores and online.
We will also take a ‘lifestyle’ approach to Home, segmenting our offer into Classic, Contemporary and Design. Our focus will be on growth departments such as kitchenware, bedding and personal care and, we will release additional space by exiting Technology, which will allow us to play to our strengths.
Food
In Food we will build on our heritage of quality and innovation to establish a clear market position as a specialist, high quality food retailer focusing on freshness, speciality and convenience.Branded foods will play a role only where we cannot develop our own best in class M&S alternatives. We will reduce the number of non-M&S branded lines from 400 to around 100, predominantly by reducing the number of pack sizes rather than the choice of brands. At same time, we plan to introduce 100 distinctive international brands, exclusively available at M&S.
The space in our food hall is currently under-utilised. Better use of space will allow us to bring in new products, increasing our range from 7000 to 8000 lines, offering our customers greater choice and more innovation.
We will ensure that we continue to provide great value on our core lines, improving the quality without increasing the prices. Our focus however will be on developing products unique to M&S and characterised by innovation and superb quality, inspired by the Best of British and Flavours of the World.
UK space growth
For the last two years we have lagged the UK retail market on space growth. Our target is for 95% of the population to be within 30 minutes drive of a full-line M&S store by 2015. In order to do this, we will step up the pace of space growth to around 3% per annum until 2015/16.
We will increase the number of Simply Food stores, ensuring they are tailored to meet the needs of customers in their local catchment area. We will refresh the look of our stores and execute a programme of store relocations and openings to increase coverage. We will maximise the opportunity presented by our Shop Your Way service by using our franchise partners’ store network as customer collection points.
2) Multi-channel
Our multi-channel operations are a key area of growth, as our customers increasingly shop with us via a range of channels. While we have made considerable progress over the last year with Shop Your Way, our aim is now to become the UK’s leading multi-channel retailer, growing sales to between £800m to £1.0bn by 2013/14. We will offer a seamless, high quality shopping experience for our customers whichever way they shop with us – in stores, online or over the phone.
In order to deliver this, we will build and manage a new platform for www. marksandspencer.com which will enable us to provide a customised multi-channel experience that links all our channels for our customers. We will continue to work closely with Amazon to maximise the performance of our existing platform until our Amazon agreement ends in late 2013.
In Food, we plan to grow our existing online wine, flower and Food to Order business from £80m to £150m by 2013/14. We will continue to evaluate a full online food offer but do not intend to build that capability at present.
It is important that we continue to provide new opportunities for customers to shop with us. We will install, for example, touch screen ordering points in stores. We will start International online capability with one market in 2011.
3) International
While we have 337 stores in 41 territories overseas, we are essentially a UK retailer that exports. We have an opportunity to move on from this and become a more international retailer, reducing our dependency on the UK economic cycle. We will target International sales (excluding Republic of Ireland) of between £800m and £1.0bn by 2013/14.
We will continue to adopt the appropriate ownership model for the different markets in which we operate. Our emphasis will be on franchise operations, building strong partnerships in each territory. We will use a JV or wholly-owned model in selected markets where it is appropriate.
Instead of ‘planting flags’ we aim to build a leadership position in priority markets. We have already built a strong presence in markets like Turkey and the Czech Republic by opening a flagship store surrounded by a cluster of smaller supporting stores. We will continue to build local leadership in core markets in this way.
We will also enter selected countries with our online capability to complement our stores on the ground, setting up tailored websites for specific local markets from 2013. We will develop a new organisational structure to enable our growth overseas, where necessary reshaping our supply chain and building up our capabilities in international design, marketing and customer insight.
4) IT, Logistics and Supply Chain
We will accelerate the benefits of Project 2020, our plan to transform our IT and logistics, and increase our original target cost savings from £250m to £300m, comprising £125m from improvements in IT and £175m from logistics, with no increase in capital investment. In Clothing and Home, we will continue to reduce our dependency on our full service vendor suppliers, giving us greater control of our supply chain. By 2015 we will aim to have a supply base comprising 35% FSV suppliers and 65% Direct.
As a result of these actions we will deliver a 5% improvement in Food availability by 2013/14, and a 9% improvement in Clothing and Home by 2015.
