M&S Focusing on Food Sales

Published on: 18 Nov 2016

The high street chain Marks and Spencer have announced that they will be focusing on their food retail stores after disappointing sales results.

The changes will see 60 clothing and home stores closed, while the Simply Food stores are set to receive 200 new branches.

Five-Year Plan

M & S SignThe plans they have outlined will take place over the next five years, so there may not be any immediate upheaval. They plan to close down 60 of the clothing and homeware stores, which have been making a loss and undermining their profits as a whole. This will allow them instead to focus on their food stores.

The retailer reported a significant loss of profits in the six months leading up to the 1st of October. Sales in clothing and homeware were down by 5.9%, while food sales only dropped 0.9%. This figure is far more encouraging, and so it comes as no surprise that they are changing their tactics.

The changes will bring about plenty of new food sales and commercial jobs, so look out for announcements and listings as they open each of their new locations. Along with the new stores, they will aim to convert about 25% of their existing clothing and home stores into Simply Food outlets.

Shops in overseas markets, which include France and China, will also be set to close as part of the reshuffle.

An Overall View

Food RetailSo how does this match up with the current line-up, and what will it mean? Marks and Spencer currently have 300 full line stores. These sell clothing, homeware, and food in mixed percentages. In the UK, they also have almost 600 Simply Food shops in the UK. These are a real boon to food recruitment in the UK, offering plenty of jobs around the country.

Overseas, they have 468 stores in total, across 58 different international markets. 194 of these are owned directly by Marks and Spencer, while 274 are franchises. There are hints that they could move more towards franchising in the future, rather than running the risk of opening more overseas stores.

The changes will mean that they have more stores in more towns, but there are 53 stores which look set to close for good outside of the UK. CEO Steve Rowe has pointed out that this could lead to the loss of around 2,100 jobs.

He said: “We have now completed a forensic review of our estate both in the UK and in our International markets. Over the next five years we will transform our UK estate with c.60 fewer Clothing & Home stores, whilst continuing to increase the number of our Simply Food stores. In the future, we will have more inspiring stores in places where customers want to shop that complement our growing digital offer. Internationally, we propose to cease trading in ten loss-making owned markets, but intend to continue to develop our presence through our strong franchise partners. These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns.”

There has not yet been any release of a list of stores affected by the decisions. Instead, Rowe says that the decisions will be made on a store by store basis over the next five years.

The restructuring is set to cost around £350 million, and will involve plenty of refurbishments alongside the closures and openings.

"This is not about the M&S brand disappearing. We will be in more locations in the future," he added.

Around 525 jobs have already been cut from the retailer’s head office to cut costs.