When will Marks and Spencer's approach to digital retail get some magic and sparkle?
- Summary:
- Retail giant M&S has kitted us out with socks and underwear for over a century, but can it make the transition to international multi-channel digital retailer? The going's tough to date.
For 130 years, Marks and Spencer (M&S) has been part of the UK high street, through good times and bad. It’s got a quintessentially British brand image that has translated to international presence, although notably not in the US despite a couple of forays across the Pond.
It also has a brand that’s built on what Chairman Robert Swannell describes as a:
commitment to clear core values, including quality and trust. Just as enduring values have defined our past, so they are crucial to our future. In recent years public mistrust has spread through many areas of business and this stems from the absence of clear values. This is not the case at M&S, where an emphasis on integrity is at the heart of the way we do business.
But while M&S has a place in the sentimental heart of the British shopper as the place you go to for socks and underwear, the retail market in which it operates has been changing beyond recognition, with firms such as Zara, H&M and Primark putting M&S on a back foot in the fashion market.
Mission statement
Recent years have been about catch-up and turn-around for M&S as the firm pursues its stated goal, articulated by Swannell as being:
to transform M&S from a traditional British retailer to an international, multi-channel retailer.
Critical to this is the multi-channel aspect and it’s here that the firm has invested a great deal of time and money, but which has yet to deliver the returns promised.
Today, the firm reported its 13th consecutive quarter of sales decline. First quarter like-for-like sales for the group dropped by 1.5%, with only the M&S Food operation seeing any real uptick.
Significantly perhaps, the firm picked out its digital strategy and specifically its new website as the scapegoat. It’s not hard to see why. While clothing sales dropped 0.6% year-on-year, online sales plummeted 8.1% as a new M&S.com website beds down.
Or as CEO Marc Bolland coyly puts it:
The settling in of the new M&S.com site has had an impact on sales.
That said, he insists that the new site is “technically resilient”, and has had encouraging feedback from customers, particularly in relation to its fashion and style content.
He rejects the suggestion that there have been issues undermining the launch of the new site:
It’s not an issue. The platform, you don’t build for a quarterly result. It’s been a resilient build-up. It’s a journey, not something customers recognise in a morning.
OK. But M&S is a retail outfit. It exists to sell things. Food, furniture, bras, underpants, socks!.
It’s all very well having lots of lovely inspirational and aspirational content on the home page, but until that converts into actual online transactions, there’s a problem.
And that’s where M&S.com finds itself right now.
How we got here.
It’s not like M&S hasn’t taken time to think this through.
For two years, it put its online strategy under the microscope before coming to the decision last year to terminate its existing e-commerce relationship with Amazon, which had been in place since 2007, and build its own bespoke M&S.com site.
It’s put a lot of effort into that, with a 50-strong software development team, the launch of a software engineering-focused graduate scheme and the creation of a specialist digital lab in a bid to create a start-up mentality to innovation. Full marks for trying at the very least.
In its annual report published in June, M&S explained some of its digital thinking principles. There’s nothing revolutionary here. It’s solid, safe, comfortable and playing catch-up, much indeed like M&S itself in many respects:
The internet has changed the way consumers shop. An increasing number of customers are using online as a source of inspiration and research before they purchase in stores or online. They are looking for editorial fashion and lifestyle guidance, and want a seamless brand experience wherever they choose to browse and buy. Customers also like shopping in store and expect the flexibility offered by click and collect services – they want to purchase what they want, when and where they want it.
The firm is not reserved when it talks up the importance of getting digital right, dubbing M&S.com as “our new flagship” and the reflection of what M&S stands for today. So there’s a lot riding on getting this right.
Nicking from Tesco
The person on whose shoulders that responsibility lies heaviest is Laura Wade-Gery, who was poached from grocery giant Tesco at the beginning of 2011 where she had been head of the enormously successful Tesco.com and Tesco Direct.
In the annual report, she articulates the digital vision thus:
M&S.com is our ‘flagship’; not just our biggest store, it is also the best expression of today’s M&S and a 24/7 window to our products and style perspective.
As well as including an improved search function, better browsing options and product images that are 50% bigger, the site brings our brand to life with bold imagery and regularly updated editorial content. We have also introduced a range of interactive services to create a richer buying experience. We are providing clearer, more consistent product information and offering a better view of stock availability, which is refreshed every 15 minutes and live at checkout, ensuring customers can buy with confidence.
Each of our customers shops our website in a multitude of ways, whether they are buying something via their desktop computer or browsing on a tablet at home. We have designed the site to be flexible and to cater for their many needs, both now and in the future.
In truth, despite the finger-pointing today, there is a lot for M&S to be pleased with as stats for fiscal 13/14 show:
- M&S.com sales were £800.1 million, up 22.8% year-on-year.
- Weekly site visits averaged 5.5 million, up 7.8% year-on-year.
- Visits from tablet devices grew by around 90% year-on-year to make up 30% of total online sales.
But there’s a long way to go yet, which is either a problem (as it seems to be today) or an opportunity, which is the way that Wade-Gery pitches it:
Of the 34 million people who shop in our stores every year, around 6.7 million also shop using our website. Whilst 8.3 million of our customers do not shop online at all, that still leaves over 19 million M&S customers who shop online but are yet to shop online with us. They represent our biggest opportunity for growth.
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The citing of the web site as a problem today shouldn’t really come as a surprise. Back in May, the firm cautioned that the new version could take 6 months to bed down after shutting down the Amazon relationship because, in Wade-Gery’s words:
We want to own our car, not rent it.
But there have undoubtedly been some self-inflicted wounds. The firm made an error in making existing online customers re-register to use the new site. The target for year one is to 6 million signed-up; to date, 3.2 million have done so, making the goal achieveable but in need of speeding up.
Part of the problem here is lack of awareness perhaps. While the new site has been promoted via M&S’s social channels, there’s been no heavy marketing campaign to date to promote it via TV or advertising, channels that the ‘average’ M&S customer might be more inclined to take heed of.
There have also been comments made, including by Bolland, that the new site is more complex to navigate than the previous Amazon version with the ‘inspirational’ content making it harder to get at the actual transcational process of buying stuff:
This affected the proportion of people who went on to buy compared with those merely visiting. The old Amazon site had a more direct route from visits to sales.
M&S finance chief Alan Stewart came up with a nice analogy when he said:
It’s a bit like going into a supermarket for a pint of milk and they’ve moved it.
But there’s no changing course now. The new site cost £150 million to launch and regular iterations and updates are planned. Wade-Gery boasts she has a bigger budget here than she had at Tesco, so M&S is putting its money where its mouth is.
It's also indicative of the emphasis placed on multi-channel, bricks-and-clicks that Wade-Gery has just been promoted to take control of offline retail stores as well as the online experience.
But retail sector analysts are downbeat. Clive Black of Shore Capital, said:
The dotcom fiasco, and that is what it looks like, noting as we do many more complaints over praises for the current proposition, leaves a bitter taste for investors.
In respect of the settling-in process, particularly given the extended planning activity and a lack of guidance of forthcoming major bumps in the road, we shared the view of a number of commentators that it was curious that the person responsible for what has been a pretty mediocre dotcom performance from M&S [Ms Wade-Gery] was given more responsibility in the management shake-up. Time may be more effectively spent sorting out dotcom?
My take
Lack of mainsteam awareness of the new site is a major problem here, unusual for a firm whose annual Magic and Sparkle Christmas advertising campaign is always one of the most eagerly anticipated of the holidays.
To be honest, I can’t remember the last time I bought anything from M&S other than food, where the firm has demonstrated genuine innovation and market leadership.
In contrast, I’ve just splurged out in Banana Republic’s online sale, buying clothes that I know will fit me because I can trust the brand from my experiences in the offline world.
And unlike the M&S.com site, I was able to cut straight to the buying stuff stage without having to plough through what looks like an online lifestyle magazine.
It should be the same with M&S. Those values that Swannell outlines should be serving M&S well, but somehow the firm just can’t move beyond the socks and underwear identity in the minds of too many people, even when it hires the likes of male model David Gandy to beat David Beckham at his own game in the underpants department.
Maybe that’s why it’s gone to such an opposite extreme on the website's look and feel.
I genuinely hope that the settling down that senior management talks about will happen and that as the website evolves, the maxim of less is more might come to the fore.
Wade-Gery is talked of as a possible successor for the increasingly under-pressure Bolland. If that happens, someone with impressive online credentials will be helming an offline retail institution. That could be a very interesting state of affairs.
