While the majority of retailers on UK high streets are seeing a distinct improvement in their fortunes, iconic brand Marks and Spencer is still struggling to hit the right note with consumers. Although its food sales remain strong, the non-food offering has received mounting criticism from industry experts, with the result that rival chain Next has overtaken it in profits for the first time in history.
It is somewhat surprising, therefore, that chief executive Marc Bolland has this week revealed plans for significant international expansion into key and growing markets such as western Europe, India and the Middle East. This is because the international growth plan sets a target for an increase in sales of 25 per cent, with profits hopefully rising by around 40 per cent as a result.
Under the plans, a further 250 stores will open overseas in the next 3 years which will include flagship stores in a number of major cities. However, the retailer is also keen to play to its strengths and will open 20 standalone food stores in the European capital of fine dining, Paris.
In keeping with existing expansion plans, a collection of dedicated lingerie and beauty stores will open primarily in the Middle Eastern and Indian markets, joining the two existing outlets of this type already established in Saudi Arabia. Twenty of these will be located in India, aiding Mr Bolland’s ambition to operate 100 stores in the country by 2016.
According to executive director for food Steve Rowe, sticking with tradition will play a huge part in the future of the overseas outlets, and will hopefully be the key to the retailer’s success in growing markets.
He said; “Britishness is as saleable as ever in any part of the world.”
Unfortunately, while growth plans are going full steam ahead in most growing economies, Mr Bolland was forced to address the underlying issues preventing strong expansion in China.
Mr Bolland has always expressed concern about widespread growth in the country, due to challenges regarding diversity and regional differences, and has now conceded that nationwide expansion may not be possible without forming a joint venture in a similar way to fellow British retailer Kingfisher.
Over the next year, Marks and Spencer will conduct an evaluation to figure out whether franchise partners should be brought in to operate the Chinese network of stores, or whether embarking upon a joint venture with another retailer will be enough to raise brand awareness.
At the same time, up to a third of its underperforming stores in Shanghai will be closed or relocated, as five of the fifteen are located on the outskirts of the city where commercial developments are yet to be completed.
Mr Bolland hinted at the possibility of a potential franchise partner becoming involved in the running of the Shanghai business.
He said; “It could be in future that if there is a partner who wants to join it, then we don’t exclude it [from negotiations].
“We have seen that where the stores are open they are working.”
Do you think Marks and Spencer should be seeking rapid international expansion or attempting to woo back consumers in its domestic market?
