Retail Sector – Railway Keeps UK Shop Sales On Track

June 27, 2011 By Retail News From the Guardian Leave a Comment

Retail Sector – Railway Keeps UK Shop Sales On Track by Andrew Martin

I used to object to retail sector businesses in railway stations. They seemed cuckoos in the nest. It bothered me that the old booking office at York station (my boyhood haunt) became Burger King, and the office of the night station manager a shop promoting York tourism. Not that I ever saw the night station manager, but I liked imagining him as a sepulchral figure in a black top hat.

Recent announcements in the retail sector make me look at the matter in a different light. Network Rail has just released figures showing a 5.17% increase in retail sales in the first quarter of this year over the same quarter of 2010. In that period, high street sales in the retail sector declined by 0.8%. High Speed One, which owns the assets of the Channel tunnel rail link, has announced that footfall at St Pancras International was 40m last year, up by 10% on the previous year. And 10m of those 40m have no intention of catching a train. They are there to shop, eat or drink.

Train travel is booming in spite of the recession, and stations can aid the beleaguered retail sector

Train travel is booming in spite of the recession, and I now see stations as nobly coming to the aid of the beleaguered retail sector. Birmingham New Street, now being redeveloped and made less bunker-like, will incorporate a huge John Lewis store. On 1 July, the Italian ice cream specialist Gelato Mio will be opening at St Pancras. Yo Sushi has just opened at Manchester Piccadilly, and there’s a new real ale pub at Euston. I wonder if it’ll be as good as the Stalybridge Station Buffet Bar (est 1885), which has well-kept beer and a great address: Platform One, Stalybridge Station, Rassbottom Street, directly helping the retail sector.

Drinking and railway stations go together well (up to a point), automobiles being left out of the equation.

I like those plastic wine glasses containing chardonnay with a foil top that are available from the excellent Marks & Spencer food stores proliferating on our stations. The peelable top gives them a childish appeal, like Kia-Ora Orange. I also like food shopping at stations. Since I’m without my car, I’m restricted to purchasing a modest amount – a shopping bag full – and the presence of trains in the background creates a sense of freedom and possibility. If I have to catch one of those trains in a hurry, the feeling of lassitude that plagues supermarket shopping is entirely banished. Not so good for the retail sector!

M&S shops are at one end of a revival that also includes station adoption and community rail schemes. The former are usually voluntary. Typically, the station garden will be maintained, the green-fingered station master having long departed. But retail sector can grow out of these schemes, and I can see the potential for it in Todmorden, where a group called Todmorden Incredible Edibles have been plating herbs in pots on the station for travellers to pick and take home. ScotRail nurtured station adoption schemes, from which have grown a laundry business called the Ironing Station at Dunblane (“Decrease your day”), and secondhand bookshops at Wemyss Bay and Pitlochry.

Merseyrail are opening convenience grocery stores that also sell tickets – as at Moorfields and Hooton. There are six at the moment; there will be nine by the year’s end. These grew out of a train operating company pursuing a community rail ethos. A more formal community rail partnership will involve contracts between operators, local authorities and other groups. The idea is to make stations “community hubs”, and of course Trevor Howard removing that grit from Celia Johnson’s eye as they emerge from the station buffet in Brief Encounter … that is the “big society” in action.

So you’d think the government would be doing more. But, says Paul Salveson, railway consultant and begetter of the community rail concept, local authority involvement in community rail is now inhibited by spending cuts. Instead, he says, the Department for Transport should be telling train operators bidding for franchises that they expect to see development at stations throughout their region. There may be no better place to plant a new business right now in the retail sector.

Filed Under: Global Retail Tagged With: cuckoos in the nest, High street sales, M&S, Merseyrail, railways, Retail, retail business, retail businesses in railway stations, Retail News, Retail sales, retail sector, retail uk, station manager, Train travel, uk retail

M&S Goes For Tailoring In £600m Overhaul

May 30, 2011 By Retail News From the Guardian 1 Comment

Marks & Spencer is to match the food and clothing ranges in its British shops to the wealth, age and ethnicity of the local area, as part of a £600m overhaul to make its stores “more inspiring” places to shop.

M&S boss Marc Bolland insisted the changes to the product ranges would not short-change customers in poorer parts of the country. It is not about a “bottom or top tier of stores” but finding the “right tone of voice” said Bolland of the plan which he hopes will boost sales at its 703 UK outlets: “We are not doing rocket science; this is about best practice in retail.”

Stores have been grouped into “clusters” assessed by five local criteria – affluence, demographic, competition, region and ethnicity. Trials of the new layouts are due to begin in the autumn. Bolland gave one example, of putting its premium childrenswear ranges into stores in wealthy areas where the store catchment included lots of families.

Bolland, who joined on a £15m pay and bonuses deal, has set a target to increase group sales by up to £2.5bn over the next three years. To get there the former chief executive of Morrisons supermarkets has cranked up capital expenditure from its normal rate of £600m a year to £900m for the duration, with two-thirds of the increase earmarked for British shops.

The substantial investment comes on top of more than £3bn spent by Bolland’s predecessor, Sir Stuart Rose. Bolland said that had fixed only the basics, with customers still telling the retailer its stores were “difficult to shop” in.

The retailer still has 90 stores to modernise and Bolland said he needed to “finish the job”.

“While the last store modernisation programme improved the core infrastructure of our stores, it has not delivered an inspirational shopping environment for our customers,” he said.

When Bolland arrived last year he promised “evolution, not revolution” and he has stuck to his word with new-look labels for its Per Una range among the changes trumpeted. He said he was “not throwing money away”. His strategy for increasing profitability at M&S hinged on improving sales densities at existing stores, growing the internet business and going for measured expansion in emerging markets such as India and China.

The pilot stores will also test improved signs and layouts that make brands such as Per Una and North Coast stand out. It said customers were confused about the difference between its 11 clothing sub-brands. Bolland also wants to capitalise on the strength of the retailer’s name, which he said was its biggest asset, and come the autumn its main clothing ranges will be labelled M&S Woman and M&S Man.

His first year in charge saw M&S report a 13% rise in profits to £714m for the year to 2 April. The retailer said it had made a good start to the new financial year, flagging up the success of recent advertising campaigns such as for the “tummy tuck” swimsuit featuring model Lisa Snowdon.

Under Rose, profits hit £1bn only to fall back sharply in the recession and Bolland said it was not about “holy numbers” but about building a sustainable business. M&S has been outperforming rivals in a tough sales environment, which analysts put down to its strength among older and more affluent customers, who are coping better as incomes are squeezed. M&S said industry data showed it had increased its share of the clothing market over the period by 0.5% to 11.7% and its share of the food market by 0.1% to 3.9%.

Tony Shiret, a Credit Suisse analyst who was one of Rose’s severest critics, said he was optimistic about Bolland’s strategy but the jury was out : “We think that investors will not buy into the long-term story until there is a realistic prospect that M&S can break through historical levels of profit … It is still too early to make that call,” he said. The shares closed down nearly 3% at 385.6p.

Filed Under: Global Retail Tagged With: best practice in retail, British shops, childrenswear ranges, M&S, Marc Bolland, marks & spencer, pilot stores, Retail News, retail uk, Retailer, store catchment, store modernization, Stores, uk retail

Marks & Spencer’s Spring 2011 Collection: Back To The 1970s

November 24, 2010 By Retail News From the Guardian Leave a Comment

It was back to the 1970s at Marks & Spencer today as the retailer unveiled its trends for spring 2011. With rails of maxi hemlines, swirling prints and A-line denim skirts, next year’s Marks and Spencer wardrobe has a whiff of the St Michael label about it.

“There were so many references to the 1970s that we’ve had to split it into 70s day and sleek 70s” Neil Hendy, the M&S head of design, explained. He distinguished between full maxi printed dresses for day and jewel-coloured halter dresses for night, which recalled Studio 54 looks, all of which were much in evidence on the catwalks in New York and Paris earlier in the year.

It is not only the 1970s that M&S is relying on to get the tills ringing. Seven trends were on offer today. Many had a retro reference, from the 1950s-inspired Coney Island section, which included accessibly pretty floral print and striped dresses, to the Fluid Form rail, which focused on minimalism and pleating and was reminiscent of Japanese designers who made their names in the 1980s.

Hendy defended the retro references, saying: “Decades are useful reference points for customers to understand new trends.” The breadth of looks on offer next spring emphasised the commitment to inclusivity on which the brand, in its current “your M&S” incarnation, now trades.

“We are chasing the key trends but we need to do it so that all our customers can have the opportunity to buy into it,” Hendy said. Other key looks will include laser cut leather tops, snakeskin print – gambled on as the new leopard print – and a beautiful red lace dress reminiscent of top London label Erdem. “It’s actually very M&S,” said Hendy.

Today’s focus on trends rather than the distinctions between the label’s in-house brands underlined new boss Marc Bolland’s recent findings that customers struggled to understand the difference between Per Una and Autograph.

Another Bolland-esque strategy was in evidence in the underwear department. He plans to make more of the fact that, in the label’s heyday, it was famed for its innovation, bringing the avocado to British kitchens.

Next year M&S will launch its Nearly Naked bra, which uses bonding and so-called free cut technology rather than tradition stitching so the straps stick to the body without unflattering bulging around the ribcage.

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M&S Steps Out For Christmas Ad – Video

November 3, 2010 By admin Leave a Comment

Marks & Spencer has launched its Christmas marketing push with a dance-themed TV ad featuring Peter Kay set to the Bee Gees’ You Should Be Dancing. The first stage of the TV ad campaign, which breaks on ITV1 tomorrow night during Emmerdale, will promote the retailer’s clothing range with Kay joining M&S regulars including Twiggy, Dannii Minogue, Lisa Snowdon, Jamie Rednapp in a series of dance routines.

The 90-second dance-themed TV ad was directed by Vaughan Arnell, who shot Robbie Williams videos including Rock DJ, Angels, Let Me Entertain You and Supreme. The campaign uses the strapline “Don’t put a foot wrong this Christmas”. The campaign has been created by ad agency RKCR.

Other commercials in the campaign will feature Caroline Quentin giving “a glimpse of Christmas parties and Christmas dinner at her home” to push M&S’s food range. The first of the Quentin ads will air in late November, with the second one timed for late December.

Myleene Klass will also front a series of dedicated Christmas videos that will run on M&S’s online TV service. The videos will include a lingerie buying guide, party wear tips and food ideas. The retail giant is also launching a Christmas microsite.

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Marks & Spencer Plans To Re-Enter European Markets

November 1, 2010 By Retail News From the Guardian Leave a Comment

Nearly a decade after Marks & Spencer shut up shop in mainland Europe, the retailer is poised to return to the continent by buying back the stores it sold at the time. Britain’s biggest clothing retailer is understood to have approached rivals in Spain and France about taking back some of its former shops.

M&S is considering buying back some of the nine shops it sold to the Spanish department store chain El Corte Inglés nine years ago. The retailer also has its eyes on some of the 18 French outlets that were snapped up by retailer Galeries Lafayette. These include the store on Boulevard Haussman in Paris, its first ever European store which opened in 1975.

Sir Stuart Rose, M&S’s outgoing chairman, has made no secret of his desire to return to European retailing but a concrete plan to do so is likely to take the City by surprise. The bold move could be unveiled on 9 November when Marc Bolland, M&S’s new chief executive, sets out his plans for the group after conducting a strategic review, alongside the group’s half-year results.

Recent sales figures were much better than expected and led analysts to ask whether this was “the start of a new era”. In 2001, M&S closed or sold off its 38 stores across France, Germany, Spain, Belgium, Luxembourg, the Netherlands and Portugal after running into problems.

The group’s forays into the US, with the upmarket Brooks Brothers menswear chain and Kings Supermarkets, were sold at a loss in 2002 and 2006 respectively. M&S refused to comment last night. The shops traded well during the first two decades, but by 2000 the European division was making losses and the struggling retailer took an abrupt decision to close it down to focus on restoring its fortunes in the UK.

It caused outrage in France and other countries as 3,350 M&S workers lost their jobs. The strength of the pound at the time, coupled with fierce competition from “upstart” clothing chains like H&M, contributed to the end of M&S’s European dream.

The retailer, which runs over 600 stores in the UK, returned to international expansion in 2008 when it opened its first store in China as part of a five-year plan to generate up to a fifth of sales overseas. Openings in India and Dubai followed, and the retailer now has more than 300 shops across 40 countries, although the majority are owned by franchise partners.

Rose has repeatedly described the decision taken by his predecessor, Luc Vandevelde, to exit from Europe as a mistake. Last year, Clem Constantine, who is in charge of property and international, hinted that the retailer might soon be back in France and Germany, saying: “Western Europe is definitely worth a look at again.”

UK high street retailers’ attempts to export their brands abroad have met with varying degrees of success. Among those to have tried to expand overseas and failed are Next, Dixons, J Sainsbury and Boots, while the jury is still out on Tesco’s Fresh & Easy chain in US.

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Marks & Spencer Enjoys ‘Return To Quality’

October 7, 2010 By Retail News From the Guardian 2 Comments

Marks & Spencer’s new boss, Marc Bolland, today reported much better-than-expected sales figures but warned that the coming months will be tough as the government’s looming austerity measures – public spending cuts and January’s planned increase in VAT – threaten to shake consumer confidence.

Bolland said M&S had been pulling in more customers, who are buying higher quality items, and that the store is profiting from its aging shoppers. “Older customers are better prepared for tougher times,” said the chief executive, who replaced Sir Stuart Rose in May. “They have seen it before and they have more savings.”

However, he added that the economy, together with rising commodity prices – such as cotton up 70% on this time last year – and “significantly tougher comparatives” will make sales gains harder to achieve in the coming weeks. And he warned City analysts not to increase their profit expectations, because the business was spending more on marketing and advertising.

Nevertheless, M&S shares were the FTSE-100′s second biggest riser, adding 19p to 410p, their highest level in more than two years and nearly double the level they were changing hands at 12 months ago. M&S said clothing, homewares and food all put in strong performances over the most recent three months, as M&S won sales from rivals.

Bolland said he hoped to absorb the impact of rising commodity prices and VAT rates on some clothes, so that opening price points – the cheapest and most competitive products – will not have to go up. Bolland is currently working on a strategic review of M&S, which is expected to address key issues such as how to pull in younger shoppers, how to expand internationally, and whether to offer online grocery deliveries.

It will be unveiled in four weeks, when the retailer presents its first-half profit figures. Echoing comments made earlier this week by his counterparts at Tesco and J Sainsbury, Bolland said he did not expect the government’s spending cuts, to be unveiled on 20 October, to tip the economy back into recession.

“No, we don’t expect a double dip,” he said. “Yes, we expect customers to have a more difficult trading environment but we expect to be well positioned.” Tesco, Britain’s biggest retailer, struck an upbeat tone on Tuesday, predicting a “slow and steady” economic recovery.

Like-for-like UK sales at M&S climbed 5.3% in the 13 weeks to 2 October, with clothes and homewares roaring 7% ahead and food up 3.7%. Matthew McEachran, retail analyst at Singer, described the figures as “excellent” and “exceeding expectations”.

M&S cemented its position as Britain’s biggest clothing retailer by increasing its share of the clothes market to 10.3% from 9.6%, helped by new products such as the “two sizes bigger” bra and “Miracle” crease-resistant linen. In the coming weeks it is hoping for bumper sales from new “front-enhancing” pants for men.

The retailer also credited its latest advertising campaign, fronted by X-Factor judge Dannii Minogue, ex-footballer Jamie Redknap and Brazilian model Ana Beatriz Barros for driving more customers into its stores. The chain has just had a record autumn season for women’s footwear, selling 300,000 pairs of boots – 50% more than last year.

Bolland said knitwear and men’s suits were benefiting from a return to quality: “With an uncertain environment people are choosing quality. They are choosing things that last, not just for a couple of days or a couple of months.” In the foodhalls, about 370 products have been launched, including “In a Pot” ready meals, groceries and biscuits.

International sales were up 6.2%, although trading remains difficult in Ireland and Greece. Neil Saunders, consulting director of Verdict, said the better-than-expected figures could mark the start of a new era. “To some extent, market conditions are now much more favourable to M&S and consumer trends should be to its advantage.

“In clothing, shoppers are more interested in quality and are willing to trade up; while in food, lower inflation means a less price sensitive consumer who is willing to buy more premium product,” Saunders said. “Both of these things play into M&S’s hands and, along with its development work over the past year, have helped to generate this set of positive numbers.

However, he added: “The big question mark, and the big challenge for Bolland, is over how long can this performance be sustained. With the negative headwinds of government cuts on the horizon, the consumer environment is likely to become much tougher.”

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Marks & Spencer shareholders want to reduce Stuart Rose’s pay

March 2, 2010 By admin Leave a Comment

Marks & Spencer chairman Sir Stuart Rose may be forced to take a pay cut after angry shareholders demand a reduction in his £1.13m basic salary. The retailer’s remuneration committee could reduce Rose’s salary within two months following consultations with shareholders. But retail analysts suggest Rose could leave M&S earlier than his stated departure deadline of July 2011 if the row escalates.

Some shareholders at blue-chip institutions believe that after the recent, expensive recruitment of Marc Bolland as the high street giant’s new chief executive on a £15m package, Rose’s remuneration should now fall substantially. He will hand day-to-day control to Bolland in May. The shareholder revolt over Rose’s pay threatens to overshadow the arrival at M&S in May of Bolland, a respected retail executive who has joined the company from the supermarket firm WM Morrison.

Relations between shareholders and M&S have deteriorated markedly in recent years. M&S is thought to be frustrated at its shareholders’ decision to go public on the pay issue. The remuneration committee is understood to have already begun a consultation with shareholders on Rose’s pay. However, the company is being criticised for not acting sooner to neutralise the issue. Two members of the five-strong committee – Sir David Michels and Martha Lane Fox – have historically enjoyed close relations with Rose.

“We have paid for a very expensive chief executive. It would therefore seem appropriate for an executive chairman taking a back seat to be paid less,” one institutional shareholder said this evening.

Rose himself has not had good relations with shareholders since his decision to assume the roles of chairman and chief executive in 2008. Combining the two most powerful positions in a company contravenes corporate governance guidelines. Rose took on both jobs in order to conduct a better search for an internal replacement to him as chief executive. However, no suitable candidate emerged, and the former chairman, Lord Burns, received a controversial pay-off.

“Given Rose has only a year to go, and the chairman of a FTSE 100 company is always going to be paid a lot of money, and that this will cause damage, it could be a pyrrhic victory,” said a leading retail analyst. “But he made a mistake taking on the dual roles. It would not be a shock if he departed early.”

Meanwhile, M&S is attempting to improve its ethical and environmental credentials with a welter of new commitments under its Plan A programme. M&S says it is increasing its fair trade product lines, improving sustainable sourcing of palm oil and other key commodities, and taking steps to ensure garment workers in Bangladesh, India and Sri Lanka receive a “living wage”.

The move has won support from Jonathon Porritt, founder director of the sustainable development charity Forum for the Future, who said: “Three years on, Plan A has become an undisputed ‘market leader’ in terms of corporate sustainability initiatives. Through it, M&S is addressing the right things, in the right way, to secure critically important outcomes.”

Filed Under: Global Retail Tagged With: M&S, M&S Chaiman, Mark & Spencers, Steve Bolland, Stuart Rose