Marks & Spencer Ltd.

Marks and Spencer is a retailer of clothing, housewares, and food items with a long history of great value and excellent customer service. M&S is not only perceived as a great brand, but is also revered with admiration in its country of origin the United Kingdom. It is in the business of providing high quality “essential” merchandise at moderate price, and high quality pre-cooked food at high rates. The company strategy is strong and evident in all their functions. Moreover, its value addition to the buyer is extremely high, which naturally builds Marks and Spencer’s brand equity. Marks and Spencer is a very successful retailer for many reasons, but the core of their strategy relies on their employees, their supply chain management, and their rooted understanding of customer’s needs.

Resource and Capabilities
Marks and Spencer control of end to end supply chain is its core strength. This is extremely rare in the retail market given the fact that M&S controls quality and design right from the producer. Working closely with approximately 500 food and 350 nonfood independent suppliers gives M&S immense control over inventory, product quality and freshness of food. Utilizing the VRIN Framework, the M&S supply-chain would be classified as an both rare and inimitable. The M&S supply chain is rare because of the streamlined distribution process which enabled its stores to offer prepared foods that were fresh, not frozen.

This was viewed as a sign of superior quality by the customer. Also, both the food and the merchandising segment of M&S operations had immense control over the supply chain from factory to floor. More importantly this strategy is Inimitable based on the time, monetary investment, and commitment it requires to build such outstanding relationships with suppliers. The time required to build such a network really gives M&S a strategic advantage as “Some supplier relationships stretched back forty years or more”. In turn the company works closely with and supports the competing suppliers, even going as far as assisting “suppliers in designing products and developing innovative product methods”. These kind of synergetic capabilities are almost inimitable by competition.

The advantageous supply chain resources were a disadvantage for M&S in Canada, where due to high Canadian import tariffs it was not cost effective for M&S to import products from Europe. The inability to utilize their suppliers actually became a strategic disadvantage for M&S in Canada, as they were forced to source goods from lower quality textile and food suppliers in Canada. The Canadian goods were so inferior that in-spite of the high tariffs for importing into Canada, M&S began importing from its European supply chain, thus drastically cutting into their margins.

Arguably the most significant strategic advantage for Marks and Spencer is its employees. M&S invests a lot in employee satisfaction, and they show their appreciation through great customer service and strong company allegiance. Not only are the employee’s paid above market rate, but health insurance and pension plans well above the industry average. This creates a unified feeling among the workforce to provide high levels of customer satisfaction and added value. M&S tries to make customers feel more convenient and comfortable. This is an inimitable resource, and a main reason M&S is one of Britain’s most successful retailers. The high employee loyalty has resulted in extremely high and noticeable sales per square foot ratio. Customers are well taken care of, provided the freshest food and the company takes innovation to deliver value seriously.

Especially in the United Kingdom, Marks and Spencer is very strategic at creating a pull effect in demand for goods, by understanding the essential needs of a customer, instead of pushing products on them. Their marketing efforts reflect this strategy by not advertising unless there’s a new product line launch. M&S didn’t necessarily need to advertise in the UK as they were a recognized brand, they received above average press, and much of their success ad value was spread through word of mouth. This free press combined with the fact that M&S rarely carried clothing lines that were considered seasonal or trendy. This rare and sustainable form of competitive strategy has earned M&S a level of high sales in the UK.

The strategy of not marketing did not fare them very well in Canada, while Peoples and D’Allairds, which were companies that M&S had a controlling stake in, earned great profits. Canada’s disaster can be partly attributed to the fact that marketing and a loyal customer base fared well for Peoples and D’Allairds. While the same factors and the high tarrifs, which increased operating costs, were weaknesses on the part of M&S. Although these two chains were great investments, it was partly due to cannibalizing and substituting affects that these two acquisitions hurt the M&S unit as a whole. These brands also had mid to low prices and extensive advertising, something avoided by M&S in Canada. Since M&S was not well advertised, not many people knew about the brand, and the value added it provided. Straying away from the norm was a good differentiator in the UK where M&S was well known, but not for Canada where they were virtually a brand new company.

Marks and Spencer’s entrance into France and Europe was not very successful. Being able to use their UK suppliers worked to their advantage from the supply side, but the demand side was very different from that which they experienced in the UK. First, M&S’s food division was not well received, and only profitable in central Paris. Hypermarkets started gaining market share in the 1980’s, and by enlarge the retail market in Europe was much more competitive than that of the UK. Also, French customers had a perception that the products were “old-fashioned”. This could have been mitigated if the customers could be lured into the store to experience the value and high quality M&S had to offer.

Marks and Spencer had developed excellent and unique competitive strategies throughout their long and successful history in the United Kingdom. However when M&S decided to grow outside their country of origin, they failed to plan for and understand how their strategy would be affected outside of the UK. This lack of preparation is now apparent as the company had to drastically change its operations outside of the UK. Fortunately, M&S strong reputation and long history of success was enough to keep them going while they reorganized their international units. Inside the UK, M&S has a very unique and successful corporate strategy which at its core revolved around their employee’s, supply chain, and ability to add value for their customers.

The clothing market of M&S has many segments but lack of segmentation. M&S suffers from the unbalance between the stock and Information Technology System.
One of its hallmarks is that it does not use advertising (other than new product line launch) but through the word of mouth and press coverage that it achieves notoriety.