Marina Case

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In his review of the year's trading the company chairman, Sir Richard

Greenbury, recognized 1999as a major reversal to company fortunes drawing

particular attention to flat sales in the peak trading Christmas period, the need

for heavy price reductions to shift large quantities of fashion merchandise, a

cyclical downturn in housewares, overseas economic turmoil (e.g. riots in

Indonesia and currency problems in Thailand, Malaysia and Indonesia),

adverse trading conditions in the Far East, together with the strength of the ₤

sterling and difficulties in the supply chain sourcing from relatively high-cost UK-

based manufacturers.

When asking the almost polemical question 'what went wrong?' the company

chief executive, Peter Salsbury, went on to say 'the answer is simple...we have

not kept pace with tremendous changes taking place in the retail market'.

Anecdotal evidence

To some extent the fall in the share price, dramatic though it was, was not as

great as it might have been as the anticipated bad news had already been built

into the share price as the stock market listened to press, analyst and trade

comment suggesting all was not well. A broad spectrum of comments had been

aired suggesting that M&S was not only increasingly becoming out of touch with

its retail market but also, and more importantly, losing touch with both its more

general macro-and micro-environment.

In no particular order the kinds of comment that were being voiced as possible

explanations for M&S's demise included the following:

The merchandise, especially ladies outerwear (e.g. trousers, skirts, suits,

jackets and knitwear) was not of modern design and cut. Indeed, the offering

was of staid fashion with little category breadth or depth. The colours too, it

was often said, were dreary an monotonous.

The attempt to satisfy in one store a broad array of age groups from say

teenage daughter via mother and aunt to grandmother was proving difficult.

Resistance, especially by the younger age group, to shop in a store selling

M&S labelled merchandise. Clearly for such a group there were brand

perception problems with ego-intensive fashion clothing items.

A lack of flair, cut, style and colour for the older female age group.

Famously, one 50-something female shareholder berated the board at the

1999 AGM. She explained she had visited a major M&S store to buy a

series of items for her wardrobe prior to going on a summer holiday. Failing

to find anything at M&S she had bought all her requirements from

competitive outlets. She challenged the mainly male board to understand the

physiological and psychological needs of the older woman!

Problems of being out of stock of the more popular selling clothing items.

The non-performance of the home delivery/shopping service even

sometimes involving wedding lists. Customers were told items were out of

stock, no longer available (although still listed in the home shopping

catalogue) and the china patterns had been withdrawn meaning it was not

possible to replace breakages.

A refusal to accept credit cards. The company would only accept three forms

of payments - cash/direct debit; cheque or the M&S Chargecard.

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Increasingly the company was offering poor value of money - full prices

being combined with deteriorating quality, i.e. wear, wash and care. This

comment was often made of lingerie, a product class in which M&S was

once pre-eminent.

High prices of food especially the convenience value-added items.

Political and planning constraints on out-of-town shopping developments

and the encouragement of the use of brown-as compared to green-field

sites. Brown-filed sites though often have significant preparation costs

(clearance and possibly pollution) and more importantly are rarely in

preferred