Clothing & Home
Restoring value and style in Clothing & Home
Clothing & Home revenues were down although the business successfully recovered margin by improving the percentage of full-price sales and continuing to drive its successful direct sourcing programme.
Over many years, M&S has lost position in the market, as, despite our strong, latent brand credentials, our reputation for fashion and style has been eroded. New global competitors have grown market share and far outweigh M&S in sourcing scale. Our online business is well behind market leaders accounting for only 18.5% share of sales. The growth of new ‘pure play’ online competitors such as Amazon and ASOS has highlighted the marked weakness in our online capability. In platform technology we are hampered by the lack of a ‘mobile first’ format, a search experience that’s average, and slow download speeds. The inadequacy of our logistics means we are unable to fulfil our delivery promises to customers at peak times. And, in our traditional ‘store’ channel, M&S has not closed and upgraded store locations in line with a changing high street.
As a result, although we retain a loyal customer base and very strong positions in some markets, our customer base has narrowed.
Against this context, the infrastructure supporting the Clothing & Home business needs substantial improvement. We operate an outdated ‘factory to customer’ supply chain which means we are slow to market, carry too much stock and cannot replenish fast moving lines. The very wide ranges result in slow moving stock that has to be transported and filled as singles, creating extra handling costs. The historic M&S bias towards high volume popular lines and great value has diminished as successive generations of buyers have bought ‘flat’ instead of backing winners.
Nevertheless, the clothing business retains great technical skills and customer understanding; a strong modern global sourcing operation and ‘affection’ for the brand remains strong. There is much on which to build.
Jill McDonald joined as our new Managing Director of Clothing & Home in October. She has already announced a new leadership team including heads of Womenswear, Menswear and Home, alongside a new Supply Chain Director, Marketing Director, Online Director and other important changes.
Under this new team the business has begun to face into the challenges. Already, new range direction has been set to broaden our appeal to family-age customers. Initial steps have been taken to sharpen our value credentials with further reduction in promotions and investment in lower ‘first price’. Marketing tone of voice has shifted with the new ‘Love it for Less’ campaign. For instance, highlighting our pure cotton tapered chinos priced at £19.50, available in a choice of ten colours.
Good progress is being made in the closure of ageing stores and a comprehensive programme has been put in hand to improve the basic performance of our online website, search and checkout capability. On supply chain, an ‘end to end’ programme taskforce is now in step towards a ‘single-tier’ distribution network so that we no longer carry warehouse space whose main role is just to store stock. We are also closing centres at Hardwick and Neasden. At our Castle Donington online fulfilment centre we are investing to ‘debottleneck’ the facility to increase peak capacity.
UK Clothing & Home Marketplace
The clothing market declined by 1.5% (KantarWorldpanel, 52 w/e 9 April 2018), with a more challenging trend in the second half of the year. The Clothing & Home markets were impacted by three long-term trends which are likely to continue for at least the next two to three years. Firstly, the migration to online; the UK clothing market is about 25% online today and we expect it to grow to about 40% online. Secondly, the development of price-led discounters with the continued growth of Primark, but also the major grocers in clothing. And thirdly, the strength of global scale competitors such as Inditex, H&M and Uniqlo.
MADE TO FIT AND FLATTER
INSIGHT Customers told us they wanted a dedicated range to fit and flatter their curves.
RESPONSE In January, we launched our new Curve collection, offering stylish clothing to our plus-size customers. We consulted with more than 2,000 customers as well as leading fashion blogger Danielle Vanier on the range. Curve is available in sizes 18-32 and all the clothes have been designed using a size 24 as the base shape, rather than a size 12 which is used in other collections. We sold 63,000 pieces from the range during the year.