MARKS AND SPENCER GROUP PLC (THE COMPANY) PUBLICATION ANNOUNCEMENT: ANNUAL REPORT 2013

GM product

Continued loss of engagement with our core customer
As we seek to enhance the M&S brand, it is important that we address our core customers’ specific needs in an increasingly competitive market where economic uncertainty continues to be an influencing factor.
 

– New senior management team appointed with clear focus on quality and style
– Prioritisation of core customer in both General Merchandise and Marketing objectives
– Regular review of customer reaction to product and in store experience through focus groups and in-house Customer Insight Unit presentations
– Ongoing product and store improvements addressing specific customer feedback
– Targeted marketing and promotional activity using customer loyalty data
 

Food safety and integrity

A food safety or integrity related incident occurs or is not effectively managed
 

As a leading retailer of fine quality fresh food, it is of paramount importance that we manage the safety and integrity of our products and supply chain, especially in light of the business’ greater operational complexity and the heightened risk of fraudulent behaviour in the supply chain.

– Dedicated team responsible for ensuring that all products are safe for consumption through rigorous controls and processes
– Continuous focus on quality
– Proactive horizon scanning including focus on fraud and adulteration
– Established supplier and depot auditing programme

– External hires recruited into a number of senior roles bringing an alternative perspective
– Robust employee engagement process for effective communication
– Alignment of development programmes with business strategy
 

– Strategic Programme Office centrally governs the Group’s initiatives providing regular status and benefits realisation updates to the Executive Board
– Proactive management of programme portfolio and associated benefits in the context of current market conditions and the Group’s three year plan
– Programme governance structures in place for all major programmes, supported by robust project management discipline
– Proactive identification and management of major cross programme interdependencies
 

– Robust programme governance in place with clear identification of interdependencies with other Group initiatives
– Phased approach to implementation
– Agreed quality assurance plan for programme delivery
– Close working with Amazon to ensure the quality of the existing online offer is maintained during new platform delivery
 

– Frequent monitoring of performance, including individual country reviews
– Particular focus on like for like performance and poor performing stores
– Property Board approval of new store openings and monitoring of returns on investment, plus creation of key roles to facilitate delivery of property pipeline
– Representation of International in key Group initiatives

– Stock, Sales & Intake tool used consistently across GM to plan and manage stock levels
– Regular commercial reviews to monitor stock levels and improve overall stock control
– Tight control of promotional activity
– UK stock ledger now live and the implementation of supporting Business Insight reporting underway
– Established inventory control team to ensure stock data integrity
 

– Established Change Approval Board process
– Clear decision making process for system changes, including the adoption of change freezes during critical trading periods
– Proactive management of cross programme dependencies including ‘release management’ to group system changes together
– Robust Disaster Recovery plans in place for critical business applications
 

Business continuity NEW

We fail to adequately manage or respond to a Group-wide disaster

The business faces a heightened level of risk as a result of the Summer 2012 events taking place in the UK.

Group continuity plans, incident reporting and management procedures are well established. We monitor these through an annual crisis management exercise and quarterly committee meetings. We have a number of policies and procedures in place to manage the safety of our employees when abroad, and have links with the Home Office and government agencies to receive information on known threats.

The Group Risk Profile reflects the most important risks facing the business at this point in time; these risks receive specific attention by the Board to ensure that sufficient mitigating activity is in place to reduce net risk to an acceptable level. The Group Risk Profile will evolve as these mitigating activities succeed in reducing the residual risk over time, or new risks emerge. As such, we have removed a number of risks from our Group Risk Profile since the prior year:

– Last year we included Business continuity on the Group Risk Profile in response to the heightened level of risk driven by the UK’s summer 2012 events. With the risk now returning to a normal level it has been removed, recognising the strength of our controls in this area
– Financial position, Corporate reputation, New store format, Key supplier failure and IT security have also been removed in recognition of the actions taken to reduce the net risk position

The above risks remain important and they continue to be monitored as part of ‘business as usual’ activities; however, we consider that they do not represent key risks to our business at this time and they have therefore been removed from the Group Risk Profile.