Marks and Spencer 2016 Annual Report Download - page 30

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MARKS AND SPENCER GROUP PLC
STRATEGIC REPORT
RISK DESCRIPTION CHANGE IN 2015/16 MITIGATING ACTIVITIES
1CLOTHING & HOME
TRANSFORMATION
Our future
performance is
impacted by a lack
of improvement in
product relevance,
execution or brand
momentum
As we reassert our Clothing
& Home quality and style
credentials and work to improve
availability, it is important
that we understand and
address our customers’ needs
in order to strengthen brand
recognition in an increasingly
competitive market.
Whilst signifi cant focus has
been placed on improving
product style and quality,
the benefi t has yet to be seen
in our sales performance.
Transforming our Clothing
& Home business to improve
performance remains a key
priority for the business.
> Workstreams in place addressing product, price
and process.
> Ongoing engagement with customers through data
gathered by our Customer Insight Unit and focus
groups, regularly shared with key areas of the business.
> Ongoing dashboard monitoring of brand momentum.
> Continued focus on product quality and style,
including adherence to our Clothing Quality Charter.
2
Nr
CHANGING
CONSUMER
BEHAVIOURS
Our business
performance will be
impacted if we fail
to keep pace with
changing consumer
behaviours
Consumer behaviours
continue to evolve at pace;
the proliferation of di erent
purchasing channels has been
unprecedented in recent years.
We need to anticipate changes
in the way our customers shop,
including advances in digital
technology. To leverage
performance and keep pace
with our competitors, we must
proactively manage our
property portfolio and operate
a fl exible business model.
Changing consumer
behaviours is a newly added
risk in recognition of the need
to remain fl exible in a highly
competitive market. If we fail
to meet the expectations
of our customers in terms
of digital advances or the
accessibility of our store
network this could have a
signifi cant impact on our
future performance.
> M&S Venture Lab in place to keep us at the forefront
of technological developments.
> Customer Insight Unit and focus groups monitor
changes in consumer behaviours on an ongoing basis.
> Channel strategy regularly reviewed at Board level.
> Financial modelling of projected channel
performance to facilitate proactive management
of the store portfolio.
3
Nr
BUSINESS
TRANSFORMATION
As we strive to
transform our
business, we must
ensure that the
changes we make
are implemented
e ectively
Our business is in a period
of signifi cant transformation,
driven by a variety of internal
and external factors.
E ective management and
implementation of associated
people and process changes
will be critical, whilst ensuring
that our day-to-day operations
are not adversely impacted.
The addition of Business
transformation recognises
the importance of ensuring
that our business remains
organisationally and
operationally e cient in an
increasingly competitive retail
market, as we continue to
address ongoing performance
challenges and enter a new
chapter in our history under
the leadership of a new CEO.
> Business transformation regularly discussed
by the Group Board.
> Employee Communications team engaged to
manage associated employee messaging.
> Robust programme management practices in place.
> Consultation with Business Involvement Group on
changes related to our peo.
4CLOTHING & HOME
SUPPLY CHAIN
AND LOGISTICS
NETWORK
We fail to evolve
our supply chainand
logistics network
to maximise
availability for our
customers and
speed up delivery
times
The growth of our business
and achievement of strategic
objectives is highly contingent
on the successful execution
of our Clothing & Home supply
chain and logistics network
strategy, the most recent stage
of which was the launch of
our redeveloped Bradford
distribution centre.
2015/16 saw signifi cant
progress towards achieving
our Clothing & Home supply
chain and logistics strategy.
Our Castle Donington
distribution centre stabilised
and we continued to progress
with the redevelopment of
our Bradford distribution centre.
We also redefi ned Supply Chain
& Logistics accountabilities.
> Ongoing simplifi cation and stabilisation of Castle
Donington distribution centre.
> Phased approach to distribution centre transformation.
> Supply Chain Leadership Group created, supported by
changes to Supply Chain & Logistics accountabilities.
> Robust programme governance in place, including
interdependencies with other Group initiatives.
> Ongoing review of progress against agreed
operational and fi nancial objectives.
5
Nr
IT INTEGRATION
Business processes
are not adequately
supported as a
result of poorly
integrated IT
systems
Our business operates using
a large number of complex
and interdependent systems.
The e ective integration of
these is reliant on us having
access to and leveraging the
right skillset, coupled with a
culture of operational precision.
IT integration is a newly added
risk. Following a period of
investment in technology,
there is scope to improve the
integration between systems
to leverage associated benefi ts,
drive our business forward and
maximise operational e ciency.
> Proactive simplifi cation of IT infrastructure and
application landscape through:
– Clearly defi ned technology roadmaps for all
business areas; and
– Decommissioning of legacy systems.
> Clear decision-making process for system changes,
including established IT Change Approval Board.
Key to change in risk level Higher Level Lower Nr New risk
PRINCIPAL RISKS AND UNCERTAINTIES
OUR PERFORMANCE
RISK MANAGEMENT
In the table below we disclose 11
principal risks that may impact
our business and are strategic or
operational in nature. In addition to
these a number of inter-dependent
external risks are also the subject of
discussion at Group Board and Audit
Committee meetings, as appropriate.
Whilst these risks are beyond our direct
control, we recognise the importance
of operating a business model that
has the potential to fl ex and adapt to
a changing external environment.
The fi rst external risk is Sociopolitical
Unrest, where ongoing geopolitical
uncertainty, social unrest or the threat
of terrorism have the potential to
impact consumer confi dence and
retail spending on a global scale.
Deterioration in Foreign Exchange &
Global Economy would not only a ect
consumer confi dence in terms of the
global economy, but the performance
of our International business is also
signifi cantly infl uenced by fl uctuations
in foreign exchange rates. As part of
these broader risk factors we have
specifi cally considered the implications
of Brexit in terms of the signifi cant
economic uncertainty that exists in
advance of the upcoming referendum
on Britain’s EU membership.
EXTERNAL RISKS