Marks and Spencer 2007 Annual Report Download - page 25

The UK retail property market has undergone radical
change in recent years, with many of our competitors
moving aggressively into new space in new areas. We have
added more than 200 stores since 2002, but we need to
make sure we are in the right place in the right space. In
particular, we missed the move to develop out-of-town
stores and to open on Retail Parks.
In November, we announced a far-reaching property
strategy that will see us increase our current space of around
13.2 million sq ft by 15-20% in the next five years. We have
five priorities here:
•Enhancing our major city centre stores, mainly through
expansion and major redevelopment;
•Finding more out-of-town stores of around 100,000 sq ft
and expanding our space where we already trade through
mezzanines and extensions;
•Opening more stores of between 40,000 and 60,000 sq ft
on Retail Parks;
•Examining our portfolio of high street stores to make sure
they are the right size and in the right place. There could be
some closures, but mostly we will relocate to better sites
that suit our customers; and
•Doubling the number of Simply Food stores to more than
400, including franchise stores at stations, airports and
motorway services. We will also extend our partnership with
BP, adding Simply Food stores at up to 200 BP Connect
sites within five years.
The way our stores look has been another big issue for us to
address and we now have a programme to modernise virtually
all of our stores by the end of 2008/09.
In the year under review, we spent £479m modernising and
redeveloping our stores as well as some £120m on new space.
In total, capital expenditure for the year was £792m.
This is an increase of around £250m on the guidance we gave
you last year and is because we have brought forward a
number of modernisation projects originally scheduled to start
in 2007/08 into the 2006/07 financial year. By Christmas 2006
we had over 220 stores in the new format, including almost all
of our Simply Food stores. By Christmas 2007 we will have
completed around another 130, equating to approximately 70%
of our total space. You can read more about our store remodel
programme in the box on the opposite page.
With both our store modernisation programme and our property
strategy, we are testing out ideas carefully, and then rolling out
successful formats at pace.
Moving with speed and consistency is essential. The market is
and will remain highly competitive, good space is at a premium
and getting planning permission can be slow. We are constantly
looking for appropriate sites, so we can reach a wider
customer-base in more easily accessible, convenient locations.
www.marksandspencer.com/annualreport2007 MARKS AND SPENCER GROUP PLC 23
SIMPLY FOOD
We opened more Simply Food stores
in 2006/07 than in any other year.
CAPITAL EXPENDITURE
Ad minim veniam, quis nostrud exeration
ullam corper suscipit lobortis.
At the year end we had
205 stores including
61 run by our franchise
partners, SSP and Moto,
at airports, stations and
motorway services and
BP in their BP Connect
forecourts. We opened 63
new stores during the year
and closed two. Our trial
with BP has been
successful and we will
open around 60 stores
during 2007/08, adding to
the 11 trial stores.
The Simply Food opening
programme, together with
some new main chain
stores and franchise stores,
has increased our total
food space by around
30% in the last six years.
Initially our Simply Food
expansion programme was
focused on convenience-
sized units of 3,000 to
5,000 sq ft but increasingly
we are targeting bigger
sites of 6,000 to 12,000 sq
ft to make the most of our
food offer.
In March 2006, we bought
28 Iceland stores, which
we converted into Simply
Food stores and reopened
in summer 2006. We also
bought an additional 12
stores from Somerfield,
six of which, including
Westhill in Aberdeen and
Blackheath in London
re-opened during the
year. The remaining six
will open during summer
2007. We want more
stores in more convenient
locations and intend to
open 20-25% more food
space in the next five
years.
OUR STORE PORTFOLIO
STORE TYPE Number of stores
Flagship stores 43
High Street stores 221
Simply Food stores 144
Simply Food franchise stores 61
Retail Park stores 20
Outlet stores 30
M&S Kitchen 1
Total 520
Total 2004/05: £229m
£m
Total 2005/06: £338m
£m
Total 2006/07: £792m
£m
Modernisation Programme
34
New Stores
80
International
34
Supply Chain & IT
34
Maintenance
38
New Stores
120
Modernisation Programme
479
International
27
Supply Chain & IT
114
Maintenance
52
Modernisation Programme
175
New Stores
49
International
19
Supply Chain & IT
39
Maintenance
56
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