Marks and Spencer 2009 Annual Report Download - page 10

6Marks and Spencer Group plc Annual report and financial statements 2009 Directors’ report
Chairman’s overview
continued
Improving our value In 2008/09 we continued to focus on getting the
basics right in GM and Food, and also addressed customers’ financial
concerns. As the economy worsened, we made a deliberate decision to
invest in our prices, reviewing all of them to ensure we were delivering the
very best quality at unbeatable value. In GM we sharpened our opening
price points and introduced new promotions such as the ‘One Day
Christmas Spectaculars’ and ‘Dress for Less’; while in Food we introduced
a series of permanent good value options such as ‘Wise Buys’ and ‘Family
Favourites for £4’ as well as key promotions such as the popular ‘Dine in
for Two for £10’. The result is that we have given our customers better
value without sacrificing our quality or ethical credentials, a fact reflected
in a gradually improving business performance towards the end of the
financial year.
Managing costs We are continuing to invest despite the recession.
But we also recognise that we have to balance the long-term strategy
with the short-term need to manage the business through the downturn
by being prudent where necessary.
We worked closely with our employee representative groups to manage
the closure of 26 under-performing – mostly Simply Food – stores and to
reduce roles across Head Office at the start of 2009.
At the same time we looked carefully at our final salary pension scheme,
which is a substantial cost to the Company. It became clear that we needed
to reduce costs so that we could secure long-term sustainability for the
scheme’s 21,000 members. We therefore decided to cap the level of pay
increases which count towards pensions and change the formula for early
retirement reductions.
Our staff understood that this was the right thing to do in order to protect
the scheme, and were quick to adopt the changes. Ian will explain the
pension changes as well as other cost management measures more fully
on page 14.
Trust Although the downturn has put household budgets under pressure,
we believe our customers do not want low prices at the expense of quality
or ethics. Our research also shows that customers are no longer accepting
green marketing at face value. They are challenging companies to deliver
on their promises so that they can be sure that they have made the right
choices for their families.
125 YEARS OF SERVICE
1932 Queen Mary visited the Marble Arch
store and the following day an article in the
The Times noted that she’d purchased an
Axminster rug, a leather handbag, a willow
pattern teapot and a 21-piece tea service.
1870 – 1910 During this time, products were
displayed behind counters, so customers often felt
obliged to buy once they’d asked to look at a product
or try it on. We introduced “Admission Free” signs to
make customers feel more
comfortable about browsing,
which proved a successful
tactic and encouraged more
impulse buys.
125 YEARS OF INNOVATION
Above: Scotbeef Family business Scotbeef has
worked with M&S for 47 years. Since introducing
canned corned beef in 1962 we’ve grown together
– to the point where today we provide some 50%
of the UK’s fresh Aberdeen Angus beef.
“After so many years, we still enjoy working
with the M&S team to find new ways of doing
business. This involves everything from
working closely with our farmers to sample
up to 20 steaks a week so we can select the
very best breeds, to recently seeing the launch
of our exclusive M&S ‘Cornish Cruncher’
cheese-filled burgers. It’s great to be part of
the innovation process and to know what an
important role we play in providing the quality
products M&S customers have come to love
and expect.”
Robbie Galloway, Managing Director of Scotbeef.