Marks and Spencer 2009 Annual Report Download - page 42

38 Marks and Spencer Group plc Annual report and financial statements 2009 Directors’ report
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How are we expanding
our International business?
M&S International: In 2007/08 we announced our plan to grow
our International business to between 15 to 20% of total Group
revenues by 2012. Our strategy remains unchanged, although we
are adapting our plans as the economy dictates. We are on course
to reach our target, with sales up 25.9%.
Our plan
There are five key elements to our
International growth strategy:
Growing our equity partnerships in line with
our revised business model;
Expanding our footprint into new markets
and within markets where we already operate;
Achieving operational excellence;
Driving brand integrity and awareness; and
Finding innovative ways to grow our food offer.
Our business model
In 2007/08 we made significant changes
to our business ‘ownership’ model. While
expansion in previous years has been
primarily through franchising, we are now
placing a stronger emphasis on expanding
through partly-owned subsidiaries and on a
wholly-owned basis. Expanding in this way
has proved successful in emerging markets,
where our subsidiaries in Southern and
Eastern Europe performed well for the year.
We also continue to run a thriving franchise
business, which gives us further flexibility
to select the most appropriate model on
a market-by-market basis.
Expanding our footprint
We opened 32 new stores during the year
taking our total International store count
to 296. Now in 40 territories, we have
continued our strategy of closing smaller
stores to concentrate our efforts on premium
locations. This means we now have a total
of 3.3m sq ft in our International portfolio,
including new stores in Libya, Montenegro,
and most notably in China where we opened
a 40,000 sq ft flagship store in Shanghai.
We plan to grow our International selling
space by 20% next year with around 50 new
stores opening across Europe, the Middle
East and India.
Improving operations
During the year we also made significant
changes to our ‘operational’ model so that we
can do business more efficiently. The launch of
our International Range Planner is the result
of a year’s work and will revolutionise the
way we approach range buying and store
cataloguing globally. We know that it is never
a case of one size fits all, and are confident these
changes will ensure we accurately stock the
sizes and styles appropriate for customers in
our different markets.
Our International supply chain now includes
regional hubs in Hong Kong, Singapore,
Sri Lanka and Istanbul. These changes make
distribution more efficient and cost-effective,
helping us get the latest trends into our
international stores more quickly.
Additionally, we are in the process of
implementing a new SAP finance and
operating system in China and Hong Kong,
which will be rolled-out through the rest of
our International business, improving
effectiveness through better management
information and new processes. As in the
UK it will support our teams in delivering
improved supplier management.
The Far East
There are clear signs that the economic
downturn is being felt in Asia. Despite this,
our Shanghai store is performing well,
following some early problems importing
food, which were quickly resolved.
M&S International sales
£897.8m
+25.9%
M&S International as a share of Group revenue
9.9%
+2.0% pts
125 YEARS OF INNOVATION
Below: Plan A-rt In July 2008 we launched Plan A
in Hong Kong. Working with WWF, the Hong Kong
Youth Arts Foundation and a number of celebrities,
we created five innovative art pieces representative
of the five pillars of Plan A.
125 YEARS OF QUALITY
Right: Local tastes Customers across the globe
can’t get enough of our redcurrant puffs – a popular
pastry in the Asian market.