Marks and Spencer 2010 Annual Report Download - page 18

Marks and Spencer Group plc Annual report and financial statements 2010 Directors’ report 14
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Our marketplace
And how we have responded
This section sets out some of the key trends
of the last year and outlines how M&S has
responded to them.
2009/10 MARKET OVERVIEW
Though Britain has returned to low levels
of economic growth, concerns about the
economy meant uncertainty continued to be
the main characteristic of the marketplace.
Consumer sentiment is that they’ve
‘weathered the storm’ and adapted well
in a difficult economic climate. As a
result consumer confidence levels have
doubled over the last 12 months, though
as illustrated in the index above, they
remain in negative territory.
However, increasing confidence has
not marked a return to frivolous spending.
Consumers remain cautious and have
adopted a trend for ‘clever spending’,
flexing their budget according to personal
priorities. Put simply, they are willing to
spend more, but only on the things that
matter to them.
CLOTHING MARKET TRENDS
Improving consumer confidence has seen the
clothing market return to growth this year.
Price remains one of the main drivers for
purchases, resulting in the continued growth
of the value market. However, after a year
of economising consumers have moved
beyond a wardrobe made up of cheaper
staples and started to invest in quality
versatile pieces, this trend is particularly
strong among the over 45s.
Customers are the heart of our business so it’s essential we understand what
they want from M&S. Our Customer Insight Unit (CIU) makes sure we are
listening to our customers, understanding what they think and how they behave.
Through a combination of market data analysis, research and customer
feedback, our CIU identifies emerging trends and how external factors are
impacting consumer behaviour. This ensures our customers’ needs are always
recognised in business decisions.
CONSUMER CONFIDENCE INDEX
Source: CFK Consumer Confidence Index March 2010.
M&S CLOTHING RESPONSE
Our ‘good’, ‘better’, ‘best’ pricing structure
caters for ‘clever spending’, allowing
consumers to trade up or down to suit their
priorities. We’ve encouraged customers to
trade up by focusing on detailing and quality
fabrics in brands such as Autograph and
have extended Portfolio across footwear and
accessories so customers can update their
wardrobe and experiment with new trends.
See womenswear on page 16.
A greater appetite for investment pieces
has translated into growth in the mid-priced
clothing market and a strengthening position
in premium clothing.
Customers have sought easy, affordable
ways to experiment with key trends, such
as footwear and accessories.
In 2008/09 the lingerie market suffered as
women deemed luxurious underwear an
unnecessary extravagance and stuck to
basics, but this year women started to treat
themselves again.
HOME MARKET TRENDS
Mortgage lending remained broadly flat for
the year, providing little improvement to the
housing market.
Sales of large furniture and white goods
declined, as homeowners opted to stay
put and improve their existing home rather
than move.
In a slow market, consumers wanted to
‘individualise’ their home to give it a distinctive
stylish look – mixing and matching a range
of soft furnishings and accessories.
Shifting household demographics have
resulted in more people in their 20s living
with their parents, along with a rise in older
single households. This change has seen
greater demand for furniture offering flexible
living solutions, such as combined bedroom/
living and work space
M&S HOME RESPONSE
The style credentials of M&S clothing have
been translated into our soft furnishings offer
to appeal to customers looking to spruce up
their home. We have focused on providing
great value, co-ordinated homeware so
customers can easily build an updated look.
See more on page 23.