Marks and Spencer 2012 Annual Report Download - page 6

Overview Marks and Spencer Group plc Annual report and financial statements 2012 04
What is happening in the
marketplace?
2011/12 was a year of continued
economic turbulence. UK Gross
Domestic Product (GDP) was revised
down during the year, as the
Government faced the difficult
challenge of tackling the deficit, whilst
stimulating economic growth. However,
consumers now have a greater
understanding of how to manage their
households through difficult times –
enabling them to better plan ahead.
Despite this clarity, confidence
remained fairly low as consumers felt
the impact of inflation on their shopping,
compounded by rising fuel prices.
Though inflation eased in early 2012
consumers have not felt the full benefit,
as incomes were hit by pay freezes,
reduced hours and cancelled overtime.
These factors contributed to a
decrease in market footfall of 1.6%, as
consumers had to make tough choices.
In this challenging environment, some
well-known retailers were faced with
administration and store closures.
Others responded with heavy
promotions – as retailers competed
fiercely for consumers’ limited
disposable income.
There were moments of light relief
during the year. The Royal Wedding
in April 2011 and Christmas provided
reasons to celebrate. However, these
events were also characterised by
heavy promotional activity and
measured spending from consumers.
How does this affect our customers?
Since the downturn of 2008,
consumers have been on a journey
of acceptance and, for many, 2011/12
was the year they took charge of their
budgets. Consumers acknowledged
that some rising costs, such as petrol,
were unavoidable, and instead focused
on spend that they were able to
manage. This positive action helped
customers regain a sense of control,
and optimism increased in the latter
part of the year.
However, finances remained tight, with
little flexibility in monthly spend. This
pressure, coupled with a greater focus
on housekeeping, meant consumers
increasingly shopped to a planned list.
They were not easily distracted by
promotions, using them as a shopping
strategy and actively seeking out value
in the form of clear, straightforward
deals on their planned purchases.
Priorities remained close to home,
with a renewed emphasis placed on
the value of family time, health and
wellbeing. Careful planning helped
consumers protect the things that
mattered to them most, such as
spending on their children. Special
occasions such as Christmas and
Mother’s Day were also ring fenced,
with an increased focus on more
traditional celebrations at home.
Understanding the way our customers think and the factors that influence
their shopping behaviour is key to our success. Our Customer Insight Unit
(CIU) uses a combination of customer analytics and research to build an
accurate picture of the trends and issues that affect the decisions our
customers make.
We launched our Consumer
Barometer in June 2010. This ongoing
listening exercise enables us to track
trends and plan ahead based on
consumer sentiment and behaviour.
The Consumer Barometer comprises
a monthly online survey of a changing
sample of 4,000 people and covers
a range of topics from spending
patterns to future plans. We
undertake additional in-depth
research with a smaller sample,
which provides us with more detailed
insight into how consumers are
thinking and what influences their
decisions. We process the monthly
results within one week, to give the
business an instantaneous view of
customer needs. This up-to-date
insight allows us
to be agile in
our responses
– from timely
promotions to
great product
choice.
Consumer Barometer
Our Gift to You Christmas promotion
Our high impact ‘25% off’ focused deals over
Christmas provided clear, stand-out value on the
items our customers wanted most.
CUSTOMER INSIGHT
“I still want quality
clothing that will last
but I’m prepared
to wait for a deal
before I buy.”
Marketplace