Marks and Spencer 2015 Annual Report Download - page 22

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MARKS AND SPENCER GROUP PLC
STRATEGIC REPORT
OVERVIEW
The UK economy continues to improve.
Unemployment is falling and house
prices are rising. Last summer, consumer
confi dence moved into positive territory for
the fi rst time since March 2005. As a result of
the more optimistic outlook, there has been
a gradual opening up of purses and wallets.
Rather than increasing their everyday
spending, people are looking to spend
on the big purchases they put o in the
downturn. This spending, however, is
accompanied by a healthy dose of caution.
Consumers still feel bruised by the credit
crisis; they are looking to save, and spending
remains careful and considered.
Feelings of stability among UK consumers
have also been dented by a year of upheaval
abroad. From the Middle East to Russia and
Ukraine, the l ast 12 months have been
tumultuous. This has tempered people’s
positivity. Domestically, the Scottish
independence referendum and the recent
general election had similar e ects. People
like certainty, and there is always uncertainty
around the outcome of such events.
UK
We saw more confi dence among our
customers this year. They told us that they
are feeling secure, stable and cautiously
optimistic.
Although clothing sales were down year-on-
year, customers were investing more in our
‘better’ and ‘best’ products. People told us
they were excited to shop with us. They
particularly loved the colours and vibrancy
of our Spring/Summer 2015 collections. This
renewed confi dence was refl ected in fewer
promotions than last year. The shift towards
convenience store shopping within the food
market means there is intense competition
for a limited number of sites. In order to
help us address this challenge we have put
in place a Simply Food surveying team to
identify and secure the best located sites
and we also benefi t from our longstanding
franchise partnerships with the likes of BP
and SSP. Customers in our smaller stores
told us they wanted greater choice when
they shopped. We responded by increasing
the ranges available in those stores. When
it came to our in-store environment,
customers told us that our stores are now
more exciting and enjoyable places to shop.
But we also benefi ted from the continuing
undercurrent of caution among shoppers.
With consumers’ focus on clever spending,
they want to buy once and buy well, and
turn to brands they can trust and whose
quality can be relied on, like M&S.
Consumers’ emphasis on celebrating life
and indulging their loved ones played to
our Food division’s strengths. Our mission
in Food is to excite customers with the
newness, quality and di erence of our
products, and we continued to distinguish
ourselves with unrivalled innovation. Britain
is fast becoming a nation of foodies and,
in an intensely price focused market, we
focused on o ering high-quality, good
value food to our customers. As a result,
we outperformed the market once again.
There is a sense of discovery in buying food
at M&S, and our customers trust us when it
comes to scouring the world for the best
there is. We excelled during events such
as Christmas and Valentine’s Day. And we
extended our events beyond dates in
the calendar; our summer-long food
campaign saw us promote our barbecue,
grill and world food ranges throughout
the season.
INTERNATIONAL
Convenience continues to drive growth in
the European food market, with demand in
France particularly strong. This presents
good growth opportunities for our
international Food o er and we opened six
standalone Food stores in Paris this year
in convenient city centre and transport
locations. Following the popularity of our
online stores on China’s leading websites
and in response to the expanding Chinese
children’s clothing market, we launched a
dedicated Kidswear store on Tmall.com,
which resulted in exceptional year-on-year
growth. We continue to target the growth of
the middle class and the expanding lingerie
market in India with our Lingerie & Beauty
stores. Our overseas shoppers see M&S as a
respected brand and they like the fact that
we are fi rmly grounded in our Britishness.
TECHNOLOGY
Technology continues to shape how
customers shop. The proliferation of
di erent channels – stores, online, tablet,
mobile – is turning shopping into a seamless
experience. Mobile is increasingly the fi rst
port of call for consumers’ research and the
number of shoppers using smartphones to
search for clothing increased by more than
half over the last year. Visits to M&S.com
via mobile were al so up 51%. We have
adopted a mobile-fi rst approach to digital
development, ensuring the primary devices
our customers use are at the heart of the
design. The pace of change in technology
continued – with the launch of some of
the fi rst wearable tech devices. Our Digital
Labs team – made up of product design
specialists and data scientists – ensure
we stay at the forefront of technological
developments. The team uses the agile
techniques of the star t-up world to help us
test and validate new ideas and concepts
and apply the learnings as quickly and
e ciently as possible. For example, the
team was able to develop our popular
Cook with M&S app for the Apple Watch
ahead of its UK launch.
In a fast-changing retail world, it is crucial that we listen to our
customers and understand their needs. Our Customer Insight Unit (CIU)
analyses responses from 60,000 customers a month. It combines this
feedback with market research to monitor the consumer climate and
understand how it is infl uencing shopping behaviour.
OUR PERFORMANCE
MARKETPLACE