Marks and Spencer 2016 Annual Report Download - page 9

OUR BUSINESS
07
ANNUAL REPORT AND FINANCIAL STATEMENTS 2016
OUR PERFORMANCEGOVERNANCEFINANCIAL STATEMENTS
our price points and reshaped the structure
of our Womenswear team to better refl ect
the way our customers shop. This new
structure means that garments are now
bought by product category – such as
skirts, shirts, or trousers – rather than by
M&S Collection and the sub-brands, such
as Autograph and Limited Edition. This way
we reduce needless proliferation. We have
also dropped ‘General Merchandise’ as
the catch-all name for the non-Food half
of our business: we should be using the
same language as our customers to
describe our business.
We have a lot more to do. We have been
giving customers too many reasons not
to shop with us. They tell us that we have
not got the balance between fashion and
style right and that we don’t o er enough
choice. They say that we are sometimes too
expensive and that our stores are di cult
to shop. In addition, we know that our
internal structure has meant that we have
not pursued areas of high growth quickly
enough. Our plan this year is to address the
root causes of these issues. We will continue
to lower prices across the board and reduce
the number of promotions. We will put
increased emphasis on contemporary
styling rather than slavishly following
catwalk trends, and we will focus on
innovations that are genuinely useful to
our customers.
We know that our customers want to feel
that they’re getting great value every time
they shop with us. It is for the customer –
not us – to decide what constitutes value.
But I would say that the equation
customers use when assessing value is
satisfaction minus price. Did they enjoy
their experience? How good is the product?
Does it fi t well or taste good? How was
the service? These are the building blocks
of satisfaction. Once the customer has
assessed these, she can subtract the
price and determine whether she’s
received value.
FOOD
In our Food division we have an engine
for sustained, profi table growth. The
opportunity remains for us to grow our
Simply Food store network in the UK and
internationally as we strive to make every
food moment special for our customers
around the world. We will continue to
innovate, with an emphasis on health,
convenience, special occasions and gifting.
We will o er customers real choice by
carefully tailoring our ranges to the
location of the store and the mission of the
shopper. Whether they want a pork pie or a
superfood salad, a pint of milk or a chicken
tikka prepared meal, we will strive to give
them the best there is. In addition to the
250 Simply Food stores we have already
committed to, we will open a further 200 by
the end of 2018/19 to make our great food
o er accessible to even more customers.
COSTS
We will continue to be prudent on costs.
In some cases, our processes have become
too complicated and we continue to review
the way we work with a view to simplifying it.
We will use any cost savings to invest in
more store colleagues. After all, they are the
people who are closest to our customers.
OUR PEOPLE
Fairness and consistency are important
to me. I believe in rewarding people for
success, wherever they work in the
company. We have reviewed how we
reward our employees and have proposed
a new approach to pay and pensions.
The proposed pay changes, which would
make us one of the best payers in UK
retail, would reward our people in a fair and
consistent way and include proposals for
a signifi cant base rate increase for our
Customer Assistants. The proposed new
approach to pensions would ensure we
o er all employees the same Defi ned
Contribution Scheme; a competitive
pension scheme that is sustainable for
the future. Members of the Defi ned Benefi t
Pension scheme would not lose any
benefi ts they have previously earned
and would be auto-enrolled into the Defi ned
Contribution Scheme. We have started
a period of consultation with National
Business Involvement Group, the
appropriate representatives within
M&S’s network of elected employee
representatives, on both of these
proposals and will listen carefully to their
feedback. I believe that these changes
would mean we can o er one of the best
pay and benefi t packages in UK retail,
so we can keep retaining and attracting
the best people to our business.
INTEGRITY IN TOUCH
We always strive to do the right thing We listen actively and act thoughtfully
CUSTOMER AND BRAND
UK STORE
ESTATE
FINANCIAL PLAN
INTERNATIONAL ORGANISATION COST REVIEW
RECOVER AND GROW
CLOTHING & HOME
CONTINUE TO GROW
FOOD
PRIORITIES TO ADDRESS
FOCUS ON PUTTING CUSTOMERS AT THE
HEART OF M&S AND DRIVING SALES GROWTH
Implementing actions to recover and grow Clothing & Home:
> Re-establish style authority: focus on product, quality and fi t;
> Restore price position: lowering prices and reduced
promotional stance;
> Enhanced customer experience: sharper ranges, better
availability and investment in store sta ng.
Continuing to grow Food business:
> Build on strengths: focus on quality, innovation and choice;
> Commitment to value credentials: competitive pricing
while maintaining margin;
> Improved convenience: extended Simply Food store
opening programme.
Driving profi tability for shareholders:
> Continued tight control of costs and cash;
> Focus on shareholder returns.
Additional strategic questions, including International, UK store
estate and organisation to be answered in the autumn.