Blog: Dean BestThe week that was - and the week ahead

Dean Best | 19 May 2008

Marks & Spencer, one of the flagship names of UK retail, is, once again, at a crossroads.

After spending the early part of the Noughties in the doldrums, all had seemed well aboard the good ship M&S. Among retail watchers and in City circles, it was generally agreed that ship captain Sir Stuart Rose had revitalised M&S and steered the company into calmer waters.

However, since the turn of the year, storm clouds have gathered over the company. The economic horizon is unclear for many retailers but, for M&S, after a fall in food sales, tension with key suppliers and a spat with shareholders over Sir Stuart’s roles at the company, the outlook is murkier than most.

Speculation abounds over M&S and its food business. Suppliers have reportedly been “enraged” over demands for bigger price discounts. One unnamed supplier labelled M&S "brutal". There have also been rumours that M&S is planning to sell brands alongside its traditional own-label fare.

Amid the rumour and gossip, one analyst has urged M&S “to get real”. Tomorrow (20 May), the company issues its annual results and is expected to post rising profits. However, Sir Stuart, once hailed as the saviour of M&S, is once again facing a tough challenge to breathe fresh life into the company.

Those in food industry boardrooms around the world will identify with some of the challenges facing Sir Stuart. The current economic climate, with commodity prices soaring and consumer anxiety heightening, is placing severe pressure on suppliers and retailers. As we found last week, some, in the shape of Premier Foods, the UK’s largest food manufacturer, are finding the going tough. Others, like US meat giant Tyson Foods, are adapting well to these new economic realities.

But, with the UN forecasting that food prices are likely to remain high for the next three years, the mettle and nous of many a food industry executive will keep on being tested.


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