Marks and Spencer needs to “urgently” take action on its food business but should dismiss any notion of becoming a “full-line” grocer, a leading retail analyst has warned.
Neil Saunders, consulting director at Verdict Research, told just-food that M&S’s food division needed “part-reinvention and part-reinvigoration” under the stewardship of new chief executive Marc Bolland.
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“The core proposition is sound but I do question whether it has sufficient relevance in today’s market,” Saunders said. “The constant battle between whether M&S should try and offer a full supermarket offering or whether it needs to focus on treats and aspirational food has been rumbling on for too long and needs to be settled once and for all so the business can move forward with confidence.”
Earlier this week, analysts at Investec encouraged Bolland to consider turning M&S, which has based its food business on own-label, into a “full-range, convenience store” to compete more effectively.
M&S sells a selection of brands in 280 of its stores and has plans to roll out those lines across its estate by the end of the summer.
However, a spokesman for M&S yesterday refused to be drawn on whether the retailer was mulling whether to become a fully-fledged grocer as advocated by the likes of Investec.
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By GlobalDataAt Verdict, Saunders said the location of M&S’s stores and competition within the market meant the business model did not “stack up”.
“The locations are wrong, the space occupied is too expensive and there is far too much competition,” Saunders explained.
“The future lies in carving out a niche which focuses on premium, treat-based food. This segment of the market is growing strongly and I would contend the reason M&S has not been successful is because it has suffered from a lack of focus and innovation. The offer is boring and samey. Because of this it appears overpriced and bad value for money.”
Yesterday, M&S published its first rise in annual food sales on like-for-like basis since 2007.
Chairman Sir Stuart Rose, who is planning to step down from the role in March after six years at the helm, said M&S had spent money on promotions “to keep the faith of our consumers”.
