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April 1, 2011

In the spotlight: M&S crosses the English Channel once more

The move was speculated about in the autumn but today Marks and Spencer, one of the flagship names of the UK retail landscape, has announced it will return to France - a decade after it quit the market. CEO Marc Bolland is upbeat about his plans, although reaction from retail analysts was mixed. Petah Marian reports.

The move was speculated about in the autumn but today Marks and Spencer, one of the flagship names of the UK retail landscape, has announced it will return to France – a decade after it quit the market. CEO Marc Bolland is upbeat about his plans, although reaction from retail analysts was mixed. Petah Marian reports.

Marks and Spencer CEO Marc Bolland said that he expects the retailer’s French operations to be profitable “very quickly” due to its bricks-and-clicks strategy.

The retailer announced today (1 April) that it would be opening a store at 100 Champs-Elysées in November, which will provide it with a “prestigious” base from which to relaunch its French operations.

It will then open a series of Simply Food convenience stores in the Paris area, while offering general merchandise online through a new website.

M&S plans to focus its store-base in Paris with a number of Simply Food stores opened in partnership with franchisee SSP, alongside a “couple” of larger stores over the next few years in shopping malls.

Bolland said that the retailer plans to open its Simply Food outlets in “high-density locations like railway stations”. However, he said M&S will be “very selective” with the locations it chooses to open its stores.

M&S executive director John Dixon said it would be “unlikely to be selling French wine to the French”, but instead would offer the “best of British”, with Scottish salmon, bacon, sandwiches, biscuits and teas.

Bolland is confident that M&S’s food offer is innovative enough to stand out in the already crowded French market.

“I just finished an interview on the radio and the interviewer wanted to see the baskets of fresh food, and we showed her things like the shaker salads, some of the new ready meals, the range of salads and lunch points. She said none of this is available in any speciality retailer or shop,” said Bolland.

Bolland announced the move a decade after the retailer pulled out of the country. In 2001, M&S quit France as it looked to exit all of its retail operations in Western Europe. At the time, the move generated a significant amount of ill-will, but Bolland was emphatic in his belief that Parisians would welcome the retailer back.

“The demands we’ve had to come back have been enormous, and we’ve done market research, and brand recognition in a positive way is 70%,” he said, adding that its French operation was a profitable one.

Analysts seemed non-plussed by the move, saying that the announcement does not come as a surprise, with one analyst, who asked not to be named, saying that “it’s not that big a deal in the grand scheme of things”.

Charles Stanley analyst Sam Hart said the move will be greeted with “some scepticism” following M&S’s withdrawal from Western Europe in 2001. However, he added that the retailer has “strengthened its offer significantly in recent years, meaning we would give them the benefit of the doubt for now”.

While some see the move as unsurprising, Neil Saunders, an analyst at Datamonitor’s retail arm Verdict, believes M&S will face challenges in developing its Simply Food footprint in the highly consolidated Paris area, where the two leading retailers – Carrefour and Casino hold an approximately 80% share of the market.

Saunders said that M&S will face difficulties in finding suitable locations for its Simply Food outlets. “A lot of the prime locations will have been snapped up already, and I think they’ve got to be quite picky about where they actually locate,” said Saunders, questioning whether it will be able to find enough locations to make the foray viable.

He also said that M&S will have to “learn from its mistakes” from its earlier stint in France, and ensure that it provides an offer that is differentiated and tailored to the customer’s needs.

“I think if it learns the lessons of last time, and differentiates itself to what the French consumer wants, and doesn’t just take the blueprint of a British store and puts it straight into Paris. And the same with the website of course,” he said.

He added that there is a lot more “granularity in its offer” now, with M&S’s different sub-brands, offers and types of stores, so there “is potential for them to do much better than last time”.

Saunders said the retailer may need to change its food offer to attract French consumers, suggesting that partially prepared meals would be something important to consider, as would setting up cafe spaces in its stores, with microwaves and coffee facilities, much in the same way that some other French retailers already do.

“They need to think more creatively about what they offer in stores as well as what the competition have already done,” says Saunders. “I think they have to come up with something that’s better than what’s already there if they want to get consumers to switch.”

Shares in the retailer were up 0.45% today at 13:08 to 338.2p a share.

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