Food has been the strong suit for Marks and Spencer in the last 12 months. Ahead of its annual results next week, the upmarket UK retailer has launched a range of “everyday” products and, Dean Best writes, becomes the latest grocer to emphasise its value-for-money credentials.
For upmarket UK retailer Marks and Spencer, the last 12 months has been a strong year for its food business.
Its series of trading updates have shown food to be the side of the retailer that has performed solidly while its clothing operations have struggled. After M&S reported its fourth-quarter sales in April, Conlumino analyst Neil Saunders said food was “the undoubted star of the show” after the retailer posted an increase in underlying sales from its grocery aisles.
Innovation, seasonal campaigns and new-look stores that include deli and bakery counters have been cited as ways in which M&S can cater to UK shoppers that are, even if just every now and then, willing to trade up.
However, an announcement last Friday underlined M&S, seen as an expensive place to buy food, understands emphasising other parts of the value equation remains vital. Last week, the retailer launched Simply M&S, a range of 800 “everyday” products that will be “competitively priced” to try to encourage consumers to do more of their shop at its stores.
The move is timely. Rival Waitrose has tried to highlight its value credentials in recent weeks with the extension of a scheme that compares its prices with Tesco. And, over at Tesco, the UK’s largest retailer has relaunched its entry-level own-label line.
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Now, the average punter is unlikely to do a full grocery shop at M&S. In any case, its estate does not have a huge number of stores equipped with a range that could fill a weekly trolley. However, by launching its everyday range, the retailer is hoping its shoppers will add a few more items to their M&S baskets instead of going elsewhere. Or, perhaps, that the occasional M&S shopper looking for a treat will also top up their basket with staple products they usually buy at other retailers.
Sainsbury’s, which last week announced annual profits that beat City forecasts, is a successful example of a UK food retailer with a relatively pricey image being able to, with a number of initiatives, demonstrate that it, too, can offer value for money. It is unlikely M&S will match that success in absolute terms but, in relative terms, the rationale behind its launch of Simply is the same.
M&S is scheduled to report its annual results next Tuesday. Reports over the weekend said chief executive Marc Bolland is likely to announce his plan to triple M&S’s sales in three years was too ambitious. A tough clothing sector is understood to have held back the retailer but its food halls, even in a tough economic climate, are holding up well.