A rise in food sales was the silver lining in Marks and Spencer’s first-half results, which were characterised by falling profits driven by higher levels of promotional spend in general merchandise.
Speaking to journalists alongside the UK retailer’s first-half results, chief executive Marc Bolland pointed out how it has managed to maintain market share at a time when all of its supermarket competitors have been in a “race for space”.
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With market share at 3.6%, Bolland said: “If we can maintain market share we are doing very well”, highlighting how the retailer’s supermarket competitors have been recording 6-8% space growth annually.
Over the quarter, the retailer launched around 900 new lines, with some 200 products focusing on helping customers to do a “fuller shop” in store, as well as innovating in the healthy food segment with new products.
Speaking about the success of the retailer’s Dine In offers, he said that approximately 20m people have eaten a Dine In meal, and that Saturday nights have become the new Sunday lunch when people “celebrate with family”.
With the division booking a 10 basis point increase in gross margin, Bolland attributed the improvements to better management of promotions and waste as well as early benefits from new systems implementation.
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By GlobalDataThe retailer has made store staff accountable for specific areas of the store, a move, which Bolland says has seen early success. Staff are accountable for visual merchandising, product info, availability and stock rotation. He said that these moves contributed to improvements in gross margin because “waste went down”.
M&S shift away from branded products has continued, with the retailer to hit its target of 100-150 products by the end of the year.
Bolland said that M&S doesn’t want to copy the supermarkets by going into a price war, but emphasised that we are “very price competitive”, highlighting the fact that its own-label focus means that it doesn’t face as many direct comparisons as supermarkets with a brand-led offer.
Fresh bakery and deli counters which were launched in a couple of the test stores in October have been “well received”, said Bolland, with the counters offering a “halo effect on freshness”.
Bolland strongly denied that the retailer is looking at offering a full food online offer, saying that it is “not in the stars”, and that it is “not part of our plans”
Internationally, M&S has opened some eight stores in India and five in Shanghai, with 15-20 stores planned for India and eight more in the pipeline for Shanghai. In France, where it is set to launch a shop on the Champs-Élysées before Christmas, it recently launched a localised website, Bolland said the site has seen “tens of thousands of hits” and “we haven’t even launched the French store yet”.
A further four full-line stores are in the pipeline for Paris, with Bolland saying there is no rush as the company “only wants prime locations”.
Speaking about the economic environment, Bolland said he hopes inflation comes down next year. However, he emphasised that it is “catering for two worlds” and that it “will trade regardless” of what happens with the economy.
