Despite facing challenges at home, Marks and Spencer is bent on European expansion. In 2011, it re-entered France; yesterday (17 April) the retailer’s new outlet in Amsterdam opened its doors. M&S said the move came as part of the group’s drive to expand in Benelux countries and – more broadly – to become a leading international and multi-channel retailer. Katy Askew reports.

Marks and Spencer is a company grappling with a number of domestic issues.

Sure, the UK retailer’s food business is performing well, with a like-for-like sales lift of 4% reported in its most recent quarterly update. In food, M&S has invested in innovation and carved out a niche for itself that distinguishes it from the cheaper supermarkets, which has helped it drive top-line growth in a sluggish market.

In sharp contrast stands the group’s higher margin clothing and home wares business. In its most recent fourth-quarter update, M&S revealed LFL sales were down 3.8%. This rounded off a poor year for M&S clothing sales, which have been hit by the downturn, cheap competition from the likes of Primark, execution and design issues and the erosion of its point of difference.

So, with some significant problems to contemplate at home – and given the poor macro-economic environment in Europe – it might seem strange M&S is investing in expansion overseas, especially on the Continent.

According to Conlumino analyst Neil Saunders, M&S’s management had little choice but to look overseas to find growth opportunities.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“M&S have realised that they need to look overseas in order to secure growth. It is clear that even if they do sort out their problems in the UK, they will struggle to grow market share significantly due to their maturity and the competitive nature of the market,” Saunders tells just-food.

In November 2011, M&S returned to France with a store in Paris a decade after quitting the market. It will open a further three Parisian stores this financial year. This week, it opened a store in Amsterdam and plans to open three Dutch outlets carrying food and non-food items over the next two years.

It has also entered into an agreement to open six Simply Food pilots at BP forecourts in “key locations” in Randstad. The new agreement – the first of its kind outside the UK – is part of M&S’s plans to open franchise M&S Simply Food stores in western Europe.

M&S launched a website in Belgium last autumn and the group plans to open a flagship store in Brussels in 2015. It is also developing its online capabilities in the Netherlands and Luxembourg, where it has launched a website to peddle its non-food wares.

All this sounds quite ambitious. But, will M&S succeed today where it failed ten years ago?

There are some factors in its favour. The company is investing heavily in developing a model that is more sensitive to local needs. As CEO Marc Bolland said when he attended the store opening in Amsterdam yesterday, the group is taking a more responsive approach to European development.

“We’re coming back in a new way because Holland is one of the most internet savvy countries in Europe. We are therefore launching our new website – – and a brand new e-Boutique as a first step towards rolling out a number of stores in the Netherlands,” the Dutchman said.

Perhaps it could be argued that Bolland’s understanding of his home market – and the other Benelux countries surrounding it – leaves the quintessentially British retailer better placed to expand in Europe. Previously, M&S had taken what worked in the UK and transplanted it to international markets. This time around, the firm seems better prepared to adapt its model to suit local needs.

The company also has a clear strategy for how it will expand online – both at home and abroad. Unlike the supermarket multiples in the UK and Europe, M&S has decided to focus its online expansion on non-food. This is a reflection of the higher margins and lower volumes on offer from non-food sales. Softer margins, more complex distribution needs (cold storage etc) and higher frequency-lower value purchase patterns mean that M&S would not be able to turn a quick profit in online foods sales and, as a result, the group has decided to steer clear and let the supermarkets battle it out.

Indeed, looking at Marks and Sparks’ cautious approach to moving food sales online Hargreanes Lansdown analyst Keith Bowman concludes: “The polarisation of the food market may be playing its part, with the mid-ground retailers losing out. Food is clearly higher volume but lower margin.”

However, he adds that the group’s “slow adoption of a material online presence is still a concern”.

A greater concern for Bowman is the troubled economic climate that Marks and Spencer is moving into. “The fortunes of Tesco – retreating from both Japan and now the US – provide a dose of caution to UK retailers venturing overseas,” Bowman tells just-food.

Marks and Spencer clearly has some big ambitions to expand internationally, where it sees long-term growth potential. However, as it looks to make these aspirations a reality it is coming up against the toughest global economic conditions known for a generation. And, as if that weren’t challenge enough, it is doing so while simultaneously dealing with significant difficulties in its core domestic business.