Marks and Spencer chief Sir Stuart Rose has insisted innovation remains vital to maintaining sales at the UK retailer’s food business.
The M&S executive chairman cited continued innovation as key for retailers to get through the recession, as well as, at the same time, keeping business costs down.
Sir Stuart said retailers need to “stick to your core values” as well as “do the usual things – keep your costs under control, keep your inventories under control” – but also invest in innovation.
“Keep innovating. Keep putting development in. Keep giving the customers a treat,” he told the Retail Week Conference 2009 in London yesterday (19 March).
“In our case it’s essential. We know that there is a direct correlation in our food business between the rate of innovation and the rate of sales. Less innovation, less ales. It’s a nil-sum game taking that cost out.”
The M&S boss acknowledged that taking cost of the business out was essential during the recession but insisted businesses had to be sure cost-cuts were in the right areas.
“Businesses have to be robust and grit their teeth. They have to make sure that they don’t cut an artery, cutting fat out is absolutely the right thing to do but cutting an artery is a dangerous thing to do,” he said.
Commenting on the current downturn, Sir Stuart said that the unique thing about the current recession was the speed in which it happened.
However, he said this could turn “from a glass half-empty to a glass half-full” should the eventual recovery be so quick.
He also said that UK government cuts in interest and VAT rates – aimed at boosting liquidity – had meant consumers had more disposable income but were not confident enough to spend amid falling equity prices and fears about jobs.
“We all talk about price but, at the end of the day, customers are very canny at the moment. They go deal hunting and they can see value for money,” he said.
However, he could not pinpoint with any certainty when a recovery might start, saying: “We have lots of leading executives on our board but nobody really knows where we’re headed at the moment.”