By Maureen Hinton
Marks & Spencer has dominated the UK clothing market for decades, but its lead as No. 1 is perilously close to being lost to Primark this year. The closure of yet more stores will hasten the decline unless it can shift the lost sales to its online channel and transfer to its other stores. But it also has to start growing total nonfood sales to stem the overall decline.
M&S has been losing share for more than two decades. In 1997 it achieved its peak clothing market share of 13.5% in the UK. Its position seemed unassailable, but since then its market share has been on a declining trend.
In 2018, GlobalData forecasts its shares will be 7.6% in clothing—virtually halving in two decades. This is despite it opening more full line (clothing, home, and food) department stores and adding more space during the period. It is now considering closing at least 100 stores (40 more than first announced) and this will reduce its share yet further and faster if it cannot convert these stores’ lost sales into online sales, transfer them to other stores, and importantly start to grow its nonfood business.
Over the past decade, M&S has lost 2.2% market share as it fights to find a relevant offer for the modern consumer. Out of the current Top 20 UK retailers, only the Arcadia Group has lost more share (-3.1%) and it sold the BHS chain during this period.
M&S certainly does not need to have so much space and so many stores to deliver its current nonfood revenue (£3.8 billion in March 2017 from 303 stores and 11.3 million sq. ft. of selling space). John Lewis’ 49 stores generate virtually the same revenue with half the space plus its online business.
In order to make its space more productive, M&S has to produce a compelling offer showcased in an inspiring environment. Closing stores will make its space more productive and help to improve profitability, but it still has not solved its fundamental problem—top line growth.
Maureen Hinton is group retail research director at research firm GlobalData.