In the mid 1880’s Michael Marks established a small penny bazaar, this was to be the beginning of a highly anticipated British success story, however in the midst of there success was an unfortunate decline. Tom Spencer formed a partnership with Marks to create the company Marks and Spencer. The first store was opened in 1904 in Cross Arcade in Leeds.
In the late 1990’s Marks and Spencer ultimately hit maturity as a company in the boom of 1998 where they reached a pre-tax profit of over £1 billion, it was the first British retailer to do this. During this period, Richard Greenbury was Chief Executive and Chairman of the company. The success was based upon a few ideas that meant M&S offered high quality garments for a good price. However this meant it was never the cheapest in their market sector. They adopted the idea of buying directly from the manufacturer instead of going through a wholesaler. This led to it entering into long-term partnerships with British manufacturers, which required them to commit themselves to solely producing M&S products. You could not get clothes like M&S anywhere else because of this. This gave a direct approach and feel to the customer. (palgarve) * Number of UK stores: 1985 (before appointment) - 283; 1998 - 300 * Sales: 1985 - £3,213,000,000; 1998 - £8,343,300,000
* Pre-tax profits: 1985 - £303,400,000, 1998 - £1,168,000,000 (wikipedia) These statistics show the completed financial years 1988-1998 on Greenbury’s tenure as Chief Executive. However, the following year in 1999 their profit more than halved, showing a dramatic decrease in turnover and profit. M&S failed to adapt to the fast change of fashion and continued as they were, they did not feel as though they needed to innovate their ideas. This obviously led them into a dramatic decline, which then saw the absence of Greenbury and was quickly overseen by Luc Vandeveide. M&S ultimately needed to reinvent themselves and in doing so needed to create a wider marketing and advertising strategy that could help create them to be a rival competition to their current competitors.
It was as if M&S were losing direction, due to their financial state, they were starting to lose profit and turnover. The costs of using British manufacturers rose, so they turned to overseas manufacturing, as the costs were cheaper, however this showed the decline of quality in their products and what they usually represented. Many of the younger generation thought that M&S was losing touch with the styling and saw their clothes as out-dated and frumpy. Furthermore, their store layouts and displays lacked imagination and seemed dull and less exciting in comparison to their other competitors. They failed to see that the high street had changed into a very fast changing fashion and used lower, affordable prices like H&M, Next and Topshop.
Luc Vandeveide took over as Chairman and Chief Executive and was undoubtedly under a lot of pressure to quickly turn the company around. ‘’The blame clearly lies with the people who were running this company when it was going well and who did not anticipate the changes in the marketplace and in consumer behaviour when they had the money, the resources and the talent to do something about it’’ Luc Vandevelde. (BBC) Major factors had to be changed in order to get M&S back as the top UK retailer. Stores were closed on the continent and in the US and many jobs were cut. The focus was to remain solely to the UK as this is were the brand originated from. The UK is the heart of the company and it was vital they got it right at the home base in...