Market Analysis for Marks & Spencers

Topics: Retailing, Supply and demand, Marketing Pages: 12 (3405 words) Published: June 19, 2006
ⅠCompany Introduction & Background

Marks and Spencer is one of the UK's leading retailers. It has four operating divisions, UK retail, international retail, financial services and ventures. UK retail is further divided into women's wear, menswear, lingerie; children's wear, home, beauty and food. It is the largest clothing retailer in the UK by turnover.

Sir Richard Green Bury was the chairman and chief-executive of the British retailing giant Marks and Spencer from 1988 to 1999. During his tenure the company continued to grow strongly until it reached its peak in 1997 and 1998 when it was second most profitable retailer in the world after Wal-Mart.

The company began in 1884 when Russian Refugee Michael Marks opened a market stall in Kirk gate market, Leeds. In 1894, Marks met and formed a partnership with Tom Spencer. It grows from a market stall to a clothing store in the first year of the 20th century.

Marks and Spencer registered as private Ltd Company in 1903. In 1930, the flagship marble arch store was opened and in 1948, Marks and Spencer opened the first self-service store, in London's wood green.

With its middle priced items and 315 stores in 30 countries, M & S was sometimes viewed in the past as old-fashioned, not very consumer oriented and with unfocused areas in its outlets. At the same time the buying relations with the suppliers also proved to be unsuccessful. So it decided to exit its retail engagement from European countries like France and Germany and also from USA. And more concentrated only on Great Britain and the new efforts will prove to be successful.

ⅡUK Clothing Retail Industry

The UK remained the second biggest clothing market in the EU behind Germany. UK consumers are the biggest spenders per capita on clothing in the EU. While the import and export market increased over the years, local production fell rapidly by approximately 1 bn pounds. As a result of these figures it is obvious that the British fashion industry is highly dependent on other countries' textile.

A large number of British consumers have became more price sensitive under the slogan ‘look good-pay less' however some consumers are willing to buy higher priced and exclusive clothing. The number of millionaires in the UK increased by more than 80% between 2001(230000) and 2004(425000). This leads to luxury and strong brand awareness. Although the formal wear is more and more substituted by casual wear, the UK is still the country with highest market share of formal wear.

The UK retailing market is currently highly competitive. Due to high competition the prices of outerwear went down in the mid 90's. The major groups in UK clothing retailing are the mixed and departmental stores, designers clothing, discount stores and market stalls.

The biggest player of the market includes Arcadia Group and Next. Departments and variety stores also play a dominant role of which Marks and Spencer is the most important variety chain in the UK.

The UK economy has been among the strongest in Europe. Consumer confidence has been high as a result of low interest rates, low level of unemployment and strong increases in house prices. Growth in household expenditure was a driving force behind the UK's GDP growth. These positive economic data for the British explain to a large extent the fact that UK consumers' most favourite leisure time activity is shopping.

The main factor in buying decision of British consumers is disposable income which is continuously increased in recent years.

Ⅲ Is Market Dominance Possible?

Marks & Spencer is the leader in the sale of clothing in the UK with sales of £3.8bn, accounting for 49.5% of the UK retail turnover, but its share is slipping. In 2005, its market share for women ware fell by 0.6% to 10.4% and share for menswear declined by 0.5% to 9.7%. Base on the situation and characteristics in this industry, it is unlikely...

References: 9. Ian Dobbs, "Managerial Economics", Oxford University Press, 2000: P219
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