What M&S has learnt from the pandemic

Laura Jacobson
Head of Insight - RA UK
@RetailAnalysis

Date : 04 June 2020

In its latest annual report M&S shares further thinking on coronavirus, its impact on the business including sharpening focus on priorities.

M&S Chairman Archie Norman hails 2020/21 as a "lost year"

In terms of results, Norman highlights the challenges of depressed demand and trading limitations amid social distancing, forecast to hit its clothing and home business much more severely than its food operations. At their lowest point, clothing sales dropped to just 16% of theilevel in the same period the previous year.

M&S anticipates the crisis to impact sales and stock flow for at least 12 months. To mitigate this, the business has taken actions to reduce costs and stabilise cash flow to the sum of £1bn.

However, the impact on its food division diverges from clothing and home. Following a significant dip in trading in Q1 and an improving picture in Q2, the retailer is keeping its sales assumptions level for Q3 and Q4. 

In the medium term, M&S aims to double the size of its food business. Its online ambitions and improvements to supply chain play crucial roles, as does its focus on  boosting value perceptions and differentiating its offer.

M&S's three stage focus during the pandemic

1. Safety of colleagues and customers

2. Securing the business, cash flow and liquidity

3. Learn from the crisis and come out stronger, faster and more competitive

What M&S has learnt

How to be more agile

  • A smaller executive team has helped M&S make decisions faster and more efficiently
  • Staff redeployment and improvisation of routines has not had an adverse impact on service and trading standards
  • Use of technology has been vital - M&S's strategic partnership with Microsoft has been highly supportive

The "change of gear" will endure

  • Central support costs and headcount will be examined at all levels
  • Direct-to-frontline, tech-enabled communications will continue
  • Increased flexibility in working patterns and management structures, as well as more multi-tasking will continue
  • Digital is being consolidated under a single transformation team, bringing together data, online and technology

Transformation can be accelerated

  • Desire to "turbo charge" its plans to be an online winner, with its Ocado Retail JV poised for customer switch on in September
  • Capturing value from its food supply chain requires tackling long-standing issues in food distribution. This includes rolling out its Vangarde programme and addressing the contract and relationship with Gist
  • Store estate changes need to happen faster

Want to know more?

Catch up on M&S's full year results here