111SAM CW2: Marks & Spencer's Response to COVID-19 Pandemic

This report provides a detailed analysis of the impact of the COVID-19 pandemic on Marks & Spencer (M&S), a prominent retailer in the UK. It begins with an introduction highlighting the economic challenges faced by retailers during the pandemic, particularly in the fashion and apparel industry. The report then delves into internal factors affecting M&S, including a SWOT analysis that examines the company's strengths (brand value, product variety), weaknesses (manual working, stock control), opportunities (internet technology, health trends), and threats (strong competition). The analysis explores the financial impact of COVID-19 on M&S, including revenue declines and management's strategic changes to address the crisis, such as the "never same again" turnaround plan, cost-cutting measures, and a shift towards digital operations. The report further examines M&S's leadership approach, focusing on employee support, communication strategies, and staff motivation. It also discusses the importance of supporting employees and providing them with a safe working environment, including cleanliness, hygiene, and online payment options. The report concludes by emphasizing the need for retailers to adapt to the changing environment and maintain employee morale.

Module Title: Internal
Management
Principles
Assignment
Number and
Weighting
CW2
50% of module mark
Module Code: 111SAM Assignment Title Coursework
Release Date: 30/05/2020 Module Leader Ala’a Azzam / Mary Crossan
Submission
Date/Time:
7th August 2020
18:00:00
Submission
Time and Place:
Submission through
Turnitin ONLY
1 | P a g e

TABLE OF CONTENTS
Introduction..........................................................................................3
Internal factors Affecting Organisations..............................................3
SWOT Analysis.................................................................................3
Impact of Covid-19 on business...........................................................5
Managing Change.................................................................................5
Leadership approach.............................................................................6
Impact on staff motivation and support services..................................7
Conclusion............................................................................................7
References............................................................................................8
2 | P a g e

Introduction
Many countries around the globe are still under lockdown norms due to widespread covid-10
pandemic. Amidst the strict measures taken to curb the spread of coronavirus, the retailers are
looking for new ways to cope with the situation (Gourinchas 2020).
In the United Kingdom alone, almost one-fifth of the business in the private sector
organizations have succumbed to the economic shock bought on by the pandemic enforced
lockdown. Obtaining the exact figure of the economic losses and business which have a
complete shutdown is difficult as many companies are operating from home or temporarily
closed.
In the domain of private sector organizations, Marks & Spencer is one of the renowned
brands in the fashion and apparel industry operating in the U.K (Marks & Spencer, 2020).
Marks & Spencer’s was already facing a meltdown in financial gains ever since early 2000’s
and the pandemic hot has further declined its position. In this report, we will focus on the
decrease that M& S has faced due to the pandemic. The report will explore the decision
making that the company plans to undertake to tackle financial crises in these modern times.
Internal factors Affecting Organisations
SWOT Analysis
The SWOT analysis here aims to examine the strengths, weaknesses, opportunities, and
threats associated with M&S. By analyzing these, M& S needs to revise its strategies to
overcome the impact of the external impact, which is the pandemic effects on the industry
(FATRICIA 2016).
Strengths
Marks and Spencer possess many strengths, especially of its brand value and wide range of
products that it has to offer, which will help the business survive the Covid-impact.
Brand recognition
Marks & Spencer holds a high brand value, and it is a giant in the U.K high street fashion
industry. The brand value and awareness attract clients towards it.
Variety of Products offerings
Marks & Spencer had started selling vegetables and fruits over 40 years ago and relied on
good relations with the farmers to increase their variety of products. The switch to offering
groceries apart from fashion apparel is a great advantage to M&S, especially in times of
Covid-19, where people are more inclined towards purchasing groceries than apparel. It can
be said that groceries have been a huge savior for M&S during the pandemic.
3 | P a g e

Weaknesses
Manual working increases costs
M & S has a reputation that follows old traditional techniques and does not focus on new
technologies. Instead of automated material handling, M&S relies heavily on manual
systems. It requires more labor and hence more costs for trading. It is a major point that M&S
needs to consider. During the Covid-19 pandemic, the least cost of operations, is what the
companies aim to survive in the declining market conditions.
Stock Control
Many consumers complain of home delivery issues with e-commerce shopping on M&S.
Customers are informed that the things they ordered out of stock on the day of delivery. It
suffers an unbalance in stock updating. This can be the biggest reason to lose its consumer
base in Covid times, where consumers heavily depend on Information technology and e-
commerce deliveries.
Opportunities
Internet Technology
The internet is fast developing, and the pandemic has made the world depend heavily on
technology. Buying products online has become a new trend. Hence, M&S needs to adopt
new technology and upgrade their e-commerce for creating a more massive reach and
attraction to the consumers.
Nutritious eating habits
Covid-19 pandemic has bought an immense need to be fit and healthy. It requires individuals
to maintain a good quality lifestyle and healthy habits to boost immunity. M&S can do a
good job by grabbing this opportunity by providing organic and immunity-boosting food
online to its consumers. It is one advantage that M&S can take and add to its growth.
Threats
Though M&S has its strengths and weaknesses and various opportunities, it still has some
threats.
Strong competition
It is one of the biggest threats lurking at M&S. For instance, in the grocery market, Tesco,
Safeway, Sainsbury, and Asda provide high-quality and value-based products to consumers.
Hence, competing with these brands is a huge task in itself for a brand like M&S, which is
more popular for apparel.
4 | P a g e

Impact of Covid-19 on business
When the covid-19 outbreak spread to the U.K, M&S had already anticipated a decline of
70% in the clothing domain and food business to drop by 20%. Surprisingly the food business
dropped only by 3%. Declines have been modest so far for the company. The reason behind it
being the efforts to drive sales through an online portal, which were opened during the
lockdown (Our Year in Review 2020).
Figure: Revenue Chart for M&S (2016-2020)
Source (MARKS AND SPENCER GROUP PLC UPDATE ON TRADING AND IMPACT
OF COVID-19, 2020)
Managing Change
To tackle the effect of lockdown, M&s adopted various management and operations changes
because of the declining revenues (Hayes 2018). The company has launched the 'never same
again' turnaround plan where thousands of employees have been laid off in the United
Kingdom.
To cut down their overhead costs and declining revenues given the covid-19 impact, M&S
announced to cut down 500 roles in the head office in London, and the store management
areas. The management has explained that the plan to do so is to overcome the shocks of the
crisis, which will endure to the next few years. With more focus on digitization, M&S plans
to adopt an inline system and reduce staff at the stores forever. With the plans to reinvent
itself in the wake of the virus, M&S decides to implement the turnaround plan.
Financial Analysis and management
5 | P a g e

The Directors and the entire team of M&S have thoroughly taken into account the impact of
The Covid-19 Pandemic, to forecast its business for the current financial year as well as the
future after the current year. The factors to be considered for forecasting are changing as the
days pass, and more aspects are considered. Trading at least 12 months in Clothing Domestic
and International market will be impacted negatively majorly. However, there is hope and
evidence to support that as the pandemic weakens, the future looks bright.
However, all the possible measures are being taken to secure the future of the stakeholders,
i.e., Shareholders, Employees, Customers, suppliers, etc. of this company.
There is a considerable decline in sales, which was not taken into account pre this pandemic.
M$S had to reduce the costs, by reducing the salaries of employees, closing a few outlets and
also can orders to our suppliers so that the company could stay afloat.
However, they are trying to shift many employees to our Food Business Unit's to support
them as much as possible.
The Profit before Taxes for the whole group of Marks and Spencer has taken a huge hit, as
this pandemic was not forecasted, and our sales came down to almost negligible levels.
They expect the food business to trade profitably throughout. They have benefited on a small
scale at this stage as customers stock up, but our heavy bias to chilled and fresh means we are
not seeing the forward buying uplift experienced by the major grocers. However, the
significant shift to eating at home should continue to benefit sales in the months ahead.
Although there will undoubtedly be supply interruptions, they do not expect these to be
prolonged or financially material.
Last year M&S had paid £180m in Great Britain with Business Rates Tax. The government's
decision to extend the business rates holiday to retail businesses is of great support.
For the Finincial Year 2020/21, they had committed a capital spend of £400m, but now it is
significantly reduced to £80m or less. They are stopping all non-essential expenditure and
also reducing the marketing expenditure by a substantial amount. The Directors have decided
against paying a final dividend, which was anticipated to be around £130m.
The group currently has liquidity of £1.34bn. This comprises a £1.1bn Credit Facility
(Undrawn), which has an expiry of April 2023, £50m Uncommitted Facilities, and a cash
balance of £185m. Despite Uncertain Future, the M&S Group of Companies wants to get
through this period in a positive position (MARKS AND SPENCER GROUP PLC UPDATE
ON TRADING AND IMPACT OF COVID-19, 2020).
Food Business is going strong, which is currently become the backbone of this company.
The Planning and execution for Online Clothing are going strong with the Joint Venture with
Ocado Retail. If things go as planned and the pandemic weakens sooner rather than later, the
Long Term Future is looking good, despite the short term not being so good.
Leadership approach
However, M&S has taken the initiative to help its affected employees by supporting them to
access the including Universal Credit and the Jobseekers' Allowance facilities in association
with the British Government. The universal credit is a payment that the employees are given
to suffice their living costs.
With over 75,000 employees laid off during the covid-19 pandemic in the U.K, M&S utilizes
traditional cost-cutting techniques and technology to engage its staff (Coronavirus impact |
Marks & Spencer to shed 950 jobs in latest blow to UK retail sector, 2020).
6 | P a g e

For instance, through the use of social media networking, M&S has been sending the
employees messages congratulating them with motivational quotes for their hard work.
Throughout lockdown, M&S held various meetings to engage their employees and give
motivational talks.
Moreover, the retailer also included an employee of the month award on its internal
communication page. It was aimed at recognizing the employees' efforts and acknowledged
them for their commitment to the company (Wakabi 2016).
Impact on staff motivation and support services
As covid-19 has impacted M&S, and other private sector organizations as well, efforts to
maintain the employee’s morale is vital. The emotional and physical toll that the pandemic
has on the staff should be tackled by the managers meticulously (Lateef 2020). Some
effective ways that M&S could adopt are:
Keep the team connected-
M&S has been keeping its team connected with regular meetings through the digital medium.
Moreover, M&S has also been providing motivational messages to the employees to boost
their morale. By communicating and keeping the entire team in loop it keeps them all
motivated and connected. Moreover, by doing so the company has better communication
regarding all operations within the orgnsations.
Support services
As the employees have been laid off in huge numbers, store management falls on a small
number of people. Providing them support solutions like self-scan check-outs at their stores
can be a great boost (Sycheva et al. 2019).
Cleanliness and hygiene
Covid- 19 has bought in more importance and emphasis on hygiene and cleanliness. Hence,
M&S needs a trip to ensure its employees that they are working in a safe environment and
ensure access to all necessities like sanitizers at every station in their stores. The employees
should be well-trained to understand the requirements to be safe in the pandemic. They
should be well-informed about safety precautions and maintain social distancing at all times.
Online payments should be encouraged for minimal contact with consumers for the safety of
employees as well. Moreover, if some work can be done from home, they should be provided
the provision (Roggeveen and Sethuraman 2020).
Care of employees at home
Maintain the morale of the employees is essential also for those quarantined at home. Initially
supporting these employees during the hardship can largely pay off. In doing so it will
motivate and keep employees satisfied and their morale boosted (Mattersah 2019).
Conclusion
In a nutshell, we can conclude that retailers need to adapt to the ‘new normal.’ The challenges
for organizations to keep their operations smooth and staff management has grown
immensely. Hence, retailers need to adopt new strategies and adopt new technology like
7 | P a g e

contactless transactions, e-commerce, improving services, and introducing self-service
options to offer seamless shipping experiences with safety regulations and cope up with the
pandemic.
References
FATRICIA, R.S., 2016. SWOT ANALYSIS OF SAINSBURY’S SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 5(1).
Gourinchas, P.O., 2020. Flattening the pandemic and recession curves. Mitigating the
COVID Economic Crisis: Act Fast and Do Whatever, 31.
Hayes, J., 2018. The theory and practice of change management. Palgrave.
Lateef, F., 2020. Face to face with coronavirus disease 19: Maintaining motivation,
psychological safety, and wellness. Journal of Emergencies, Trauma, and Shock, 13(2),
p.116.
MARKS AND SPENCER GROUP PLC UPDATE ON TRADING AND IMPACT OF
COVID-19. 2020. MARKS AND SPENCER GROUP PLC UPDATE ON TRADING AND
IMPACT OF COVID-19. [online] Available at:
<https://corporate.marksandspencer.com/media/press-releases/5e0f046f7880b21924350282/
marks-and-spencer-group-plc-update-on-trading-and-impact-of-covid-19> [Accessed 1
August 2020].
Marksandspencer.com. 2020. Welcome To Marks & Spencer. [online] Available at:
<https://www.marksandspencer.com/> [Accessed 1 August 2020].
Mattersah, M., 2019. The Relationship Between High-Performance Work System (HPWS)
Practices, Motivation and Employee Performance among Support Staff at Public Universities
in Sabah. Malaysian Journal of Business and Economics (MJBE), pp.19-19.
Moneycontrol. 2020. Coronavirus Impact | Marks & Spencer To Shed 950 Jobs In Latest
Blow To UK Retail Sector. [online] Available at:
<https://www.moneycontrol.com/news/world/coronavirus-impact-marks-spencer-to-shed-
950-jobs-in-latest-blow-to-uk-retail-sector-5572761.html> [Accessed 1 August 2020].
Our Year in Review 2020. 2020. Our Year In Review 2020. [online] Available at:
<https://corporate.marksandspencer.com/annualreport> [Accessed 1 August 2020].
Roggeveen, A.L. and Sethuraman, R., 2020. How the COVID Pandemic May Change the
World of Retailing. Journal of Retailing.
Sycheva, I.N., Voronkova, O.Y., Kovaleva, I.V., Kuzina, A.F., Bannikov, S.A. and Titova,
S.V., 2019. Motivation in personnel management of a trading enterprise.
Wakabi, B.M., 2016. Leadership style and staff retention in organizations. International
Journal of Science and Research, 5(1), pp.412-416.
8 | P a g e

9 | P a g e