Analysis of UK Fashion Retail: Case Study of Marks & Spencer

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BUSINESS RETAIL
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Executive Summary
This report has focused on the fashion retail sector of UK and its current issues. It has chosen
M&S to provide real life examples. The analytical tools like PESTEL and Porter’s Five Forces
have been used here to identify the current issues of the market which have been faced by the
company. Other than that, proper recommendations have also been suggested against each of the
identified problems.
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Table of Contents
Introduction:....................................................................................................................................2
Introduction to the Company Mark & Spencer:..............................................................................2
Identifying the Key Relevant Changes in UK Fashion Clothing Market:.......................................3
Relevant Changes within the Micro Environment:.........................................................................5
Suggesting and discussing Strategies and Tactics that could be used by the Retailer to respond to
the major Changes Occurring in the Fashion Clothing Market.......................................................7
Recommendations:..........................................................................................................................8
Conclusion:......................................................................................................................................8
References:......................................................................................................................................9
Introduction:
The modern retail industry in UK is facing tremendous pressure and high competition the
retailers have identified them in such an uncomfortable situation where they are being squeezed
between rising costs and weakening demands. Especially, the e-commerce businesses are taking
their strong position day by day. At the end of the previous year, the e-commerce had 20% more
sale than other retail stores (Retail Trends 2019). However, the fashion industry in UK has a
significant influence in the economy of the country. A recent record has noted that this industry
has the value of 29 billion pounds. The awareness among the customers and the growing
population are the main reasons of it. This report has focused on the current issues and their
solutions for this industry. Marks & Spencer has been chosen here to provide some real life
examples of the situation to get a better understanding.
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Introduction to the Company Mark & Spencer:
Mark & Spencer is UK’s leading retailer with a global recognition. Nearly 21 million people
visit Marks & Spencer every week and they deal with products which are high in quality. The
store is mainly famous for its stylish clothing and home products and foods. There are nearly
979 stores of Marks & Spencer (M&S) operating in UK only. M&S was formed by Michael
Marks in 1884 in Leeds. He was a Polish refugee and he opened a stall named Marks & Spencer
with a slogan “don’t ask the price, it’s a penny”. Current revenue of the company is
£10,698.2 million. Their operating income is £670.6 million and the net income is
£29.1 million. Currently more than 80,787 employees are working with them (Welcome to
Marks & Spencer. 2019).
Figure 1: Logo of Marks & Spencer
(Source: Welcome to Marks & Spencer. 2019)
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Identifying the Key Relevant Changes in UK Fashion Clothing Market:
Figure 2: PESTLE Analysis Framework
(Source: et al. 2018)
For identifying the changes in UK fashion industry, the author has used PESTEL analysis as it
would cover all the necessary factors to analyse the issues of the country.
Political:
European Commission’s free trade agreements have made the product import easier and reduce
the sourcing cost and it actually helps M&S to increase their sell. As per a current report, M&S is
the first retailer to opt for fair trade route. According to this policy, now their products have less
are opted for recycled packaging. Having a high cost structure of the company, it takes more
time to be adopted by a new market. If they fail to do so these companies can be fined or can be
forced to shut down. It was alleged that M&S ignored all request to repair the door. The trail is
still going on (Temple & Grasso, 2018).
Economic:
Brexit have significance impact on the business due to the currency impact on price rise. M&S
have been hit by this because now due to economical uncertainly people do not have much cash
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PESTLE
Political Economic Social Technologies Legal factors Environmental

to spend on luxury items of food and clothing. M&S have closed down few stores and job cuts
due to this recession. Recently they have introduced 20% discount on for Christmas and also
20% discount on wine and Champagne to attract more customers and increase in sells and to be
in competition with its competitors (Thompson & McLarney, 2017).
Social:
The dependency on internet has been increased in last few years, so the CEO Stuart Rose took
the decision to sell product online to reach maximum customers and also to keep up with the
competitive market. Currently the cheap clothing industry have increased due to the economic
situation of the country so M&S have also took steps to keep up with the latest trends and opt for
less expensive clothing range to keep their customer interested (Virtala-Raskila, 2018).
Technology:
Technological advancement is the most important factor for any organization to continue their
business and achieve desired target. As stated in Woods & Linsley (2017), companies needs to
manage their brands and should continuously make their consumer updated about their products.
The brands most of the time spend huge amount of money to create brand awareness loyalty.
M&S is also doing the same by appointing celebrity icon Myleen Class as their brand face and
regularly appears on advertisements and also on their website modeling. Also M&S website is
bright in color, easy to use and constantly updated with new products. But high rate of returned
products have taken away loyal customers from M&S.
Legal:
M&S always keep them updated with the new laws and regulations and also took care to update
their legal protection as they already have an issue regarding Health and safety.
Environment:
For every industry or business environmental factors are very important. What materials to use
and how to manufacture keeping in mind the environmental factors are very important in today’s
scenario. M&S have announced a 100 point 5 year plan to become a carbon neutral, ethical
trading, health promoting and sustainable sourcing business (Virtala-Raskila, 2018).
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Relevant Changes within the Micro Environment:
M&S is a leading retail chain in UK with a customer base of 32 million and total 1433 stores
worldwide including 979 in UK. The business environment of any company is always influenced
by various macro and micro environments and these factors are responsible for impacting the
overall strengths and weaknesses of that company. Thus, it can safely be said that the overall
performance and effectiveness of the organization like M&S is dependent on that macro and
micro environment (Anik, 2018). Different types of policies have adopted and various codes of
conduct have been applied by M&S to fulfill this internal and external requirement. Whereas
macro environment mainly deals with external factors on which the decisions are taken for any
organization and these factors can actually influence the process of decision making. M&S is
operating for a time and many scenarios have changed during this time. The organization also
has faced many challenges like dip in sales and loss of customer confidence, but they have taken
serious measures to build and maintain the relationship with their vendors and customers. Below
is the PESTLE analysis of Marks & Spencer on external or macro environment.
Figure 3: Five Force Analysis (Porters Five Force)
(Source: Tete, 2018)
Any business which is going on for a long time, the first threat faced by them is the new entrants.
The big companies like M&S with their high capital and customer loyalty can put a barrier to the
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new entrant but emergence of low cost clothing can pose a significant threat to M&S business.
Low price clothing sector has a huge opportunity and competitors like ASDA, TOP SHOP may
also consider introducing low cost product. ASDA has already become Britain’s second largest
retailer. As per data release by Financial Times till July 6 ASDA had 11.1% clothing by volume
of goods sold while M&S sold 10.9% (Marks & Spencer revenue 2010-2018). Thus, here is a
serious cause of concert for M&S. There are also threats of substitute products which is copying
the existing product at a low price and sifting customer preference. For example Tesco, ASDA,
Sainsbury which took out the traditional food market of M&S. Bargaining powers of buyers and
suppliers are also important aspects. Price sensitivity, fashionable preference of customers
affects the retailer. Customer oriented approach helped competitor of M&s to build strong
customer relation while M&S gave importance only to their brand name and not customer
preference. Previously M&S suppliers were only British but after 1990 outsource globally which
resulted in the decline of bargaining power of British (Marks & Spencer revenue 2010-2018).
Figure 4: Revenue of M&S Worldwide from 2010 to 2018 (in million GBP)
(Source: Marks & Spencer revenue 2010-2018)
Suggesting and discussing Strategies and Tactics that could be used by the Retailer to
respond to the major Changes Occurring in the Fashion Clothing Market
Economic factor:
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The high rate of inflation affects the price of products of any business because it would impact
the purchasing power of the customer of that business. So in spite of high inflation rate product
price of M&S are quite high. Various initiatives have taken by M&S to strength the clothing arm
of the business like introducing sub brands (Autograph and Per Una), launching websites but still
desirable outcome has not been received and sales graph have been falling for four years in a row
and worst quarter was second quarter of 2016 M&S needs to do an economic analysis with taken
into account the long and short term goal, inflation, GDP etc with a proper marketing and
strategic plan to counter all these issues to ensure sustainability. M&S needs to focus more on
younger generation as they spends more on fashion and clothing (Virtala-Raskila, 2018).
Social factor:
M&S needs to modify its design and clothing line according to the customer demand, age and
environmental concern. They should set up and distribute their clothing line according to the
demography, age and taste and spending capacity. The shop located in London should have
Limited Collection or Autograph range.
Legal factor:
BBC news reported that M&S was failed to protect its employee and customer from asbestos and
was fined 1 Million GBP. Judge claimed that M&S needs to pay more attention to the safety and
security rather than making profit. So M&S needs to be more active in abide by laws (Temple &
Grasso, 2018).
Technological factor:
Implementing digital transformation was very late for M&S as they started their retail website
only after 2014 which were really late compared to its competitors. There was also privacy
breach happened on its website during Members club and card scheme and it led to temporary
shutdown of the website. M&S should take more action in their technological up gradation and
also should take precautionary action so that the customer’s sensitive data is not leaked.
Political factor:
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The economic and political uncertainly due to Brexit have also posted a strong impact on the
revenue of M&S as there is a decrease in the buying power of pound and people have less money
to indulge in any luxurious item . In addition to that work visas and resident permit is needed for
citizens working abroad and EU workers employed in UK. An estimated total of 8% of
workforce M&S UK is from EU workers. Also increase in political and economic tension in the
international franchise country such as Middle East, Russia has a big threat in operations in those
areas. Also due to the large footfall the company’s store are often target of terrorism attacks.
M&S needs to take strong safety measures and also proper implementation of the same
(Thompson & McLarney, 2017).
Recommendations:
After discussing the above factors it can be said that M&S needs to take few steps to ensure
smooth running of their business as well as earning good profit.
 M&S needs to do a proper economic analysis and strategic marketing plan to ensure all
economic factors can be taken care of.
 Modification and proper designing of clothing line according to age, demography.
 Technological up gradation should be taken into consideration.
 Abide by the rules and regulation of the state for proper functioning.
 Political factors should be taken into consideration while promoting business.
Conclusion:
M&S is very highly successful organization and has been providing high quality services for a
long time. Though in this long run it has to compete with more fashionable and cheaper clothing
range but it has always given a very tough competition to its competitors. The greatest strength
of M&S is its customer loyalty and brand name. But to make it more effective and successful
business structures needs to be re organized and marketing mix needs to be changed and
management needs to be streamlined.
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References:
Anik, S. M. (2018). Prospects of RMG industry and processes involved in contrast of Arafat
Fashion.
Gheibi, M., Karrabi, M., Mohammadi, A., & Dadvar, A. (2018). Controlling air pollution in a
city: A perspective from SOAR‐PESTLE analysis. Integrated environmental assessment and
management, 14(4), 480-488.
Marks & Spencer revenue 2010-2018 | Statistic. (2019). Retrieved from
https://www.statista.com/statistics/413349/group-revenue-marks-and-spencer-mands/
Retail Trends 2019 | Deloitte UK. (2019). Retrieved from
https://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends.html
Temple, L., & Grasso, M. T. (2018). Austerity, Politics, and Partisanship in the UK. In Citizens
and the Crisis (pp. 29-60). Palgrave Macmillan, Cham.
Tete, A. S. (2018). Study on Product Development, Dropout Analysis and Recovery of Styles.
NIFT.
Thompson, J., & McLarney, C. (2017). What effects will the strategy changes undertaken by
next Plc have on themselves and their competition in the UK Clothing Retail Market?. Journal of
Commerce and Management Thought, 8(2), 234.
Virtala-Raskila, I. (2018). Feasibility Analysis for a New Maternity and Nursing Wear Business
in the Finnish Market Area, Case: Start-up X.
Welcome to Marks & Spencer. (2019). Retrieved from https://www.marksandspencer.com/
Woods, M., & Linsley, P. (2017). Future research in accounting and risk. The Routledge
Companion to Accounting and Risk, 296.
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