Analyzing M&S: Retail Theory and Practice in the UK Clothing Industry

This report provides a strategic analysis of Marks & Spencer (M&S) within the UK retail clothing industry. It begins by defining retail and highlighting the growth of the UK clothing market, emphasizing the shift towards online platforms. The report then introduces M&S, detailing its history, market position, and recent performance, including store closures due to changing consumer behavior. A macro environment analysis examines political factors like Brexit and trade controls, economic factors such as inflation and exchange rates, social factors including demographic shifts and changing shopping habits, technological advancements like internet connectivity and artificial intelligence, environmental concerns related to climate change and recycling, and legal factors such as employment and health and safety laws. The micro environment analysis assesses the bargaining power of suppliers and buyers, as well as the rivalry among existing firms. The report concludes with strategic recommendations for M&S to adapt to these challenges and opportunities. Desklib offers a variety of resources, including solved assignments and past papers, for students.

RUNNING HEAD: RETAIL THEORY AND PRACTICE
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Retail Theory and Practice

Retail Theory and Practice
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Table of Contents
Introduction................................................................................................................................2
M&S...........................................................................................................................................2
Macro Environment...................................................................................................................2
Micro Environment....................................................................................................................4
Strategies....................................................................................................................................5
Retail theory...........................................................................................................................6
Recommendations......................................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................9
Appendix..................................................................................................................................10

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Introduction
Retail is the process of selling goods and services to customers for consumption rather than
for resale (Christopher, M., 2016). According to (Johnes, 2019), “retail is the sales of
products to consumers in relatively small quantities”. The clothing retailing industry in the
UK has been growing steadily as market value in 2019 was 69.6 billion Euros (Russell,2020).
There are several leading brands in the UK clothing industry that captured the market such as
New, Primark, Next, and M&S (Nash, 2019). The clothing retailing industry in the UK
moved towards e-tailing because 55% of sales shifted to online platforms in 2018 (Pantano
and Vannucci,2019). Due to that M&S was the biggest loser in 2017 as its sales dropped by
0.4 percent and its biggest competitor Next sales also dropped (Russell,2020). In upcoming
years sales through the online platform can reach $873 billion by 2023 (See appendix 1).
M&S
Marks & Spencer is a British multinational company and headquarters in London
(Marksandspencer, 2020). The company was founded by Thomas Spencer and Michael
Marks in 1884. Marks & Spencer offers high-quality home products, food products, and
clothing. The company is a leading player in the retail clothing industry and compete with
Next and H&M in terms of quality and design (Russell,2020). It was the first retailer to
make a £1 billion pre-tax profit in 1998 (Ancarani et.al, 2019). The company desire for low
prices and value and aim for development (Marksandspencer, 2020). The company’s profile
was raised because of its aggressive promotion strategies as the company featured many
famous stars this helped to raise the company’s profile in the UK market (Johnes, 2019).
The company introduced a campaign like “Leading Ladies” and featured figures like Annie
Lennox, Emma Thompson and Rita Ora (Jones and Comfort, 2019).

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Marks & Spencer's vision is to provide or offers quality, service, and value to its customers.
In the UK, the company has 300 stores with wide expansion plans; the company operates 289
stores in the UK, 267 in Canada and 11 in Europe (Johnes, 2019). Further, their distribution
channel includes 70 suppliers and with that, the company is able to manage its logistics and
distribution. In 2019, the company showed a profit of £10.4 billion and its sale of clothing
increased by 22% through an online platform (Nash, 2019). Due to the shift of customers to
online platform the company closed 14 stores and another 86 stores are under investigation
and will be closed by 2022 (Russell,2020). This happened because of decreasing customer
footfall and corporate sales.
Macro Environment
Political Factors
In terms of Brexit,. The decision of the UK government to leave the European Union
impacted the retail industry as the cost of production may increase because of an increase in
tariff rates. (Ancarani et.al, 2019). M&S operations also impacted by these political decisions
as the company need to change its strategies in order to reduce the cost of production as due
to increasing tariff it becomes costlier for M&S to import raw material from parts of Europe
(Johnes, 2019). Hence, firstly because of these political decisions cost of production for M&S
will increase.
In terms of trade control, the second factor that impacted the UK clothing industry and then
on M&S is trade control as the UK government changed trade policies such as increasing
taxation on cross border trade (Ancarani et.al, 2019). This reduced the import of goods and
raw material required by retailers in the clothing industry and due to that overall growth and
contribution of the industry lowered (Johnes, 2019). This impact on M&S operations as the

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company has presence all across the world and with changing trade regulation it will become
difficult for M&S to import on low prices and sell on higher prices as profit margin of the
form affected and this will hinder the growth and market share of the company (Cullinane
et.al,2019).
Economic Factors
In terms of inflation rate, this factor impact negatively on consumer spending (Obrien,
2019). As increasing the inflation rate in the UK reduce spending by consumers and this
direct impact on economic growth. An increase in the inflation rate reduces the purchasing
power of customers that impact on demand for M&S products. As people do not have enough
money to spend hence sales will decrease (Whyman and Petrescu,2017).
In term of exchange rate , as changes in currency exchanges because of political instability
resultant in the decline of the value of Pound (Whyman and Petrescu,2017). This factor
impact M&S as a financial statement of the company gets affected by changes in currency.
Hnece, ledas to poor brand image and less growth oppurtunities of the company in the UK
(Quix,2019).
Social Factors: Social Factors are things that impact on the lifestyle of people. Some of the
social factors are the wealth of people, demographics, religion, and level of education.
In terms of age and population, some of the changes that impacted the retail industry are the
increasing population of Youth. The UK population rose to 66.4 million and out of that 23%
increase seen in the youth population aged between 18-25 (Obrien, 2019). Thus, the clothing
industry in the UK transformed. The changing habits of shopping of people and increasing
youth population affected the footfall on M&S stores becomes less and due to that 100 stores
were closed by the company.

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In terms of change in habits, that is shift of people to online platforms. The impact of this on
the retail industry is that the whole retailing concept shifts to e-tailing (Obrien, 2019). This
can impact M&S operations as due to shifting of people to an online platform or Further, this
changing scenario will impact the production and sales of M&S and also its operating cost
will increase due to that the profitability will decline in the near future. (Ancarani et.al,
2019). M&S changes its strategy and business model and shift its sales to the online platform
and the company had 22% increases in its online sales in 2019(Quix,2019). These two factors
lead to the downfall of the UK retail industry.
Technological Factors:
In terms of internet connectivity, The technological factors are one of the most important
amongst all the forces at the present time (Zebal and Jackson,2019). The increasing number
of internet users and connectivity is considered as the disruption of the retail sector in the UK
due to easy access to the internet and an increasing number of e-commerce sites the retail
industry transformed. This factor impact on M&S, as the company followed brick and mortar
model but because of the increasing use of internet the company shifted to brick and click
model. Further, the retail segment and profit margins in this segment reduced that leads to
closure of many big brands and stiff competition for M&S in the industry.
In terms of arifical intelligence, the use of artificial intelligence shifted the focus of the
fashion industry. As in order to predict and understand the taste and preferences of people in
the clothing industry companies are using AI and computer learning. This shifted the clothing
industry towards a consumer-centric approach (Taplin and Winterton, 2019). Moreover,
because of artificial intelligence, M&S needs to adopt technological processes such as the
use of a digital assistant, virtual reality and big data technology to serve its customers. At last,

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technological forces lead to a change in the structure of M&S in the retail industry (Taplin
and Winterton, 2019).
Environment Factors
In terms of climate change, According to the waste and resources, the action program UK
people sent 300,000 tonnes of clothing to landfills. This indicates that due to the clothing
industry the environment and society are suffering. Further, due to clothing manufacturing
700,000 microplastic fiber releases into the environment that lead to the threat of climate
change (Ancarani et.al, 2019). Due to that the government of the UK shift its focus to green
initiatives and make companies obliged to perform their duties by opting for sustainable
practices. The impact of these changes in the environment can impact on M&S supply chain,
production process, and strategic objectives.
In terms of recycling, the retail industry shifted towards green initiatives and focus on using
raw material that reduces the impact on climate change such as recycled cotton and the use of
an ethical supply chain. Due to these changes the operations of M&S impacted and the
company need to set a high standard for its suppliers and focus on ethical and sustainable
practices in order to stay ahead in the retail clothing industry (Todeschini et.al,2017).
Legal Factors:
In terms of employment law, As UK retail crisis leads to a loss of 60,000 jobs (Guo et.al,
2020). UK retailer segment is the biggest private-sector employer in the country and
employs more than 3 million workers (Guo et.al, 2020). The government of the UK decided
to increase the minimum wages of workers and spending on creating opportunities for
employees. The UK retail crisis impacts M&S as well because the company needs to change
its employment policies and ensures that its workers get payment as per the new rate

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(Ancarani et.al, 2019). This will resultant in the higher variable cost for M&S and will
increase more competition for the company.
In terms of health and safety law, On the other side, in the clothing retail industry health and
safety policies for employees are focus on handling and lifting material, protecting employees
from heavy machinery and precautions regarding fire exit. If M&S is not able to adapt these
changes that the company might face legal issues and penalties by the government and this
impacts negatively on the brand image of the company (Guo et.al, 2020).
Micro Environment
Bargaining Power of Suppliers: The number of suppliers in the clothing industry is higher
as there are many suppliers and few buyers. The bargaining power of supplier in this
industry is weak as M&S can shift to other suppliers if any price changes done by one
supplier the company can shift to others as products are standardized and less differentiated
due to that switching cost for the company is low (Thompson and McLarney,2017). In the
clothing industry, the profits of the company are directly depended on the suppliers but
because of large number of suppliers the switching cost for the companies is low. Hence, the
bargaining power of supplier is low.
Bargaining Power of Buyers: Buyers in the clothing industry have moderate power as they
have different alternatives to choose but because of product differentiation it becomes hard to
find substitute of products (Taplin and Winterton, 2019). In this industry, the important
consideration is quality and due to that buyers are less price sensitive, this leads to moderate
power in hands of customers to control the company’s operations and strategies. M&S focus
mainly on quality and providing innovative and designers to its customers due to that it is
quite difficult for buyers to switch to other products or brands. Hence, in this industry
bargaining power of buyers is moderate

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Rivalry among existing firms: The competition in this industry is higher as there are few
competitors in the industry but they have larger market share. That means competitive
scenario in the industry is high and M&S need to take actions in order to gain position in the
market. The rivalry amongst existing firms is stronger within the industry. In the clothing
industry, the investment in assets and resources is higher due to that exit and entry of firms in
this industry is quite difficult so the firms that operate in clothing industry have strong
operating plans and processes (Guo et.al, 2020). The competitors in the clothing industry in
the UK are Primark, Zara, H&M, Next and Debenhams. In this industry changes in strategy
of any competitor impact on other as there are big players in the market and all have larger
share it become important for the companies to focus also on competitor’s strategy in order to
compete in the market (see appendix 2).
Strategies
Retailing includes attracting different customers on the different platforms in order to
increase the sales of the company. In order to do so the companies adopt several methods in
order to attract customers, fulfil their demands and satisfy them. In the clothing industry,
M&S is facing challenges related to political factors, and social factors. In order to come up
with these challenges the company need to set long and short term strategies. The long term
strategies should be made keeping in mind the impact of Brexit on the business
(Obrien,2019). In the clothing industry due to Brexit, supply chains of the firms get affected;
profit margins get affected and due to exchange rate fluctuations international trade get
affected. In order to reduce the consequences of Brexit, M&S need to change its strategies
and tie up with multiple suppliers in order to ensure that supply chain function smoothly. On
the other side, the company in order to reduce the impact of exchange rate changes need to

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opt for hedging strategies with its suppliers and logistic partners in order to balance the
impact of currency changes in near future (Thompson and McLarney,2017).
Short term strategies include focus of the company on boosting its sales as because of social
factors such as shift of people to online platforms for shopping and concern for eco-friendly
products and practices the company need to change its marketing strategies to digital
marketing strategies to attract more customers towards its online platform such as websites
and through email marketing and social media marketing tactics. M&S can adopt customer
relationship management and virtual shopping experience as shift of buyers on online
platform leads to companies to focus more on providing services through online platforms.
Due to that most of the fashion retailers in the UK market has been closed and closing cost
for companies in retail segment is higher. Hence, M&S also need to focus on providing
virtual shopping experience, increase online sales, and increasing reach to its website (Zebal
and Jackson,2019).
Retail theory
According to Christopher (2016), retailing is considered as using various channels for selling
its products in order to increase sales. Different organizations have different channels such as
departmental stores, retail stores, discounting stores, and supermarket and through online
platforms. M&S is an established brand that focuses on its retail outlets. The primary mode of
selling products for M&S is through brick and mortar stores. But due to changing scenario
and high competition in the clothing industry the company need to shift its focus on brick and
click model and selling through online platform (Taplin and Winterton, 2019).
Further, environmental theory is applicable in the case of M&S as this theory focus on the
concept of “survival of the fittest” and M&S is trying to operate in the industry by changing
its policies and practices according to micro and macro environment changes (Edwards

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et.al,2018). However, considering micro environment factors that are analysed above it is
suggested that the company should focus on providing quality products and best customer
services in order to satisfy its customers and to increase its customer base. As the bargaining
power of buyers in this industry is moderate so the influence of customers on M&S is less but
because of higher competitive environment the company need to focus on building strong
relationship with its customers with the help of customer relationship management and by
giving virtual experience (Quix,2019).
Recommendations
Firstly, from the above analysis it is identified that in the macro environment in which M&S
is operating, the company is facing issues related to political and social factors. Further, in the
micro environment the company has threats related to competition and supplier and buyers
influence. In order to face these threats the company should focus on building strong
relationship with its customers by using customer relationship management tools and by
using virtual experience in its online shopping platform (figure 2).
Secondly, M&S by using these tools can compete with its competitors such as Zara, H&M
and Next in the clothing industry. As all of have some unique selling proposition that helps
these companies to increase its market shares. It is recommended to M&S that the online
sales of the company increased by 22% and the company should focus more on building its
network through online platforms such as Facebook, Twitter and reach on websites (Jones
and Comfort,2019). In order to do so, a huge marketing campaign should be run by the
company so that people get aware about online market and sales of M&S. The competitive
position of M&S in the UK clothing market is strong but the company need to boost its sales
in order to remain at the competitive position as in near future Primark and Zara might take

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over the remaining share in the market which make it difficult for M&S to compete and to
gain market share.
Conclusion
It is concluded from the above analysis that Marks & Spencer is a leading player in the
clothi9ing industry in the UK. But due to many macro environment factors retail industry in
the UK is suffering and one of the factor is Brexit and some of social factors that are
identified and can impact M&S is shift of people to online platform, low footfall on stores
and concern for eco-friendly products by customers. Further, it is concluded that retail
industry is moving to e retail as most of the retail outlets has been closed. On the other side,
micro environment factors are high competition and bargaining power of buyers due to that
M&S need to focus on attracting more customers, providing quality services and products in
order to compete with Zara and H&M. At last, strategies that M&S can include are
increasing online sales, hedging of international contract and purchasing from multiple
suppliers as with that impact of Brexit on the company can be reduced. Considering all the
background and factors it is recommended that the company should increase its online sales
by using customer relationship management tools and by providing virtual reality experience.