The past year has been a “story of growth” for M&S, according to chief executive Stuart Machin as he sets out the retailer’s plans to broaden its appeal and drive bigger basket sizes.
Over the past year, M&S has served 32m customers, which Machin says is “more than ever before”.
“For us to serve over 60% of the UK adult population, that is telling us we have broad appeal. We’re a broad church.”
A big driver of this is the retailer’s food division, which GlobalData senior retail analyst Eleanor Simpson-Gould termed “the standout success in M&S”.
In the 52 weeks to 30 March, food sales surged 13% to £8.2bn as adjusted operating profit hit £395.3m, up from last year’s £248m.
The retailer has seen customer growth across all age demographics and has seen switching from a “broad spectrum of retailers”. But how exactly has it grown not just its appeal but its basket size too?
Upgrading and innovating the range
Machin says that for M&S, “product is at the heart of everything we do”.
In the past year, the retailer upgraded 1,000 products and added 1,300 new lines, including its exclusive Zoe gut shot, which has been one of its biggest product launches ever, selling 1m bottles in the first two months.
Simpson-Gould says this product expansion has seen M&S “double down on innovation, launching new ranges and aptly ensuring its dine-in offer was front of mind for consumers seeking an economical alternative to restaurant quality meals at home.”
She explains that M&S has been able to perform so well in the past year by steering away from “aggressive pricing schemes in response to competition from discounters, a challenge that has beset the top three grocers, but by remaining steadfast to its brand identity as a purveyor of premium and consistently high-quality products”.
Quality is a key differentiator for M&S and, after revamping 1,000 products last year, it has plans to upgrade or innovate a third of its food range each year.
Machin explains that among its innovations, customers can expect a new M&S Collection fresh pizza range launching next month, which has been in development for over a year.
The retailer has improved every aspect of this with 20% more toppings than its classic pizza range and a new hand stretched 30-hour fermented dough for the base.
Other improvements this year include the relaunch of the grocer’s premium Gastropub range and what he describes as “the most amazing” Christmas selection.
Simpson-Gould says to ensure wider appeal in future range and product launches, “the retailer must heed its customers’ frequent demands for more vegetarian and vegan products to ensure dining-in options are suitable for the whole family”.
Bigger, better M&S stores
M&S has been pushing ahead with its aim to become the UK’s leading omnichannel retailer.
Its store rotation programme will result in it having 180 higher quality, higher productivity full-line stores with clothing, home and food, and 420 food stores, which Machin says look to create a “different shopping experience”.
These stores will include features such as market-style food halls that stock the full M&S food range, and sustainable innovations such as ‘Fill Your Own’.
“We’re really proud, across this year we opened six full-line stores, eight bigger standalone food stores and we renewed eight food stores.
“Those renewed stores are attracting new customers and drive the bigger baskets in food especially,” he adds.
Simpson-Gould says that looking ahead, M&S “must prioritise an integrated omnichannel approach to ensure that the expansion of its physical store network complements, rather than detracts from, its overall sales performance.”
Growing online with Ocado
M&S and Ocado haven’t had the smoothest of rides since the partnership began in 2020.
The retailer revealed that Ocado Retail’s “profitability [was] well below original expectations” as M&S’ share of adjusted loss on the joint venture rose to £37.3m, up from £29.5m.
It comes following a dispute between the partners over a withheld final payment for the online retailer after it missed key performance targets.
Despite this, Machin affirms: “I still believe in the opportunity of selling M&S food online.
“I think when you look at the work the food team have done with Ocado, it is in the early stages of sales growth and we’re quite encouraged by that.
“M&S products grew 15% in the last quarter, and the highlight is we have 4,800 products on Ocado – that’s 20% more than it was this time last year.”
More M&S products are now available on the online grocer than ever before and in recent weeks have made up 30% of the Ocado basket.
Machin says that M&S has a “clear plan, a clear vision for the future, and there is so much opportunity ahead of us”, as he states this period marks the “beginning of a new M&S”.
With it firing on all cylinders, the year ahead is certainly looking like a positive one for the upmarket retailer.
