CaroleAnne Clayton

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• Carole-Anne Clayton
• Lynn McElroy
• Yvonne Moody
• Natalie Paterson

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• RETAIL CLOTHING
• INDUSTRY TRENDS
• DEFINING THE BUSINESS

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• Major UK Players Regulations
• 1st Largest Retailer MS
• 2nd Arcadia Group (Top shop, Top man, Miss
  Selfridges, Dorothy Perkins)
• Largest retailers control 75 of clothing market
• Labour costs - major element
• Historically poorly paid
• Minimum wage prices manufacturing
  overseas.

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• Industry Growth Largest Sector
• Customer price conscious growth in discount
  clothing, decline designer brands
• Largest sector womenswear 54
• Sensitive to climate, trends disposable income
• Missed targets 98/99 by MS, Laura Ashley, Next
  Monsoon
• Required Radically Restructure Offer

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History

• Clothing underperformed 2001
• Results - How?
• Manufacturing Overseas
• 25 2000, 80 2002
• Redefined business in terms of customer not
  product.

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• SBUS Retail Sales
• Womenswear 00/01 3.1 billion
• Menswear
• Childrenswear
• Lingerie
• Home
• Finance
• Beauty

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• Womenswear Product Segmentation
• Autograph exclusive/designer by Betty Jackson
• Per Una George Davies (Next 80s)
• Classic traditional
• Perfect Core product, single item department -
  white shirt
• Redefined business in terms of customer not
  product. Customer lifestyle attitude

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Product Segmentation

• MS
• Autograph 10
• Per Una 5
• Classic 5
• Perfect/Core 80
• New Markets / designer
• New Customers / 18-35
• Improved Image

• Competitor
• House of Fraser
• Next
• Debenhams
• Next, Dorothy Perkins
• Vision aspirational quality accessible to all

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• Autograph

• Per Una

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• Perfect

• Classic

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• MARKET SHARE
• PORTFOLIO
• POSITIONING

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• Market share of the UK clothing retail market

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• Portfolio 2002

10 5 0
Autograph Classics Perfect Per Una
10 1.0 0.1
RMS
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• Product Positioning

Autograph Classics Perfect Per Una
Quality
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• ANALYSING THE
• ENVIRONMENT

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• Trends
• Import penetration
• Vertical integration
• Branded designer clothing
• Price deflation

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• Auditing the Environmental Influences
• What are the key influences and drivers of change
  for MS?
• Markets Niches
• The MS Customer
• Competition
• Technology
• The legal/political environment
• Geographical location
• The social environment

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• Markets Niches

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• The MS Customer

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• Competition
  

Potential entrants
Threat of new entrants
Competitive Rivalry
Buyers
Suppliers
Bargaining power of suppliers
Bargaining power of buyers
Threat of substitute products/services
Substitutes
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• Threat of Entrants
• Large international branded companies
• - barriers to entry low (large capital exp.)
• E.g. discounted stores Matalan
• multiples Tesco, Asda
• New start-up companies
• - barriers to entry high (small capital exp.)

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• Power of Buyers
• Not particularly strong
• - volume purchases low
• - not a significant fraction of buyers
  costs/purchases
• - no threat of backward integration
• - limited access to company information
• Power of Suppliers
• Weak
• - vertical integration
• Power increasing as manufacturing relocates
  offshore time quality

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• Threat of Substitutes
• - product-for-product
• - generic
• - ceiling on prices
• Competitive Rivalry
• Intensity of rivalry high
• - balanced market, stable market?

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• How does Marks and Spencer adapt to competition?
• Focused on customers
• Applied a unique fundamental strength strategy
• 100 own brand
• Command of supply chain
• Scale authority
• Focus on superior quality innovation
• Assisted self selection
• Underpinned executed through the talent
  capability of their employees

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• Technology
• Clothing industry slow to embrace new technology
• Fabric technology linen and Lycra, machine
  washable cashmere
• BioForm Bra

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• The legal/political environment
• Minimal effect of legislation, major impact of
  international agreements
• Phasing out of Multi-Fibre Agreement
• European legislation minimum wage working
  time directive
• Ethical considerations in strategy marketing
  communications

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• The Economy
• UK economy prospered over the last 5 years
• GDP growth decreasing unemployment inflation
  favourable
• House Price Index

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• Geographical location
• Proximity to target market
• - divestment selling of Canadian and EU stores
• Back to basics to rebuild the MS brand

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• The social environment
• Shifting demographics 50 of the population
  over 50 by 2020
• Increase in workingwomen increased levels of
  disposable income.

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• The Positioning of Marks and Spencer
• Repositioning the brand
• - St. Michael brand dropped Marks and
  Spencer brand strengthened
• - target market - 20-35years
• - quality, fashion focused, competitive price
  structure
• The leading UK high street fashion retailer

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KEY STRATEGIC ISSUES
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• Planning for the Future
• Become larger
• Become different
• Stay the same
• Become smaller
• Marks Spencer became smaller
• Recovery strategy - DIVEST

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• Objectives
• Regain dominance in clothing market
• Build on unique customer relationships
• Shape store location, format and offer
• Reassert position as leading socially responsible
  business

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• UK Growth Strategies
• Segmentation
• Targeting
• Positioning
• - - - - - - - - -
• Convert non-users
• Increase revenue from existing custom

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• How?
• Concentration on 5 core strategies
• Segmentation
• Pricing Structure
• Quality
• Supply Chain
• Store Renewal

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• Segmentation
• Began in Womenswear
• Defined ranges according to lifestyle
• Everyday clothing Classics
• Exclusive designs Autograph
• Extension to other areas

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• Pricing Structure
• Used to establish clothing categories
• Clear price ranges
• Displayed for customers ease
• Good, Better, Best
• Essential, Perfect, Luxury

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• Quality
• Return to strengths
• Close relationships with suppliers
• Zip Project
• Returns down to 1.2

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• Supply Chain
• More efficient
• Reducing costs
• In 1998 75 sourced in UK
• In 2002 25 sourced in UK
• Better value, quality and fit

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• Store Renewal
• Extensive plans throughout UK
• More relaxed atmosphere
• Lighting, flooring, equipment, visuals
• Introduction of set spaces
• Coffee shops, beauty shops, home concepts
• Each area with specific fittings

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• Marketing Mix
• Product
• Refined and reinforced
• Price
• Clear structure
• Promotion
• Advertising and branding
• Place
• Store renewal and location

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• Industry SWOT
• Strengths
• Consumers can purchase on impulse
• UK is world leader in fashion and design
• Weaknesses
• Aggressively competitive
• Affected by factors beyond its control

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• Industry SWOT
• Opportunities
• Scope for innovation (displays)
• Branded clothing may increase market
• Threats
• Foreign competition (quotas phased out)
• Interpretation of trends (sales)

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End

• Any questions?