As Britain’s biggest clothing retailer, Marks & Spencer is a bellwether for the health of the UK high street, and its bold move to close more than 100 stores by 2022—which it revealed today (May 23) will cost £321 million ($430 million)—is a sign that brick-and-mortar clothing shops are on their last legs.
The closures are part of a restructuring that it hopes will turn around the business. When Archie Norman was brought in as chairman in September, he said bluntly that “M&S has been drifting and under-fulfilling its promise not for five, 10 but for 15 years.” And its full-year results released today were sobering enough for the company to say in a statement it was “facing facts” and “accelerat[ing] change.” In the year ended March 31, M&S reported clothing and home-goods sales fell 1.4%, and pre-tax profits dropped by 62% to £66.8 million.
The British Retail Consortium, a trade association representing the UK retail sector, has said that sales will likely remain sluggish throughout 2018, and recently warned that weak non-food sales (such as clothing and electronics) are contributing to an “unprecedented period of change the impact of which is being laid bare for us all to see.”
What’s to blame? In part, the internet. Paul Martin, head of retail at KPMG, said last month that online retail “bucked the trend” when it came to stagnant retail sales. Last November was seen as a key turning point for UK retail when the market value of trendy online retailer ASOS usurped M&S’s.
The radical change in how consumers buy their clothes today is why M&S is hanging by its fingernails onto the top spot as the UK’s largest clothing retailer, where it currently commands just over 8% of the market, and others have to make themselves distinctive in either inventory, price, or both, to stay ahead. The brick-and-mortar clothing shops that are gaining ground amid the threat of online have distinctive modus operandi. Primark, known for its ultra-cheap fashion, is tipped to surpass the likes of M&S due to its rock-bottom prices.
Another factor in M&S’s downfall is that it, like other legacy stores that have been around for a century, has struggled to find its identity. It’s not considered cheap, but it’s not high end either. Despite its best efforts to add new, more up-to-date fashionable lines, which helped briefly add to an uptick in sales, it has struggled to shake off its reputation of catering to frumpy old people.
M&S’s new chairman and CEO Steve Rowe know this has left the retailer unwieldy in its inventory. Rowe told investors it was “taking steps to recover our appeal to family-age customers,” reducing high stock levels, “buying more stylish product in greater depth and emphasizing value.” Hoping to fix its structural problems by July, Rowe added that the new M&S is “tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business.”