Retail Marketing (Marks & Spencer) Case Study Example | Topics and Well Written Essays - 3000 words

Retail Marketing (Marks & Spencer) - Case Study Example The group's merchandise includes clothes, household goods and food sales, with their clothing line contributing half the revenues. It has also diversified into financial services that include accounts cards, pensions, loans, and life assurance and contributes about 5% of its total revenues. Marks and Spencer divides its operation as UK retail, International retail and financial services. The UK Retail division is its major chunk of the business and contributes the most to the turnover. It sells Women's wear, Men's wear, Lingerie, Children's wear, Beauty products, Household goods, and groceries. The International Retail business prevailed from Europe to North America to the Far East a well. The Financial services division offers personal insurance, personal loans and store cards. Until the late 1990's Marks & Spencer was largely successful and Marks & Spencer recorded highest profit growth in the years, 1997 and 1998. In 2000, Marks and Spencer launched lingerie outlets in Paris, Hamburg and Dusseldorf that met with considerable success. It is a leading seller of lingerie in the UK with a 20% market share. It introduced the "Per Una" clothing range designed by George Davies in 2001 that was received moderately well. However, strong competition from other retailers was a big problem for Marks and Spencer. Marks and Spencer had built its business by ensuring customers that the high quality of its products, warranted the higher price paid by the consumer. Its business model was to maintain UK sourcing for its products. Consequently when competitive retailers sourced from low cost Asian suppliers, Marks & Spencer found its core business model a great liability. Its margins would not let it keep up. Ultimately, when it had to be done, the strategy came a little too late. It also lost its appeal to the consumers. Product quality deteriorated and customer dissatisfaction caused it to lose a lot of its base. Its target segment was traditionally women aged 35 and above. However, statistically, the younger generation invest in fashions and styles than the target segment it was aiming at. Therefore Marks & Spencer also lost valuable potential target base in its marketing efforts. Its image as a mid priced company for the middle-aged segment drove these younger consumers to the rival high street retail fashion boutiques offering great discounts. The company did attempt measures like revamping the business model and opening the stores on Sundays, but the results were not good enough. Internal management issues It had serious internal issues and this instability led to low profit margins and loss of customer satisfaction. Sir Richard Greenbury who headed the company has often been blamed for the debacle. The style of management was supposed to be autocratic and feedback from the employees was not encouraged. The lack of input from the actual employees who were in touch with the consumers on a daily basis was a great disadvantage. There was no transparency in communication and therefore Marks & Spencer had no finger on the customer's pulse. It lost valuable information that should have driven its strategy. Managers had no decision making power and were unable to implement even small changes without top management approval. The top management had no perception of the external environments in which the stores operated and was