Global Business Strategy of Mark & Spencer
In this report, “Global Business Strategy of Mark & Spencer” we discuss, Mark & Spencer, one of the very well-known retailers in Great Britain, has suffered a lot of disadvantages in the last three years such as repeated reductions in sales, growing competition, and important organizational cracks.
To tackle these questions and to set a proper course for Mark & Spencer in the next three to five years some more crucial actions are proposed that concern the company’s digitalization, new products and services development, operating model optimization, customer experience delivery, and environmental responsibility. Firstly, M&S requires a radical online operation revamping that would encompass all its aspects. The buying and selling process has moved from the traditional, physical stores to online markets more so being sparked by the novel coronavirus.
As with any form of eCommerce, sufficient and reliable digital development plays a crucial role in the overall consumer experience. Second, product differentiation and innovation are vital since they involve providing new products or adapting existing products to reflect the customer’s needs and wants. To upgrade its current strategies, M&S has to enter new product segments by providing healthy and eco-friendly food offers.
The organization’s envelopment of lean management practices can help to reduce the level of waste and make processes faster and more effective, which saves cost and increases yield. Lack of automation is another issue, which means that upgrades to modern IT systems are essential to minimize the margin of error. Improving point of sale, warehouse management systems, and CRM platforms for business improvement is necessary to advance overall operative performance.
It is crucial to highlight that the improvement of the customer experience level is vital for success. High levels of staff training will help develop customer service skills and product knowledge, contributing to the organization’s ability to create an inviting atmosphere in the store and gain the customer’s patronage. Introducing and synchronizing cross-channel services like c-stores and e-fulfilment including click-and-collect and home delivery, backed up by easy returns, will offer the desired channel harmony. Finally, to support its business strategy and meet consumer expectations, Mark & Spencer has to enhance its focus on sustainability and CSR.
Thus, the concept of going green can be defined as the process of integrating sustainable policies into the company’s operations, environmental protection measures, and recycling initiatives. These are the efforts that should be promoted to ensure the customer base of any organization is loyal given that there are people who care about ethical practices.
Read more: Global Business Strategy of Thomas Cook
Strategic Audit:
Financial Performance:
Revenue Trends:
Three years’ analysis of Marks & Spencer reveals that the company has undergone fluctuating revenue trends. The COVID-19 pandemic affected the sector immensely, reducing foot traffic into physical retail stores and disruptions in the supply chain.
UK-based food and clothing retail chain Marks & Spencer (M&S) said it suffered an 11 percent decline in its revenues during the first half. Percent in the ratio of 2020/2021 financial year below ten pounds from £10. £2 billion to £9 billion from the year 2019 to the year 2021
Cost Management:
Stiff competition squeezed profit margins, store expansion, and rising operating costs impacted Mark & Spencer’s results greatly. Demand has been strained by rising logistics costs, owing to disruptions in supply chain networks around the world and costly transportation of goods. Moreover, the shortages of labor have also put upward pressure on the wage bills contributing to the higher costs. Mark & Spencer has failed to demonstrate strict cost management to match the quality and service of its competitors.
Profitability:
A key threat that has affected Mark & Spencer is low-profit margins due to competitive pressure, especially within the clothing and home divisions. Such segments have experienced a gradual slump in sales attributed to the emergence of new trends in fashion and piling pressure from faster Fashion brands and Online stores which is indicative of the refreshing food segment, which rose by a 3. 79% target of increasing sales volume by 6% in 2022.
Business Performance:
Market Position:
The market position of Mark & Spencer has been eroded by price competition from prestige players and cuts price by cut-price rivals. In the clothing division, Mark & Spencer has been displaced by fast fashion competitors such as Zara and H&M that introduce new trendy merchandise frequently at relaxed prices. Also, major online retail stores still exist in the market and then leveling down of more market share to M&S by companies like ASOS and Boohoo.
Customer Satisfaction:
For instance, customer satisfaction at Mark & Spencer has been evaluated at a relatively moderate position. Like-for-like sales to increase to $77,418m in 2022 – an increase of 5%. However, the segment related to clothing reaps some criticism because of the feudal and unstylish clothes they offer to their customers that sometimes lack quality.
Operational Efficiency:
They have also experienced operational inefficiency, which has exacerbated all these issues for Mark & Spencer. Lack of inventory management and distribution channels planning means that many of the stores are out of stock is often or they buy too much stock and end up losing money since the product is not selling out.
It is evident that Mark & Spencer faced various inefficiencies; the company recorded £303m of write-offs primarily from the stock during the financial year 2021, which was up by 15% compared to the previous year. For instance, a poorly addressed inventory management system has resulted in delayed restocking and problems related to product fulfillment that in turn affect consumer satisfaction and business vent sales.
Analysis and Justification for Strategic Actions:
Digital Transformation:
Online Shopping Experience:
Its interface should allow for minimal difficulties in browsing and searching for required products, user recommendations, and smooth checkouts. As such, Mark & Spencer will benefit from ensuring the user experience is at an optimum level with a specific focus on the shopping trends in the hope of attaining customer retention and loyalty.
Another advantage that comes with a strong e-commerce platform is the ability to gather better customer information through the sales process, increased marketing, and tailored product offers that lead to more sales
Supply Chain Integration:
A sophisticated supply chain technology, that integrates real-time data, can help the company to manage inventory levels, estimate the demand, and decrease lead times. These improvements will in turn improve on the general performance by making the products available and timely to deserving customers.
Besides, the integration of these systems can also help minimize costs relating to extra stocks/ inventory holding and stock-outs which overall enhance the productivity of the company’s operations hence enhancing the company’s profitability.
Data Analytics:
Mark & Spencer can be able to use data analytics to capture ways in which customers behave, what they need or prefer, and how they buy by analyzing their big data; this gives M&S strategic ways of marketing their various products.
There are increased benefits for customer engagement that M&S can leverage; M&S will be able to target her promotions and make special recommendations that could translate to increased sales and customer retention. It also can serve for the analysis of newly arising tendencies that may threaten M&S or bring new opportunities.
Operational Efficiency:
Lean Management:
Implementing strategies such as lean management techniques that help in reducing process waste and increasing efficiency in operations has the potential to bring down operational costs and improve operation efficiency.
This allows the company to eliminate wasteful costs and, therefore, boost its overall profitability – a key to which Marks and Spencer can attribute much of its success. It will be possible to work on detailed improvement and make sure that Mark & Spencer can offer better solutions to customers and provide higher quality products. Lean management also creates a continuous improvement culture because it promotes employee engagement in issues that need change.
Technology Investment:
Another key factor to be noted is the consequences of investing in advanced IT solutions that will bring about efficiency in operation and limit human errors. Implementing POS, WMS, and CRM will also improve capabilities in terms of strengths in operation functions. It is also seen how these technologies help to reduce costs, control stocks, and offer good service to consumers.
Efficiencies brought about by automation include the probabilities of errors by people being eliminated by automation, and processes becoming faster. This kind of investment also benefits the company in such a way that customer satisfaction is made better since it is now easier and more effective.
Supply Chain Optimization:
Improving the forecasting process and the inventory management system in the supply chain will help eliminate stock-out situations and minimize unnecessary inventory which is costly to carry and finally increase the service level and decrease the cost of holding inventory. Hence, the idea of sharing heavy and detailed information with suppliers is helpful to ensure production processes meet the customers’ needs thus avoiding cases of overstock or stock-out.
In essence, supply chain management aims at improving the flow of goods and services in a way that prohibits any interruption in the delivery process, thus increasing customer satisfaction. The efficiency of the supply chain also decreases the operational cost and supply chain cost plays a significant role in achieving better financial performance and competitive advantage.
Product Innovation and Diversification:
Health-Conscious Products:
Introducing a new line of health-related products like organic, gluten-free, and plant-based fit modern-day lifestyle and tends to attract consumers with an active health-conscious appeal. With the emergent demand for health consciousness and practicing sustainability Mark & Spencer has the opportunity to amplify its demand for healthy food products.
It also targets current and potential clients including those who are conscious of their health by offering healthy foods to eat. In another way, since the outlet is health-conscious, M&S can use this opportunity to offer healthy products to the market thus helping them forge an image that will set them apart from the rest of the companies in the market.
Sustainable Fashion:
Successful creation and launching of some clothing brands that incorporate environment-friendly fabrics and non-leather production processes can greatly help M&S set it apart from other companies. There are lots of people who are conscious of their environment and they would prefer to buy goods from companies that implement sustainable production processes.
It relates to sustainability management not in the above sense but Mark & Spencer can make a niche market out of sustainable fashion by targeting the conscious consumers who will be willing to fork out some extra bucks for clothes that are sustainably made. This particular change Further strengthens M&S’s image and is in concord with the global shift towards sustainable living and carrying out business responsibly as the company becomes one of the sustainable retailers.
New Product Categories:
Opening up new streams of business by expanding product portfolio by introducing home fitness equipment and smart home devices will successfully tap a new customer segment for M&S. Such expansion also assists Mark & Spencer in diversifying to other markets, thereby overcoming over-reliance on core product categories.
There is always the issue of consumer trends and demand, whereby by clearing new products that will be in high demand, M&S can penetrate the market more thus creating its fan base. This strategy also protects from many risks that are associated with fluctuations in market conditions within core segments, providing a more diverse and stable client base and revenue streams.
Customer Experience Enhancement:
Staff Training:
Appropriate training for employees in skills in enhancing customer relations and enhancing their knowledge of the products should be conducted. The employees are the ones on the front line and better-trained employees are better placed to offer better assistance to customers, thus making the shopping experience a positive moment enlightened by the acquisition of relevant knowledge.
Not only is there an increase of skills and abilities within the staff members, but the customers are enhanced with a better in-store feel and are eventually loyal to the stores. Qualified employees can give satisfactory replies, suggest items, and fix problems quickly; as a result, results in increased customer satisfaction and purchasing frequency.
Omnichannel Services:
Creating a unified omnichannel offering of services, including click-and-collect, home delivery, and easy returns makes the shopping experience, across all channels, easy and uninterruptible. These services cater to the convenience that modern consumers require in order to shop and any elements that address this are more than welcome.
From the aforementioned benefits, strategies on omnichannel ensure that customers make purchases either online or physically and receive what they want in a convenient way. This makes it easy for the customer and promotes a flexible way of shopping which in turn acts as a way of promoting customer satisfaction thus promoting customer loyalty.
Loyalty Programs:
The focus on the strategies of frequently patronizing the establishment to ensure a higher rate of repeating customers improves the relationships between firms and customers on the aspects of loyalty programs which automatically results in increased sales. Using offers with the company’s specific wrapping and additional bonuses can create effective customer loyalty and satisfaction.
Thus, M&S can increase its sales and revenue by rewarding those customers who appreciate the services and products offered by the company and are still willing to do business with it. Effective loyalty programs also provide consumer insights concerning the consumer preferences and tendencies associated with consumption depending on the cases, which can be used by M&S in order to modify its marketing strategies and, therefore, increase the level and effectiveness of consumer engagement.
Sustainability and CSR:
Green Practices:
The necessity for the organization to guarantee green practices in the course of their operations comprises the need to minimize the use of plastics, increase the efficiency of energy usage, and the reduction of wastage involves developing some important issues for Mark & Spencer. Not only does it reduce costs incurred by the operations of the business, but also increases the value of the corporate image by making the company be considered as one that is environmentally conscious within the retail sector.
For instance, one of the distinct goals that M&S can set is to minimize the application of plastic packing in its food division and instead use items that are eco-friendly or reusable. Also, energy efficiency solutions such as installing energy-efficient lights, and equipment in stores and warehouses can do wonders for retail companies’ energy bills.
Sustainable Sourcing:
It is noteworthy to underline that commitment to sourcing sustainable materials for products, particularly the clothing segment, will be perceived positively by those clients who are concerned about the state of the environment and the impact of their consumption choices and will help M&S to stand out among the competitors. For instance, M&S can emphasize the utilization of organic cotton, recycled polyester, and other more environmentally friendly fabrics in the collection of its apparel.
Sourcing them in an ethical and sustainable manner will help appeal to consumers who are accepting of ethical products to be used in the manufacturing of these goods. Moreover, aggregating these efforts by creating awareness through advertisement and marketing on how sustainable sourcing benefits both the environment and the community will independently improve M&S’s brand image.
Community Engagement:
Speaking of corporate social responsibility, increasing focus should be given to supporting campaigns and charitable organizations in communities of residence, as the recipience of such support will in turn produce goodwill and enhance the association of M&S with the specific communities.
This may mean cooperation with nongovernmental organizations, company branding of events, and projects that can focus on challenges such as hunger and illiteracy in the communities. There is no better way of creating a good reputation among people than by being involved in the development of the community in which it operates, and M&S has many ways of doing so.
Critical Reflection:
It is completely fulfilling indeed to pen down the conclusion for this particular management report that would offer deep meanings to strategic management and business analysis. Performing the strategic audit was useful in that it forced the analysis of numbers including financial and business performance data which would improve my information evaluation process in terms of issue identification.
This involved focusing attention on revenues, costs and profitability through which I was able to develop my skills in handling large amounts of data. Evaluating and defending strategic initiatives also helped me consider what long-term position is best and what various approaches meant in the broader context.
This included evaluating the risks associated with changes brought by digitalization, the introduction of new products and production, and increase operational effectiveness. These factors promoted an integrated company-wide problem analysis technique, guaranteeing that recommended changes integrated the organization’s strengths and the market’s needs.
The preparation of this report enhanced the ability to search and analyze data in the presented study field. The mandatory condition for M&S to follow a well-thought-out and research-based approach to strategic planning was to identify the company’s position in the market, its customers’ satisfaction, and organizational issues in its functioning.
This process helped me to improving my capability in certain aspects of collecting data and applying it to create a useful analysis for making strategic strategies. The activities in preparing for the management report developed professionalism in presenting compelling ideas, especially in professional business environments. This process highlighted the role of clarity and detail when it comes to communication in business.
When writing the executive summary, strategic audit, and thus the analysis section, it was crucial to choose words and debates that made clear strategic recommendations. The ability to reflect on weekly tutorials and, also incorporate the feedback into the creation of the report has been very helpful in bringing about improvement in my work. This reflective practice highlighted the importance of developing the ability to apply changes to one’s approach based on the analysis of emergent knowledge and perceptiveness, which remains an imperative aspect of management.
Recommendation and Conclusion: Global Business Strategy of Mark & Spencer
Implement Digital Transformation:
To tackle the growing challenges of online shopping, M&S should create a robust vision for further digitalization of the overall shopping experience and supply chain. Now, digital sales make up about 34 % of the total retail sales of M&S although in 2019 it was 18% indicating the increasing reliance on digital platforms.
This is yet another area to invest predominantly in advanced technologies; for instance, a strong e-commerce hub. Silicon Valley is a platform that should offer easily navigable, customer-specific solutions, as well as straightforward checkout features that would substantially enhance customers’ satisfaction and their further loyalty to the company. Furthermore, solutions such as implementing SCM systems through real-time technology improve inventory, identify appropriate demand points, and shorten lead time.
Drive Product Innovation and Diversification:
To remain competitive in the constantly changing marketplace, and fulfill customer needs that are emerging more and more, M&S should update its product range with products that contribute to a healthy lifestyle and are environmentally friendly. Aspect of consumer trends- the health and wellness food segment has over the last year recorded a growth rate of 20% thus showing the readiness of consumers to embrace this category.
In the clothing category, it will be important to create new lines that focus on the usage of eco-friendly materials and a friendly production environment which will also contribute to the competitive advantage and choice of the clients. It was found that sustainable fashion contributes 2.5 percent to the global apparel market and they recorded that in the year 2022, sustainable fashion had reached sales of 10 percent of the total global apparel market.
Enhance Operational Efficiency:
In particular, improvements in operations through the adoption of lean management principles and modernization of IT infrastructure will lead to cost reductions. M&S has also suffered a £314m hit because of problems in inventory management, which made write-offs of the stock increased by 15 percent.
Simplification of the work, reduction of the causes of delays and unnecessary steps, and more efficient storage is essential. Upgrading the current IT systems including introducing new and modern point of sale systems and modern warehouse systems will improve the functionality of these operations and will help to minimize human interface,
Improve Customer Experience:
The latter also highlights the need for staff training and the improvement of omnichannel services in the pursuit of a superior customer experience. Another factor involves staff product knowledge as well as customer service, where staff should undergo comprehensive training to be able to deliver their best in boosting the overall ambiance of the store.
Creating a smooth integration of online and offline channels, including click-and-collect, home delivery, as well as easy returns, will offer customers a logical and simple shopping experience across the channels in question. According to industry trends in 2022, customer expectations increased and shifted to 80% in favor of brands that provide uninterrupted omnichannel convenience.
Commit to Sustainability and CSR:
This is why it is crucial to discuss M&S’s ability to expand the list of its sustainability activities to become more attractive to conscience clients. Adhering to the principles of sustainable development and transitioning towards eco-friendly measures, including the reduced usage of plastics, better energy management, and waste reduction, will bring benefits to both the operational costs and sustainability commitments of M&S.
For instance, in the case of M&S, has announced that it has chosen environmental sustainability as its business priority and enshrined it in the strategic objectives by agreeing to eliminate waste by the year 2030.
