To Succeed, Marks & Spencer Must Cultivate A More Thoughtful Real Estate Portfolio
Marks & Spencer will close 30 UK stores and convert dozens more to food shops as part of plans to turn around the business. In five years, M&S plans to have about 60 fewer clothing and homeware stores. Like many other retailers, M&S is grappling with changing shopping habits as online sales are increasing, forcing high street retailers to change.
In a statement, M&S CEO Steve Rowe said improving clothing and homeware sales were his No. 1 priority. He’s now shutting loss-making international stores and focusing on the size of the retailer’s UK store portfolio.
Knight Frank’s head of retail research Stephen Springham noted one problem with M&S is that only its very largest high street stores stock anything like the full M&S range—the rest have a very edited and compromised offer. So, even if M&S gets certain things right in its larger stores, it still has the conundrum of how to successfully deploy these across an extremely varied estate.
“The issue isn’t necessarily that M&S is in the wrong towns—even having a small outpost can be a valuable strategic asset in today’s multi-channel world,” Stephen says. The issue is that the store portfolio has not been proactively managed for many years—if ever.
Steven compares the retailer to its rival, Next, which consistently reviews its store presence and acts accordingly. "20 years ago, Next predominantly operated small (less than 5k SF) high street and shopping centre units. But this estate has been proactively managed—some stores have been expanded, others relocated to better sites, others simply closed to be replaced by shinier out-of-town versions. Next and M&S both have very diverse store portfolios, but the former has got there by design, the latter more by default."
Edward Cooke, chief executive of Revo, the community of retail property professionals, agrees the retailer has to look beyond mere real estate to be successful. “M&S’s strategy reflects changing consumer behaviour, resulting in an increased focus on convenience stores, price competition, a strong online presence and excellent customer service—rather than business growth through an ever-increasing property footprint.”
Edward says the retailer's fashion-led branches in “weaker” high streets will cause concern in those places, given the role retail plays in supporting successful local economies and communities. He suggests local authorities partner with the private sector to regenerate and enhance retail places, which will attract customers, boost the shopping experience and increase value for customers. The end result is vitality and vibrancy of towns, cities and other urban areas, Edward says.