SWOT Analysis of Marks and Spencer (M&S)

Marks and Spencer (M&S) is a retailer headquartered in UK with 1382 stores worldwide according to its 2016 financial report. Reuters (2017) has described the two segments through which the organization operates. The UK segment consists of UK retail business and the UK franchise operation while the international segment consists of M&S owned businesses elsewhere. The portfolio of products include own brand food, clothing and several home products as well. In UK M&S has 910 stores, including both company owned and franchise stores. As per Hoover (2017) M&S has 480 locations in 60 countries where its departmental stores sell apparel, food and household stuff under private label. In UK M&S is the leading provider of menswear, women wear and lingerie. As per the Euromonitor report, M&S is mainly focused on retailing and also has a wide range of private label goods.

M&S had revenues of GBP 10.5 billion in 2016 with a net profit of GBP 407 million. 52% of this revenue was related to UK-Food, while UK – General Merchandise segment was responsible for the 38% of the revenue. The remaining 10% was distributed amongst International owned businesses and international franchised operations. M&S.com rose by 23.4% in 2015-16 to become the UK’s second largest online clothing retailer. One of the key reasons that has supported the company in securing a prominent position in the UK retail industry is that it promises easy accessibility to its customers with 93% of its target audience is within 30 minutes’ drive from and M &S departmental store.

Strengths

M&S has a strong focus on UK market with 90% of its revenues coming from this region. Company launched innovative new food products and added items to its frozen foods line. In 2015 M&S served 33 million customers. Moreover, M&S expanded its limited edition women wear making it available in all stores. M&S uses multi-channels to reach its target market, by using online, mobile, catalogue and in-store channels. M&S also allows for online ordering and picking up the ordered merchandise using “shop your way” service. CSR strategy can be linked to success of Plan A which aims to put M&S as a responsible retailer by introducing different socially responsible initiatives. Furthermore, M&S has actively participated in reducing greenhouse emissions and was listed among world’s most responsible companies in 2014.

Weaknesses

M&S overt reliance on the UK market makes it vulnerable to fluctuations in domestic market conditions.  Frequent product recalls in 2015 marred its reputation and affected consumer confidence in its products.

Opportunities

M&S has announced plans to expand its food business and plans to introduce new 250 stores in 2016. This strategy of focusing on food section which gets M&S 52% of the revenue would help fortify M&S position in food segment. Also the company has increased presence in China and India – two of the world’s biggest markets. The strong economic development focus in China is expected to help strengthen international position and reduce dependence on UK stores. Online retailing is expected to be growing with a fast pace in UK. The global online retail market has grown at CAGR of 22.6% from 2010-14 to reach almost a trillion dollars. Strong online presence is expected to help M&S in further growth by benefiting it from growing trend to shop online.

Threats

UK retailing is faced with an increase in the scourge of shoplifting. Retail crime in 2015 was worth more than $600 million in 2015 and the trend is increasing YoY. The cost of surveillance to counter this trend adds to bottom line costs, which adds on prices for customers. The rising labour costs in UK also affect M&S profitability. The minimum wage rate increases YoY so the profitability is affected. Since the 90% of the employees are in UK so the affect is significant (“Marks and Spencer Group PLC SWOT Analysis”, 2015).