M&S's online sales have been a major factor in its resurgence in popularity among shoppers
Marks & Spencer shareholders licked their wounds after the retailer was dropped from the FTSE 100 index for the first time in its history.
But they had reason to cheer this week, as the resurgent retailer was on track to re-enter the blue index. chips at the next shuffle in four years.
Marks & Spencer has gone through a transformation over time that has seen it close more than 100 stores, introduce third-party brands into its clothing range, and invest in lower prices in its food business.
This strategy, led by CEO Stuart Machin, helped her avoid the fate of failed department stores such as Debenhams and House of Fraser. Its shares are up over 80% since the beginning of this year.
However, M&S's expected re-entry into the FTSE 100 comes amid a bitter row with Housing Minister Michael Gove, who rejected his plans to rebuild his multimillion-pound Oxford Street store, saying the plans had failed. to support the transition to a low-carbon future.”
M&S has secured support from Westminster Council and local businesses including Selfridges for a project that will demolish the current Art Deco building and replace it with a 10-story block with just two and a half floors of retail space.
Company M&S said the renovation will bring the building to zero standards and reflect changing shopping habits. Now, after Gove's decision, he has threatened to leave the site entirely.
The latest chapter in M&S's success story raises the question of traditional retailers' need for such huge brick and mortar stores as main streets increasingly decline and shoppers go online.
M&S's online sales have become mainstream a factor in its resurgence in popularity with shoppers, and the company has said it wants 50% of its clothing and homewares to eventually be ordered online.
For Oxford Street once on London's main shopping street, the potential loss of a major a flagship store like M&S will be another blow at a time when retailers are desperate to attract investment.
Signs and amplifiers Spencer is considering the future of its Oxford Street flagship store following Michael Gove's decision to block restoration plans. Photo: Holly Adams/Getty Images
The street has been plagued by high vacancies, an influx of American-style candy stores, and a high crime rate in recent years. “Oxford Street as a shopping destination is changing before our eyes, and mostly for the worse,” says retail consultant Richard Hyman. «It's becoming a lot less attractive, and there's a lot less reason to go there.»
Richard Lim, chief executive of Retail Economics, says that in some cases, big flagship stores like Oxford Street's M&S store are now more useful for marketing and awareness than for increasing sales.
“Retailers don't see them as a separate profit and loss function,” he says. «They're seen as a marketing tool, they're a way to build a brand, to provide an experience for their customers, and it's more seen as a marketing expense.»
But for those who are betting on investments from companies like M&S to to help revitalize shopping areas like Oxford Street, the meddling of politicians is especially frustrating.
Di Corsi, chief executive of the New West End Company, which represents 600 retailers in the West End, says: “The proposal for Marks & Spencer's flagship redevelopment was part of Oxford Street's future growth story and this decision misses an opportunity to capitalize on the positive momentum the area is now experiencing.”
Lim adds: “The industry is changing rapidly. It's almost unrecognizable compared to what it was a couple of decades ago, and compared to when government regulation was created for things like changing the use of property and the like.
“The way retailers view and value their physical property space is very different. Generally speaking, the industry doesn't need as much space, it doesn't need as many stores, store formats tend to get a little smaller,” he adds.
Responding to Gove's decision last month, Machin said: «It was clear to us from the beginning that there was no other viable scheme, so after almost a century at Marble Arch, M&S is now left with no choice but to reconsider their future. a place in Oxford Street at the whim of one man. It's downright pathetic.»
Signs and Amplifiers Spencer boss Stuart Machin said it was «extremely pathetic» that the whims of one man thwarted the plans of the Marble Arch.
Jeff Barraclough, councilor at Westminster Council, said: Big brands want to open up, but they need to do so in an environment that encourages people to want to come and spend time here.
“M&S can remain a strong presence on Oxford Street. We really want them to continue to be part of the West End success story.”
M&S's battle for its Oxford Street store highlights an issue that goes far beyond London.
The Retail Sector Council (RSC), which includes the executives of Sainsbury's, Boots and Primark, has warned that Oxford Street Decay risks becoming a model for the UK's main streets if ministers do not support retailers and support revitalization efforts.
Retailers say they are hampered by excessive red tape and an overly bureaucratic scheduling system that makes it difficult to adapt at a time when the industry is changing rapidly.
RSC said there was no incentive for retailers to create “ a vicious spiral» in which «the more stores that close, the more stores that are likely to close.»
“We already see and have already seen the consequences of the government not taking action. it's as serious as it needs to be,» says Retail Economics' Lim. “Across the UK, you can see areas that are seeing a significant decline in the attractiveness of high streets.”
According to PwC, main streets recovered slightly from the pandemic, with a net closure of 2.6% in 2022 compared to 5 .4% in 2021. However, they have not recovered as much as other malls such as retail parks.
«If [ministers] don't adapt and accept that the industry is changing very, very quickly, we retailers will continue to wind down properties where possible,» says Lim.
System glitches planning is attributed to a shortage of qualified personnel, insufficient investment by the central government, and new, stricter environmental regulations.
A spokesman for the Department of Upgrading, Housing and Communities said £830m had been provided by the government. ministers to fund local government investments in downtown streets and city centres.
The spokesman added: “At the same time, we are also advising on changing the planning rules to make it easier to return empty stores to operation.
Ultimately, having a wide range of retail, hospitality and leisure businesses and transport links is critical to keeping the UK's main streets alive, says Helen Dickinson, chief executive of the British Retail Consortium. «Planning laws should support that.»
«It's not black and white, it's not about letting people do whatever they want,» adds Hyman. “This is not about having no rules, but about really revisiting the old regime and making it fit for purpose and better attuned to the speed of change and the competitive environment. This is the reality of today.”
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