Marc Bolland’s move to Marks & Spencer has sparked excitement in the City and attracted acres of coverage in mainstream news. The interest reflects M&S’s position as jewel of the High Street, leading purveyor of the nation’s underwear, and reliable backstop when looking for clothing basics - and Bolland’s success at supermarket giant Morrisons.
Marks badly needs someone who can revive it's £4.2bn turnover food business. Performance has been nothing short of dismal with falling margins and severe loss of market share, and the decline cannot be put down to difficult economic times. The problems arose well before the credit crunch, and continue despite a slight loosening of consumer purse strings, and recovery in its rival Waitrose.
Mr. Bolland's experience at Morrisons equips him well for the challenge. So what might he do?
First he has to understand what the problem is. Current management seems to think it is all about price, and has responded with hundreds of offers and deals such as “Dine in for £10”. This might help in the short term as Marks' food is expensive, but it is not a long term fix. Neither is the plan to introduce branded products such as Coca Cola, for Marks has neither the expertise nor the buying power to be a general grocery shop. What Marc Bolland must do is solve the basic problem which is this - as of today there is no compelling reason either to visit M&S on a regular basis, or to spend much when you get there.
How different it was a few years ago. M&S's initial success came because it offered outstanding quality which was unavailable from anywhere else. Then in a brilliant piece of market understanding and pioneering innovation it developed its range of ready meals, offering culinary delights which an increasingly widely travelled public encountered when abroad but had no idea how to replicate at home. Ready meal sales went from strength to strength as time pressed but affluent consumers bought a no-preparation evening meal, not giving too much thought to nutritional content or having to double up because portion sizes were tiny. M&S sandwiches were a leading development too, offering fresh and delicious lunchtime fodder at a time when the only takeaway food was a sausage roll and packet of crisps.
But then the world caught up with Marks. Supermarkets matched them on quality by introducing premium ranges, consumers shunned ready meals preferring instead to do some actual cooking at half the price and twice the goodness, and lunchtime options became available everywhere from the likes of Gregg’s the bakers, or coffee outlets such as Costa and Starbucks.
So Mr. Bolland, what is needed here is a return to the historical ability of Marks and Spencer to see the future with crystal clarity, to anticipate consumer trends, and give us what we want before we even realise we want it.
On the supplier relationship side, we know that Morrisons supported British farmers under Bolland’s leadership, committing to stocking only British beef and lamb. Also that they set up Morrisons Farm, a 700 acre holding on the Dumfries house estate in Scotland where the objective is to be a “leading centre of excellence in applied farming research”. It is to be hoped that he will continue Marks’ constructive approach to farming relationships, and commitment to stocking only British beef, salmon, chicken, pork and turkey. He might even go all British on lamb. Whether he will bring a tougher negotiating stance generally to suppliers remains to be seen, but with slipping margins some changes are likely.