Marks and Spencer: How ‘arrogance and overconfidence’ lost customers in sales plunge

The 136-year-old company became a favourite among Britons for selling high-quality products in the UK under its ‘St Michael’ brand. In 1998, M&S became the first British retailer to make a pre-tax profit of over £1billion, but a year later those profits were halved – forcing the company to make unprecedented changes, like switching to overseas suppliers. Since then, bosses have moved to implement a “radical” plan focusing more on the food side of the business as clothing sales plummeted by 75 percent in recent reports.

But textile expert Niki Tait highlighted growing concerns during an analysis made at the time the company began to make some of these changes.

Writing for Just-Style in 2000, she stated: “Within the UK clothing and textile industry in general 700,000 jobs have been lost over the last two decades. 

“Of the 300,000 employed today, probably 80,000 are still dependent on M&S. 

“With a further reduction from 50 percent to 30 percent UK manufacture, many more of these must be in jeopardy.

Marks and Spencer's clothing sales have declined

Marks and Spencer’s clothing sales have declined (Image: GETTY)

Marks and Spencer was founded in 1884

Marks and Spencer was founded in 1884 (Image: GETTY)

“The majority of questions raised by those respected within the industry are focused around the loss in M&S’s competitive strength. 

“It was the bastion of the industry, it sold quality British-made goods to a predominantly British market, the middle market – never those looking for high fashion or cheap goods, but those who felt comfortable, for all manner of reasons, in buying British.”

Ms Tait claimed decisions undertaken by the company missed what their target market wanted and showed M&S were “arrogant”.

She added: “It sold sensible practical clothes for the family, to go to work in, do the housework in, relax in and be comfortable in.

“If you listen to their target market in the street, pub, hairdressers, little of what is in the shops at present matches what they want. 

READ MORE: Marks and Spencer: How survey showed Britons would pay MORE for UK-made goods

Marks and Spencer prided itself on selling British goods

Marks and Spencer prided itself on selling British goods (Image: GETTY)

“The problem, they say, is not one of price, or shop layout, or even the fact that credit cards are still not accepted within the stores.

“It is the fact that M&S has had the arrogance to sit back with over-confidence in its position as Britain’s number one retailer and not see the other stores catch up and overtake it, a point that was first admitted by M&S interim chairman Brian Baldock, and is now being acted on by new chairman Luc Vandevelde.”

Ms Tait said that M&S’s dropping of the St Michael brand signified the issues that its customers had.

She added: “They are just no longer offering the clothes their customer wants to buy.

“A well-known industry figure summed up his feelings on M&S: ‘It is a dinosaur: a huge body, small brain, moves slowly, and lives in the past.’

The company hit a high at the turn of the century

The company hit a high at the turn of the century (Image: GETTY)

M&S switched to overseas suppliers

M&S switched to overseas suppliers (Image: GETTY)

“With the dropping of the St Michael logo and the introduction of the designer ‘Autograph’ range, the company hopes to lose both this ‘lived in the past’ image and the harmful speculation into its future.

“The UK high street is today dominated by a small number of super-powerful retailers (more so than anywhere else in the world) with only a handful of major UK retailers absorbing 80 percent of market share.

“If one sneezes, many people get the flu, just as demonstrated by this simple change of policy in one company.”

Ms Tait finished her analysis by pointing out that despite the issues, Marks and Spencer were still highly profitable.

She continued: “The whole change in policy seems to have come about as a panic measure in response to a definite loss of confidence and has been reflected in share prices hitting a near nine-year low. 

Some have criticised Marks and Spencer

Some have criticised Marks and Spencer (Image: GETTY)

“But is this fair, since Marks and Spencer is still a profitable company?

“Between 1995 and 1998 its profitability was extremely high (an unsustainable position most say), rising gradually from 13.5 to 14 percent. 

“This dropped suddenly in 1999 to 6.6 percent and is still dropping, but the company still managed to turnover £8.224million, almost the same as in 1998, with a total operating profit of £512million.

“This drop in profitability has to be a concern, but is the decision to purchase an increasing amount, so quickly, from the low-cost countries the correct response?

“Many do not think so, and there have been many questions of late within the UK industry as to the real competitive nature of overseas purchasing.”

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