Sir Stuart Rose, chief executive of Marks & Spencer, this month revealed that he is considering breaking with tradition by stocking branded grocery products.
In the past the retailer has stocked only own-brand grocery products or exclusive ranges, so the potential change is being taken as an indication of M&S' ambitious plans to move its positioning toward that of a one-stop grocery shop. It also coincides with provisional talks with French beauty retailer Sephora about opening its first branded area.
Rose's remarks came as the retailer posted its worst performance for more than two years, despite a big-budget, star-studded Christmas ad campaign. UK like-for-like sales fell 2.2% in the 13 weeks to 29 December. While there was no real surprise that clothes and homeware sales fell 3.2%, given a general slowdown on consumer spend, the City was shocked by a 1.5% drop in food sales over what, traditionally, has been a buoyant period.
This month, M&S launched a 150-strong cooking ingredients range for customers who want to prepare meals from scratch. While they still carry M&S branding, the retailer's director of food, former Waitrose managing director Steven Esom, believes it is a departure. 'Customers wanting to buy their ingredients under one roof will increasingly find everything they need at M&S,' he says.
Patrick Allen, marketing director at The Co-operative Group, whose businesses include food retailing, pharmacy and farming, is not surprised M&S is 'bowing to consumer demand' and considering adding name-brand lines. 'It still has a strong high-street presence but its rivals have upped their game,' he says. 'The gap between their premium own-brands and M&S food is negligible.'
M&S faces further competition from Waitrose, following John Lewis' decision to install more outlets for the supermarket in its department stores, bringing the two retailers into closer competition on clothing as well as food.
Further pressure will also result if Tesco pursues plans to build department store-style shops in town centres to house its fast-growing non-food goods and clothing ranges alongside groceries.
Kate Waddell, head of consumer brand at branding agency Dragon, warns of the dangers of diluting M&S' premium positioning. 'Waitrose has an upmarket positioning even though it has always stocked branded products, but M&S' heritage is 100% own-brand,' she says. 'It risks losing its brand values by trying to take share of the core shop.'
Waddell suggests M&S should introduce products from sectors where it cannot be the premium brand leader, such as laundry and baby goods, and with competitive products such as Coca-Cola. 'It must stay away from food brands, as this is where its own brand is strong,' she adds.
Moreover, the introduction of non-M&S food products could jeopardise its 'Plan A' environmental pledge. 'How will it be able to control the sustainability and guarantee the integrity of other brands?' asks one retail expert.
Whether M&S is aiming to bring in a wider audience or simply increase basket spend to insulate against recession, many industry sources agree a move into branded grocery goods will have a dramatic impact on its brand. One goes so far as to issue this warning: 'It won't be traumatic or instant, but it will slowly erode the simple pleasure of the hedonistic experience of shopping in M&S.'
For a listing of the major multiples' own-label ranges see this week's Marketing magazine.
Comments