Marks & Spencer Mulls Selling Other Brands
By Bernice Hurst, Managing Director, Fine Food Network
UK-based Marks & Spencer has long sold clothes and food, relatively recently introducing some housewares and toiletries. It is mid-market rather than high end and suffered for many years from a perception of being boring and middle-aged. It is best known, and always has been, for reasonably priced, sensible underwear as well as high quality food. They were probably the first to introduce ready meals – and they were well regarded.
Over the past few years, in addition to revitalizing their designs and advertising, Marks & Spencer has launched Simply Food stores, which sell precisely that – simply food. They seem to be successful convenience size/style stores.
Everything sold in Marks & Spencer carries the brand name St Michael. So any introduction of name brands, especially for food, would be very radical. But that is precisely what The Sunday Telegraph reports the retailer to be considering.
According to the paper, Sir Stuart Rose, M&S chief executive, said a team of managers at the company’s head office was working on initiatives assessing whether the sale of branded food and cosmetics would help drive sales growth and be supported by M&S customers. Amongst the brands being considered are Chanel and Heinz.
“Provided it doesn’t bring the [M&S] brand into disrepute, we will consider it,” Mr. Rose told The Sunday Telegraph, adding, “when a customer comes in to one of our stores and wants to buy make-up we are basically saying to her: ‘Sorry madam, you have to go across the road.’”
He added, “I am a big fan of Tabasco, but when I want to buy some Tabasco I have to go to Sainsbury’s.”
Another possibility mentioned is opening cosmetics and perfume shop-in-shops across the UK through a tie-up with French beauty retailer Sephora, owned by luxury group LVMH. This project has been under discussion for some time and would increase the chain’s presence in the UK’s £6bn cosmetics market, where it now has only a small market share.
M&S plans to reveal whether it plans to add brands when it releases full-year results in May.
Discussion questions: What are the pros and cons of bringing other brands into a store whose reputation and reliability are based on its own proprietary brands? Might they be getting hurt at this point by not carrying well-known labels?
[Author’s note] In 1884 Michael Marks, a Russian born Polish refugee, opened a stall at Kirkgate Market, Leeds and instructed customers that there was no need to ask the price because “everything costs a penny.” Marks & Spencer now has more than 600 stores in the UK and 240 stores worldwide, including over 219 franchise businesses, operating in 34 countries. The St Michael brand name was introduced in 1928.
I think it is a big assumption that shoppers go there because they can ONLY buy the M&S brand there. It is likely that shoppers expect a certain experience, value, and quality level and if selling other brands in addition to own brand does that better than restricting choice, so be it.
I think distribution of (other non-proprietary) branded goods hurts more than it helps.
One point of correction…nothing has been sold under the brand name “St. Michael” at M&S for some time. That moniker was dropped in favor of simply labeling items as “Marks and Spencer” brand, or one of their other exclusive in-house brands, such as “Autograph,” “Blue Harbor” or “Per Una.” So in a sense, M&S is already experimenting with branding variations, and this would just be an extension of that.
Is it the brand name product that is causing the erosion of sales or is it that M&S doesn’t have products consumers want. If a consumer really wants Tabasco sauce do they have to go to Sainsbury’s because they want the Tabasco brand or is it that M&S doesn’t have their own brand of Tabasco that is equally good?
Determining why consumers are buying products at other stores would seem to be an important step to take before shifting away from a very successful point of differentiation.
“The essence of positioning is sacrifice…” – Rosser Reeves (I think).
The toughest management decision in the world is to stick to a tight positioning in the market. Especially if there is a slowdown in the business or the positioning is perceived to be losing traction. But quite often, the first step onto that slippery slope starts a long downhill slide that is nearly impossible to stop. Wal-Mart almost did it with their foray into “premium.”
That’s not to say that adaptation to changing times or local markets is ipso facto abandonment of the positioning. In Wal-Mart’s case, the positioning is “lowest prices every day” — not “cheap.” They can offer higher quality brands as long as they continue to offer the best price in the market on those brands.
Marks and Spencer is built on the positioning that their brand uniquely represents the highest value in the market. I’m not sure how they can avoid diluting that positioning if they introduce other manufacturers’ brands, like Heinz.
If Marks and Spencer chooses to alter their strategy and starts to sell other brands in their stores, they will lose their significant point of differentiation. People in the UK know for what the St. Michaels brand stands, and they shop M&S because they trust the brand, and trust the quality of the brand. M&S should be more concerned about always maintaining the high quality of the St. Michaels brand, which will continue to encourage shoppers to return on a regular basis.
While it is true that Trader Joe’s has successfully integrated other brands within their stores, I believe that most shoppers who go to Trader Joe’s, go for the Trader Joe’s branded products, not for the branded products that they can find in their local Kroger or Safeway.
Retailers that have a high quality private brand strategy and maintain that high quality while innovating in new product development will have a better chance to sustain their customer base, and grow their business.
Marks & Spencer could certainly test famous brands to see if their financials outperform what they replace. Few “adding to the assortment” retail news stories ever state what will be dropped to make space for what’s new. Instead of famous brands, famous exclusives might be a better idea. Or more adroit investment in Marks & Spencer’s private label merchandise. Inspired product development can take a lot of time and effort, but when it’s successful, the customer loyalty becomes wonderful.