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Unit 14: A Review of Retailing: Environment and Operations

environment, by finding new capabilities and changing strategies. This interdependence between Notes
environment, strategy and organizational capabilities is shown in the following illustration:

Illustration 4: Interdependence of Main Factors

This is where M & S stumbled. Till 1990s M & S rode on a success wave because the environment
hadn’t changed and they weren’t forced to face unpleasant tasks. But when the rules of competition
changed, it failed to adapt itself, hence the mighty fall from everyone’s favourite to one at which
everyone looked at with wariness. In expanding laterally, it failed to focus.
When analysing the history of M&S strategy the following points have to be considered:
M & S was known for the family atmosphere, feeling of camaraderie, and the top management
within the family. It had an inward looking culture- of ‘growing your own tree’. Almost all the
top management had come up through the lines in the organisation. There was no fresh blood,
ideas to infuse life in the organisation. It was only as late as 2000, that a person from outside the
organisation was appointed to the top post, Luc Vandevelde, who brought with him a new
strategy, quite different from the existing one. He began changing the entire outlook of the
organisation from inward looking to outwards.

 M & S had a top down management approach, which seldom worked. All the stores were
similar in layout, design, etc., leaving no scope for modifications based on the local
environment. The individual stores were allocated merchandise dependent on the floor
space. Stores of the same size were sent the same clothes. It failed to understand that
customer tastes are different, will change according to the lifestyle and the demographic
characteristics.
 M & S always had the same UK based suppliers, because they felt that these suppliers could
provide them with the highest quality goods. They also believed that the customers were
patriotic. They gave scant regard when the costs escalated and competitors started buying
its merchandise from low cost countries.
 M & S continued with its risk aversive formula long after the rules of competition changed.
It ignored the market changes. Greenbury, who was heading the firm in the 1990s, when
trouble began to erupt, used to focus on day to day operations and didn’t focus on the long
term strategy for the company. It neither understood nor tailored the offerings to the
various growing market segments.
 Even though the majority of the customers were women, and much of the merchandise
was womens’ wear, the decision makers were dominated by men.
 M & S tried to expand in the international market in a big way. But it didn’t give importance
to the fact that Europe, America, Canada were entirely different from England. It failed to
give respect to the new foreign environment.
 M & S built its reputation on the basics, the essentials, and didn’t work on fashions. This
worked for them in the beginning, but by late 1990s it began to lose out to its competitors,
The Gap, Oasis, Next, at the top end and Matalan, Asda, etc. at the bottom end. In the value
food market, Tesco and Sainsbury began competing with them. It was only in 2001, did
they bring in a designer to design its new range of clothes. They stopped understanding or
reacting to the customer’s needs.
 M & S did not have a customer loyalty card, when almost all its competitors had one.

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