Marks & Spencer plc Definition

History

The original firm was a chain of "penny bazaars", founded by a Jewish immigrant, Michael Marks in Leeds with a loan of 5 from Issac Dewhirst, a wholesaler. His first full store was opened in 1894 at Stretford Road, Hulme, in Manchester. Marks entered into a partnership with Thomas Spencer who was working as Dewhirst cashier. Dewhirst went into manufacturing and remains the biggest supplier to M&S. M&S became a household name thanks to the efforts of Marks' son, Simon Marks, and his friend, Israel Sieff.

Unlike most of its rivals M&S resisted the lure of television advertising when ITV was launched in 1955, preferring to rely on its reputation to draw in customers. It was not until the mid-1990s that the first TV commercials for M&S clothing were broadcast.

M&S made its reputation in the 20th century on a policy of only selling British-made goods. It entered into long term relationships with British manufacturers, and sold the goods under the "St Michael" brand (trademark registered in 1928), which was used for both clothes and food. It also accepted the return of unwanted goods, giving a full cash refund if the receipt was shown no matter how long ago the product was purchased. It has now adopted a 90-day returns policy, which puts it ahead of rival retailers, who still only offer a maximum of 30-days on refunds. The company put its main emphasis on quality, but for most of its history, it also had a reputation for offering fair value for money. When this reputation began to waver, it encountered serious difficulties. Arguably, M&S has historically been an iconic retailer of 'British Quality Goods.' Its business model required suppliers to commit to long term contracts solely to M&S. This approach often led to an over reliance by manufacturers on the portion of trade they did with M&S. Accordingly, when the M&S fashion buyers changed suppliers on some aspects of the company's retail clothing offering, manufacturers were left dangerously exposed many became insolvent. This has resulted in a change of climate and no longer is a contract to supply M&S held up as the panacea it once was. Further, the shift by M&S towards the pursuit of profits, has precipitated a reliance on imported goods. This has often been to the detriment of quality, jeopardising a fundamental mainstay of the enduring M&S ethos.

In 1988, the company acquired Brooks Brothers, an American clothing company and Kings Super Markets, a US food chain.

M&S's profits peaked in 1997 and 1998. At the time it was seen as a continuing success story, but with hindsight it is considered that during Sir Richard Greenbury's tenure as head of the company, profit margins were pushed to untenable levels, and the loyalty of its customers was seriously eroded. The rising cost of using British suppliers was also burden, as rival retailers increasingly imported their goods from low-cost countries, but M&S's belated switch to overseas suppliers undermined a core part of its appeal to the public. In addition, as an ageing and famously bureaucratic company, it was losing touch with potential younger customers, who were reluctant to shop with it. These factors combined to plunge M&S into a sudden slump, which took the company, its shareholders, who included hundreds of thousands of small investors, and nearly all retail analysts and business journalists, by surprise. The company's share price fell by more than two thirds, and its profits fell from more than a billion pounds in 1997 and 1998 to 145 million in the year ended 31 March 2001.

Since the late 1990s M&S has experienced serious boardroom instability and has made a number of attempts to revive its business, with only partial success. In 2001, with changes in their business focus such as the introduction of the "Per Una" clothing range designed by George Davies , accompanied by a redesign of their underlying business model, profits recovered somewhat and M&S recovered some of its market share, but it soon became apparent that problems remained. Other changes to tradition included accepting credit cards and opening their stores on Sunday.

In 2004, M&S was in the throes of an attempted takeover by Arcadia Group & Bhs boss, Philip Green. On July 12 a recovery plan was announced which would involve selling off the financial services business to HSBC Bank plc, buying control of the Per Una range, closing the Gateshead Lifestore and stopping the expansion of its Simply Food line of stores. Philip Green withdrew his takeover bid after failing to get sufficient backing from shareholders. Philip Green's offer to the shareholders in 2004 of 4 a share, has been recently made to look feeble by M&S's current revival. Since June 05 the share price has almost doubled from 319p a share to a high of 632p in May 2006.

The headquarters of M&S was for many years in Baker Street, London; during World War II these offices were used by the Special Operations Executive for secret missions in Occupied Europe. In 2005 the company moved to a new headquarters in Paddington, London.

When Stuart Rose took over in 2004, he introduced a new promotional brand under the Your M&S banner, with a corresponding logo. This has now become the company's main brand in its advertising, online presence and in-store merchandising. The clean font and modern colors of the new image are somewhat incongruous alongside the traditional M&S signage and associated fittings that still adorn the stores themselves. In fact the only thing they have in common is the use of M&S traditional green in the ampersand of the new logo. This may seem confusing at first, but the new look has been instrumental in the company's recent resurgence, particularly with the success of a new clothing campaign featuring the legendary model, Twiggy, and younger models associated with the bohemian styles of 2005-6, and the TV ad campaign for their food range featuring Dervla Kirwan and the tagline "This is not just food, this is M&S food".