July 17, 2009

Let's talk underwear shall we?

Marks and Spencer, The Mercat, KirkcaldyImage via Wikipedia

About 12 years ago I was on a skiing holiday with friends in Austria. Some of the girls had managed to inveigle a couple of the Austria Ski instructors back to our chalet and we were chatting about Austrian/English things. One of the girls made mention of "Marks & Spencer" and the Austrians, naturally, were puzzled as they had no knowledge of what "Marks & Spencer" was. By way of explanation I asked the following of the group "When I call out your name could you please indicate with either a 'yes' or a 'no' whether the underwear you currently have on was purchased at Marks & Spencer?" I then went around the room calling out the name of each of the 12 members of the ski party. 10 replied in the positive.

Now, some dozen years later I would be surprised if the same poll had anywhere near the same results. But why? Well there are a number of possible reasons. M&S lost sight of it's customers for a while in the late 90's The rising cost of using British suppliers was also a 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 as it prided itself on sourcing only from the UK. Another factor was the company's refusal until 2000 to accept any credit cards except its own store card. In addition, as an aging and famously bureaucratic company, it was losing touch with potential younger customers, who were reluctant to shop with it. The net result is that turnover dropped, profits dropped and customers left in droves. Recent initiatives to stem this tide appear to be working but there is still a fundamental problem that M&S have with their products. They have let competitors in. Back when I took my poll of skiers, the number of places that would supply underwear to the masses was limited. British Home Stores and Woolworths were other possible places. But both of these have suffered along with M&S - in fact Woolworth's no longer exists as an organisation. But more insidious than this was the rise of dedicated stores seeking to take market share away from M&S. Knickerbox, Contessa, La Sensa and other such outfitters took on the niche market with products that were priced competitively and promoted well. As a result the British public had somewhere to go for their 'smalls' when M&S failed them. And they never went back.

What's the moral of this story? Well, as Seth Godin would no doubt agree: Sometimes you have to keep pushing forward and making your presence known even if you are the dominant player. Standing still in the world of business is equivalent to going backwards. M&S found this out the hard way.

Will you?


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(You should follow me on twitter here)

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