Analysis of Marks And Spencer In 2014
Marks and Spencer (M&S) is an international multi-channel retailer, which operates on more than 50 territories all over the world and has about 86,000 employees (Marks & Spencer 2014). To reduce its dependence on the UK market and expand international market, it is increasing store locations as well as channels and product range. For example, it opened new distribution centre in Castle Donington to strengthen its position of an international retailer (Marks & Spencer 2014). The aim of this paper is to analyze the company’s political, economic, social and technological environment.
Political environment mainly denotes the role of the government in establishing taxes, labour policies, environmental norms, industry investment requirements, etc. (Jobber 2010). The industry where Marks & Spencer operates is typically influenced by few safety, health and environmental regulations (Beavis 2012). Marks & Spencer adopted several initiatives for promoting fair trade including recycling, animal protection and reducing the amount of salt and fat in food (Marks & Spencer 2014). As Marks and Spencer is an international company, it needs to follow regulations of all the countries where it operates. In 1999, it created a number of principles together with its suppliers. These principles respond to all appropriate local and national legislatures, especially laws that regulate “working hours and conditions, health and safety, rates of pay, terms of employment and minimum age of employment” (M&S). In 2014, the company added principles that deal with human rights, community, gender equity, fairness and small businesses, particularly farmers (M&S). As for recycling initiatives, Marks and Spencer in partnership with Sainsbury launched a market trail. The aim of this campaign is to recycle at least 1.3 billion plastic food trays annually. Companies focus on recycling black CPET trays that are usually used for ready meals offered in supermarket. In fact, this kind of trays is recyclable but their black colour does not allow Near-Infrared sorting equipment detect them and then sort and recycle. To deal with this problem, experts decided to design a black trail that could be detected by sorting equipment (Hower 2014).
Economic environment is becoming more positive for Marks and Spencer due to improving of the UK economy. According to the company’s strategic plan 2014, GDP was expected to grow by 2.7 in 2014, whereas house prices have grown by 8.5% in a year. Inflation rates fell even lower than the Bank of England predicted (target was 2%). Employment figures have improved. Growth of food prices was slowed. Therefore, people started to think less about their finances and spend more money. On the other hand, the overall rising incomes caused lagging inflation. As a result, buyers do not see advantages in their discretionary spending (Marks & Spencer 2014). Therefore, despite certain improving of the economy and increasing confidence levels of customers, Marks & Spencer cannot achieve significant sales (e.g. underlying profits before taxes reduced by 3.9%) due to careful purchasing habits of its buyers (Marks & Spencer 2014).
“Consumer purchases are influenced by cultural, social, personal and psychological characteristics. For the most part, marketers cannot control such factors, but they must take them into account” (Armstrong & Kotler 2007). Social environment has a significant impact on Marks & Spencer as well on the rest retailers. It includes many aspects. First, there were changes in shopping habits of customers due to increasing use of the internet. Today, buyers search editorial fashion and lifestyle recommendations and direction. They also desire a smooth brand experience each time they choose to browse and purchase. Shopping in stores is still popular but customer demands have changed (Marks & Spencer 2014). For instance, they want flexibility, which is provided with a help of click and collect services. This allows buyers to make their own choice what to buy as well as choose place and time for shopping. Second, social environment differs for such business areas as clothing, food, Marks & Spencer website and brand. In particular, value of clothing market grew but its volume slowed because customers are more careful with their spending. Despite increasing confidence levels in comparison with previous years, this did not cause significant high street sales but there are some signs of improvement. For Marks & Spencer it means that buyers have a serious approach to the clothes items they buy. They desire to get a good balance of value and quality. Marks & Spencer responded to this by changing style, design and quality of its collection for women. For instance, 70% of fabrics were improved. More luxurious items were suggested. ‘Better and best’ offer was upgraded by adding more clothes made of leather, cashmere and silk. Sub-brands were made more distinct and easy to buy. Marks & Spencer also created new store concept, which became more inspirational (Marks & Spencer 2014). As for the food area, customers started to eat out more. They still desire value from shops that they visit on a daily basis. To satisfy customer needs, Marks & Spencer offered high quality and competitive prices as well as options for delivering restaurant-quality dishes to people’s homes. Customers especially value festive ranges that include interesting dishes that are regularly renewed (Marks & Spencer, 2014). The online retail has grown by about 16% in the UK. Its popularity also significantly increased. This is explained by changing customer expectations for shopping experience. Nowadays, buyers want to have more freedom, which means opportunities for browsing, purchasing and collecting items in any time and in any place. This has also led to reducing of differences between shopping in stores and online. Marks & Spencer responded to this by creating a new website marksandspencer.com that is easy to use on different gadgets, such as PC, tablet or mobile phone (Marks & Spencer, 2014). As for brands, customers look for reliable ones. Besides, people are very influenced by social media, which became an extremely integrated part of their lives. Therefore, brands need to be confident in their messaging. Customers desire to get some piece of glamour. Marks & Spencer tried to satisfy these customer needs launching ‘Leading Ladies’ campaign. It focused on promoting quality benefits of Marks & Spencer as well as on communicating excitement opportunities. For example, the company’s Christmas advertisement rekindled people’s interest to Magic and Sparkle. Marks & Spencer also expanded the use of social media in its marketing mix (Marks & Spencer 2014).
The influence of technologies has been strong in 2014. First, Marks & Spencer was affected by growing of internet sales and internet advertising (e-commerce). According to the company’s strategic plan 2014, the internet has modified consumers’ buying patterns. For example, the growing number of buyers is applying the internet as a source of their inspiration and investigation before buying something in stores or online. This forced the company to create a new website with an attracting design. It is now a flagship of the retailer. Moreover, it satisfies all the needs of customers. However, despite all these positive sides, online sales of Marks & Spencer reduced by 8.1 % in the first four months after launching new website (Chapman 2014). Specialists believe that this has happened due to lack of usability (Creven 2012). New e-commerce website should be intuitive and have easy transition for customer. It should not be ‘too clever’ but when “you go onto the M&S site you are not quite sure if it is a magazine or somewhere to buy a shirt” (Chapman, 2014), so customers get frustrated. Nevertheless, Marks & Spencer believes that they just need some time to return to the growth of sales. As for online advertising, the retailer had to use cloud services to scale the most important campaigns on TV and in social media. In particular, the company made a new website applying Microsoft Azure to deal with significant number of users (Rossi 2014). This approach also allowed Marks & Spencer to reduce spending on physical servers and inside of IT resource. For example, Microsoft Azure was effectively used for marketing the campaign named Magic and Sparkle that encouraged buyers to visit Marks & Spencer website and vote for the name of a dog used in the campaign. Magic and Sparkle campaign allowed to reach 97 % of British adults during holidays. The same technology was used for other busy times, such as Valentine’s Day, Mother’s Day, etc. (Rossi 2014). Apart from that, Marks & Spencer is affected by increasing use of applications on mobile phones. Furthermore, impact of mobile commerce will continue to grow in future, particularly it will be done by broader using of 4G, which provides wide opportunities for immersive shopping experiences. According to EE research, 39% of 4GEE users were going to purchase on a mobile phone or tablet during 2013/2014 Christmas holiday period. In 2012, the number of customers planning to use their smartphones and tablets for shopping reached only 15% (M&C Saatchi Mobile 2014). The most popular times for such shopping were early morning (8.30 am) and evening (5.30 pm), which means that people tend to use daily commute for purchase (M&C Saatchi Mobile 2014). Experts of EE believe that retailers, which have qualitative mobile applications and websites with convenient options for mobile users have an advantage over their competitors without such benefits (M&C Saatchi Mobile 2014). Therefore, technological environment is characterized by growing use of e-commerce and increase in applying applications on mobile phones.
PEST analysis of Marks & Spencer demonstrates that economic environment has improved in comparison with previous years, which provides more opportunities for increasing company’s sales. Political environment is quite stable and does not significantly affect its performance. As for social environment, buying habits of customers have changed. They started to buy more goods online and the use of mobile applications for shopping became more frequent. This increased the impact of technologies factors. The company had to create a new website, design new applications and use cloud services. Besides, customers are trying to find good balance between value and quality, so Marks & Spencer had to review its offerings. However, growing consumer confidence did make people feel advantages of their discretionary spending, so underlying profits before taxes reduced.
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