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| Marks & Spencer to trial larger food halls | Marks & Spencer to trial larger food halls |
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| Marks & Spencer has begun a trial scheme to increase the size of its food halls and cut back on the space it devotes to fashion as its clothing sales continue to slump. | Marks & Spencer has begun a trial scheme to increase the size of its food halls and cut back on the space it devotes to fashion as its clothing sales continue to slump. |
| The retailer has already lined up eight stores where it will increase the amount of floorspace for its upmarket food range over the next six months. It is now examining how many more could be rejigged to bolster its struggling sales and profit performance. | The retailer has already lined up eight stores where it will increase the amount of floorspace for its upmarket food range over the next six months. It is now examining how many more could be rejigged to bolster its struggling sales and profit performance. |
| The strategy is being developed as M&S is expected to reveal another dive in fashion sales over the key three months to 26 December. Sales from stores – rather than online – are expected to be down by as much as 10%. | The strategy is being developed as M&S is expected to reveal another dive in fashion sales over the key three months to 26 December. Sales from stores – rather than online – are expected to be down by as much as 10%. |
| Online sales are expected to be up by as much as a third, as M&S recovers from problems at the distribution centre for its internet business a year ago. With both stores and online taken into account, City analysts are expecting underlying sales of clothing to have fallen by 2%. | |
| It will be the third consecutive quarter of falling clothing sales – the M&S has now had just one quarterly rise in five years. | It will be the third consecutive quarter of falling clothing sales – the M&S has now had just one quarterly rise in five years. |
| The retailer has struggled to compete with growing competition from rivals including Next and Debenhams, and fashion chains such as H&M, Zara and New Look, where its once core “mum and dad” customers are now happy to shop. | The retailer has struggled to compete with growing competition from rivals including Next and Debenhams, and fashion chains such as H&M, Zara and New Look, where its once core “mum and dad” customers are now happy to shop. |
| But the M&S food business is thriving in a tough market. Food sales at its established stores are expected to have risen by as much as 1% over the three months to Boxing Day – putting M&S well ahead of grocers such as Tesco and Morrisons. | But the M&S food business is thriving in a tough market. Food sales at its established stores are expected to have risen by as much as 1% over the three months to Boxing Day – putting M&S well ahead of grocers such as Tesco and Morrisons. |
| Well informed sources said M&S had concluded that it devoted too much store space to clothing, especially as shoppers’ shift towards buying online and the retailer continues to struggle to regain the broad family appeal it had in the 1980s. | Well informed sources said M&S had concluded that it devoted too much store space to clothing, especially as shoppers’ shift towards buying online and the retailer continues to struggle to regain the broad family appeal it had in the 1980s. |
| The food business, which currently does not offer home deliveries, is better protected from the switch to online shopping as its upmarket own-label products cannot be bought elsewhere. | The food business, which currently does not offer home deliveries, is better protected from the switch to online shopping as its upmarket own-label products cannot be bought elsewhere. |
| With food performing well, one source said there could be as many as 60 stores which had space for larger departments. | With food performing well, one source said there could be as many as 60 stores which had space for larger departments. |
| The retailer’s biggest stores have food departments as large as 16,000 sq ft (1,500 sq m) – the size of a small high street supermarket. But the average space devoted to food in its medium-sized stores is about 7,000 sq ft and it is understood that there are dozens which could be expanded by up to 30%. | The retailer’s biggest stores have food departments as large as 16,000 sq ft (1,500 sq m) – the size of a small high street supermarket. But the average space devoted to food in its medium-sized stores is about 7,000 sq ft and it is understood that there are dozens which could be expanded by up to 30%. |
| Fraser Ramzan, a retail analyst at Nomura, said: “The channel shift [towards online sales] in the most recent quarter does raise questions about what to do with store space longer term. Other retailers such as B&Q and Debenhams have already addressed store space with concessions or closures. M&S does have a decent alternative use for some of their spare space – food.” | Fraser Ramzan, a retail analyst at Nomura, said: “The channel shift [towards online sales] in the most recent quarter does raise questions about what to do with store space longer term. Other retailers such as B&Q and Debenhams have already addressed store space with concessions or closures. M&S does have a decent alternative use for some of their spare space – food.” |
| About t10 years ago, M&S cut back the amount of space devoted to food in a handful of stores. But the retailer is thought unlikely to simply unwind those changes | About t10 years ago, M&S cut back the amount of space devoted to food in a handful of stores. But the retailer is thought unlikely to simply unwind those changes |
| One well-informed source said the retailer would have to consider a number of factors including the location, car-parking facilities, the spending power of the local community and level of competition in an area to judge the opportunity for expanding food space. | One well-informed source said the retailer would have to consider a number of factors including the location, car-parking facilities, the spending power of the local community and level of competition in an area to judge the opportunity for expanding food space. |
| “Each store will have to be judged on its own merits with a lot of factors taken into consideration,” said the source. “Clothing profit margins are much higher so they don’t want to shrink clothing sales and find they don’t make the money back on food.” | “Each store will have to be judged on its own merits with a lot of factors taken into consideration,” said the source. “Clothing profit margins are much higher so they don’t want to shrink clothing sales and find they don’t make the money back on food.” |
| M&S has already cut back the amount of space devoted to clothing in some stores by introducing cafes, restaurants, delis and dedicated areas for picking up goods bought online. | M&S has already cut back the amount of space devoted to clothing in some stores by introducing cafes, restaurants, delis and dedicated areas for picking up goods bought online. |
| One source who knows the retailer well said there was still further opportunity to expand cafes and takeaway food areas to reflect the rising trend in eating out and buying pre-prepared food. | One source who knows the retailer well said there was still further opportunity to expand cafes and takeaway food areas to reflect the rising trend in eating out and buying pre-prepared food. |
| Retailers such as Sainsbury’s, Waitrose and Tesco are already introducing more eateries and takeaway food areas to take advantage of the changing spending habits. | Retailers such as Sainsbury’s, Waitrose and Tesco are already introducing more eateries and takeaway food areas to take advantage of the changing spending habits. |
| Spending in restaurants and pubs rose 14.4% and nearly 10% respectively last year, according to credit and debit card provider Barclaycard, while food and drink shopping rose just 1%. | Spending in restaurants and pubs rose 14.4% and nearly 10% respectively last year, according to credit and debit card provider Barclaycard, while food and drink shopping rose just 1%. |
| With all the challenges it faces, Ramzan said M&S not only needed to reassess its existing outlets but be more proactive in reshaping its store estate. | With all the challenges it faces, Ramzan said M&S not only needed to reassess its existing outlets but be more proactive in reshaping its store estate. |
| The retailer closed 12 stores in the six months to November, nearly twice the number in the previous six months, and analysts said M&S appeared to have stepped up action to move out of less popular shopping locations. | The retailer closed 12 stores in the six months to November, nearly twice the number in the previous six months, and analysts said M&S appeared to have stepped up action to move out of less popular shopping locations. |
| “It’s not just about closing stores but opening in the right places where, in an increasingly online world, people want to shop,” Ramzan said. | “It’s not just about closing stores but opening in the right places where, in an increasingly online world, people want to shop,” Ramzan said. |
| A spokeswoman for M&S said the changes to store space were just business as usual and it had no plans to alter dozens of stores. The company has said it wants to keep the space devoted to clothing and homewares steady across the business and that was still the current plan. | A spokeswoman for M&S said the changes to store space were just business as usual and it had no plans to alter dozens of stores. The company has said it wants to keep the space devoted to clothing and homewares steady across the business and that was still the current plan. |
| “We will move some space from GM [clothing and homeware] to food in eight stores over the next few months. This is part of our regular work to ensure every store has the best possible set up for our customers,” she added. | “We will move some space from GM [clothing and homeware] to food in eight stores over the next few months. This is part of our regular work to ensure every store has the best possible set up for our customers,” she added. |