Case example Can the Saturday boy change Marks \& Spencer? Can the Saturday boy change Marks \& Spencer? the late 1990s, imposing high costs. Marks \& Spencer at Marks \& Spencer for both clothing and food). However, refused to accept credit or debit cards until 2001. In 2004, many of these full-line stores were in prime locations with Philip Green (owner of Topshop and several other major high rents that could no longer be justified. The company retailers) launched a hostile takeover bid that was only had recently moved into two expensive new headquarjust fended off. Defeated, Green threatened: 'They are ters buildings in Paddington, London. The overseas going to have us breathing down their neck in every street businesses, a major thrust by predecessor Marc Bolland, and every shopping centre in the UK. Then we'll see who were faltering. Although spread across 58 territories in is the best retailer.' In the period 2007 to 2016, Marks \& Asia, Europe and the Middle East (there had earlier been Spencer's share price lost 43 per cent of its value, while the painful withdrawals from North America), in 2016 interFTSE 100 index of top British companies lost just 5 per cent national sales still only amounted to around 10 per cent When Steve Rowe took over in 2016, he faced a of purchasing economies of scale: international retailers number of challenges. The clothing and home prod- H&M and Zara had three to four times the buying power ucts business was still an important part of the compa- as Marks \& Spencer. ny's overall activities, accounting for 3.9bn in sales. Marks \& Spencer did have one jewel in its crown, the However, the clothing business was regarded as having food business, accounting for 5.4bn in sales, up from stagnated: in an age of fast-fashion, quality tended to 4.4bn in 2010. This growth had been achieved by investmean dull. At the company's annual general meeting of ment in quality and innovation, a mark of Steve Rowe's 2015, Muriel Conway, a former fashion designer at the former rival John Dixon. Marks \& Spencer became famous ting ranges: 'I could weep when I see what is in stores of luscious food items. By 2016, the company had nearly today. Where is the originality? The flair? The newness? 600 'Simply Food'stores focused on food, many converted The good taste?' At the same time, the company had from full-line stores. Again, however, there were anxieties problems with availability when it did have hits: a pink about growing digital competition, with companies such duster coat in 2013 and a brown cowgirl suede skirt in as Ocado operating online delivery services that Marks \& 2015 had been hugely successful in the fashion media, Spencer were far from creating. but stores had quickly run out of stock. The company's Rowe set out to address Marks \& Spencer's problems customer base was now aging, with young women in several ways. The declared objective was continued increasingly preferring shops like Zara, H\&M and Philip growth in food and recovery in clothing and home prodGreen's Topshop. ucts. He cut 525 jobs at the London head office and moved At the same time, there was the rise of digital sales. a further 400 roles outside of the capital city to cheaper Earlierinhiscareer,Rowehadbeendirectorofecom-merceatthecompany,butunderLauraWade-Gearyalocations.HecutpremiumpayforSundayworkingbyretailstaff.25percentofthefull-linestoreswereear-marked merce at the company, but under Laura Wade-Geary a staff. 25 per cent of the full-line stores were ear-marked many problems: the transfer from an Amazon site to the retreated from ten international markets. However, results company's own website had required existing customers were slow to come. In the year ending early 2018, Marks \& to re-register and the new online business warehouse Spencer's profits had fallen to 68m, with both food and had suffered problems of availability, resulting in stalled clothing sales down. Rowe insisted to investors that his growth for six months. In 2016, online sales amounted to turnaround plan for the company was a 'marathon', and about 20 per cent of total clothing and home products that the retailer was only at the three to four mile mark. sales, against 40 per cent at the similarly positioned British retailer John Lewis. Euromonitor estimated that 18.5 per cent of fashion sales in the United Kingdom were online Archie to the rescue? by 2016, and the online specialist ASOS, founded in 2000, In late 2017, Marks \& Spencer had got a new company already had 15 million customers with sales growing by chairman, Archie Norman. Norman was renowned as a roughly a third every year. deal-maker and retailer, having previously turned around Finally, Steve Rowe faced cost problems. Marks \& the ailing supermarket chain Asda, before selling it to Spencer had 302 full-line stores scattered around the American giant Walmart. Norman promised a hands-on United Kingdom (about 30 per cent of customers shopped style as Chairman, saying: 'Companies are better run Chapter 15 Leadership and strategic change that way than with a disengaged board.' Norman's with the bald statement: 'Accelerated change is the only appointment brought several top management changes, option.' including new directors of both the food and clothing In early 2019, Marks \& Spencer reported again that businesses, along with a head of digital and new heads sales in both food and clothing and home products had of menswear and womenswear. Several of the new fallen over the previous year. Against rising financial managers had worked with Norman before. markets, the company's share price had fallen about one The retail context in the United Kingdom was tough, third since his appointment as Chief Executive. especially for traditional retailers. During 2018, estab- Main Sources; www.corporate marksandspencer,com; CityAM, 6 March World went bust, and the major department store chain Debenhams was under takeover threat. In a public speech, being on 'a burning platform'. The company could not stay in the same place, but must make a daring leap into chairmanship,Rowepresentedacontinuousfourstagetransformationplan.Thefirststage,puttingoutthetermsofthechangekaleidoscope(Section15.3.1)atthetimeofSteveRowesappointmentasChief transformationplan.Thefirststage,puttingoutthefires,describedthefirsttwoyearsofhisleadership.2018-atthetimeofSteveRowesappointmentasChiefExecutive. fires', described the first two years of his leadership. 2018- Executive. 2019 was about 'restoring the basics'. Then would come 3 Consider the types of strategic change (Section 15.4) 'Shaping the Future', preceding 'Making M\&S Special' 3 Consider the types of strategic change (Section 15.4) from2021onwards.Thetransformationplanwouldhavetoaddresssixself-identifieddeep-seatedissues:they,giventhechangecontext?chairmanshipofArchieNorman.Howappropriateare a 'complex corporate culture and structure'; 'behind the 4 Which of Kotter's eight steps for change (Section 15.5.1) are exemplified by Steve Rowe's curve in digital"; "more to do on style and value in clothing (Section 15.5.1) are exemplified by Steve Rowe's with inefficient supply chain'; and 'store estate not fit case, could have been more greatly emphasised