- Marjorie van Elven |
After dominating the UK clothing market for decades, Marks & Spencer is set to lose its number one position to Primark this year, according to GlobalData. Marks & Spencer announced it has earmarked 14 stores for potential closure this Thursday, which sits in line with its broader turnaround plan. In total, M&S aims to close over 100 shops by 2022.
“M&S has been losing share for more than two decades. In 1997 it achieved its peak clothing market share of 13.5 percent in the UK. Its position seemed unassailable, but since then its market share has been on a declining trend”, said Maureen Hinton, group pretail research director at GlobalData. “The closure of yet more stores will hasten the decline unless it can shift the lost sales to its online channel and transfer to its other stores”.
In order to ensure Marks & Spencer does not decline even further, Hinton advises it to not only close stores, but also make store space more productive, by providing consumers with an inspiring environment. “John Lewis’ 49 stores generate virtually the same revenue with half the space its online business”, ponders the research director.“While closing stores will make its space more productive and help to improve profitability, it still has not solved [Marks & Spencer’s] fundamental problem -- top line growth”. This seems, however, to already be part of Marks & Spencer’s plan, as the UK store estate restructuring is said to be part of the department store group's broader five-year transformation scheme to position itself as a leading store. In addition to store relocations, conversions and downsizing, M&S plans to introduce store concessions.
GlobalData forecasts Marks & Spencer’s shares to be 7.6 percent in clothing, which means a decline of almost 50 percent in two decades. Over the last 10 years, M&S has lost 2.2ppts in market share. “Out of the current Top 20 UK retailers, only the Arcadia group has lost more share (-3.1 ppts)”, added Hinton. Earlier this month, the Sunday Times’ rich list estimated that Sir Philip Green, chairman of the Arcadia Group, has seen his fortune shrink from 787 billion pounds to 2 billion pounds last year.