M&S - All eyes on results this week
6 November 2017
The M&S results are with us this coming week and it remains to be seen how the chain has performed, if we consider food in isolation, there was little wrong with their ranges for Summer.
Their reputation for 'newness' and developing lines that represent the season is unparalleled and works so well. It does tie in with their larger fresh space too so it's a win / win all round.
But inflation has been an issue all year and the Waitrose Essential price campaign alongside considered strength elsewhere (including Sainsbury's and their flatter prices) have impacted the M&S food operation.
That's before we consider discounters and their increasing efforts on premium too. Most of the ranges in Aldi and Lidl feature premium lines and in Aldi particularly, most of the products have a premium range extension now. We are up to 7 separate lines in premium Pizza alone.....
The opening of discounters in well heeled locations means they automatically come in to competition with M&S and with the discounter being an acceptable place to shop, it stands to reason that M&S will lose market share in this way, like everyone else is.
Intriguing comments in the Guardian via Archie Norman, a document and then a 3rd party writing such thoughts. He points to weaknesses within clothing and a target market of 55+.
A quote from the article:
According to the document, Norman also found fault with M&S’s food halls where the pace of trade has slowed this year. The report states that he highlighted how “too many” promotions were confusing customers and said the price of staples such as eggs, milk and bread needed to be brought into line with competitors.
Not many reading this note would disagree with that, nor the fact that entry price points in clothing and food are too high and promotions too plentiful. Again, he's not wrong on this.We have seen a steady rise in deals and as inflation has also impacted, it's driven the promotion northwards too. Where a deal was 3 for £9, it's now 3 for £10 which can look expensive.
The £6 deal inside the British category looks decent value, within the aisle but this alongside other deals can confuse the customer. Where does the value come?
Three conflicting meal deals (Asia / Indian) with another (Chinese) on the same week? Confusing?
As we see above, there are a number of deals around fresh, with numerous meal deal mechanics active. These deals are expensive to operate as you have to 'over stock' in many cases as you're never quite sure which lines will be purchased.
The waste then becomes challenging as reducing products means they are excluded from any meal deal promotion, as a meal deal saving on reduced products could end up meaning that M&S could give customers money back.
As we've covered before around their new price campaign, their shelf edge messaging can be cluttered and in some cases, actually worsens their value perception due to the lack of clarity.
The example above at first glance could make it appear that the £1.50 was for a giant Pastry, but was in fact a Buy one get one free esque deal.
However it's a 2 pack for £1.50. Advertised twice on the same signage, with an 's' missing from the Pain Au Chocolat label top.
Any effective competition from Tesco means that the market has to react, mainly due to the sheer size of Tesco alone.
The aggressive nature of Tesco recently, especially with their Wines deals has seen the market follow with Waitrose, Sainsbury's and latterly M&S run more 25% off deals to compete.
It's another deal and popular for customers but another example of this deal being voucher esque in its nature.
They should perform well at Christmas though, despite the price perception they look to have a great package of products, signage and also a tie up with Paddington given the second version of that movie comes out soon.
With Chocolate gold coin shippers dotted around the store, driving earlier trade in Confectionery. They also have their famed partnership with Shelter for Christmas within their food to go offer.
The Christmas pudding smoothie looking like a sure fire winner already!?
With Santa themed Toilet and Kitchen roll representing further examples of the ambition to stretch spending in to the festive season........
More of their new lines noted in Pies, strong packaging and the limited edition moniker always works well for customers.
However is 2 for £5 a good promotion? There is a conflict then around some 'new' labels not showing the promotion, leaving customers to assume that some Pies are not included in the deal, thus harming sales.
New Lattice pastries were included in the meal deal too.... Good value? Given they're £4 usually, adding a side and dessert for a further £2 represents good value.
The merchandising wouldn't necessarily see these lines placed together on shelf.
Lots of premium around for Christmas, the range has experienced steady growth around the food hall.
It's ideal for gifting and Confectionery benefits from a number of premium / niche gifting lines (giant Prosecco cracker anyone?)
All eyes on their food results this week, and the prospect of further store closures, or a slow down in the pledged roll out of their food halls? Interesting times ahead and their Christmas performance will be very interesting to watch indeed.
From the Grocery Insight newsletter archive, first sent to subscribers on 6 November 2017. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.