M&S

Smriti Mehrotra, vice president of a media channel, works in close proximity to the Marks & Spencers store in Phoenix Mills, Mumbai. Being a compulsive shopper and a brand loyalist, Smriti is exactly the kind of customer, who will eventually increase sales at M&S. However, she rarely visits the store unless she needs to buy gift hampers for special occasions. I can never manage to get my size at the M&S store. Most of their apparels are not stylish and are ill fitting. They offer no variety and the same dress will be repeated if five different colours, complains Mehrotra. In short, all she gets to see clothes of the last season, a limited range of beauty products and over priced accessories. Poor avataar of a world renowned retail chain Most Indian shoppers have a different takes on Marks and Spencers stores but all of them seem to agree on one fact Indian Mark and Spencer stores (previously operated by their franchisee, Planet Retail) dont offer the same products available internationally. The truth is that M&S undermined the Indian market to a certain extent and were highly confused when they launched the brand in India. The vastness and complexities of the Indian market often pose as problems for the international retailers. Although the company strategists launched their products targeted it at the mid-market level; they were too over priced and lacked the affordability factor which initiates buyers to try new brands. From 2000 till 2007, M&S in India was run as a franchisee operation with Planet Retail. Planet Retail put up the stores and purchased merchandise from UK and sold it in India. M&S also allowed Planet Retail to have smaller stores of 5,000 to 8,000 square feet, compared to the international standard of 15,000 square feet plus stores. After M&S let go of its previous franchise arrangement with Planet Retail, Planet Retail executives were quick to connect with M&S much smaller British Department Store competitor, Debenhams. Planet Retail also holds master franchise rights for other international brands that include Debenhams, The Body Shop, Guess, Accessorize, Next, Sole Effect, OshKosh BGosh and Carters. But all this proved to be detrimental to the growth of M&S in India. M&S franchisee imported clothes from the UK, paid a high import duty (at over 50%) and housed the merchandise in the stores here, pushing up landed costs of its goods in India. Localization of products When Marks & Spencer launched in 2000 it received a very cold response because it was way overpriced for the Indian upper middle class and not exclusive enough for the upper class, says an official from M&S.

M&S was then compelled to adapt to the Indian markets and restructure their sales strategy, said the source.Over the past 2.5 years, the 9.5 billion shopping chain has been putting in great effort to shed its expensive image to make itself more accessible to Indian shoppers. The brand was not being perceived as a mid-market retailer as it is in the UK. So in order to increase sales and reach out to the midmarket customers, M&S cut down on costs and reduced imports. They even when to the extent of redesigning their apparels to suit the Indian body type. For e.g.: M&S have now introduced shirts with chest pockets in their menswear collection because most Indian men tend to carry pens and wallets in their shirt pocket. Another interesting change that has been observed by frequent shoppers is that they have started using Indian colours such as hot pink, orange, deep yellow in their apparels as opposed to the subtle greys, silvers, light blues, maroons etc. The slim fit trousers for women now come with an extended curve at the hips, considering that Indian women generally have heavy bottoms. Martin Jones, head of M&S India operations in an interview told Forbes, When we took over the business we took a call to source more products from the South Asian region. At the time just about a single-digit percentage of products were locally sourced. Now it is 42%. Jones now sources 70% of the raw materials from the South Asia region. Consumers Complain Even after going through such dramatic changes M&S does not seem to match up to its contemporaries like Zara. The main problem lies in the fact that the Indian consumer is acquainted with most of the merchandise available at M&S stores abroad. The Indian shopper has now turned into a globe trotter and can clearly differentiate the local good available at M&S. Why should I pay a high amount for a product that does not meet internationals standards? questions Mehrotra. The two-year-old joint venture with Reliance Retail is a change in M&S entry strategy from the franchise model of the past. The 51:49 partnerships between M&S and Reliance are likely to result in 50 new stores over the next five years in India. The fate of these stores will only change if M&S is able to satisfy the various demands of the experienced Indian consumer with an enhanced vision. About Reliance Retail Reliance Retail is the retail business wing of the Reliance business. Many brands like Reliance Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness, Reliance Trendz, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home Kitchens, and Reliance Jewel come under the Reliance Retail brand. These are the home grown brands, at the same time, they hold rights for several international brands like Marks and Spencer and Hamleys. Reliance Retail does not sub-franchise its brands, hence these franchise opportunities are not listed at our websit

Marks & Spencer the right strategy for India Entry

The M&S case was discussed in an earlier post http://tiny.cc/o38it where my friend Vedant Sharma an ex-student from Tasmac had given the following interesting comment: M&S is well known lifestyle brand in the world. M&S entered in India with JV Planet retail pvt ltd but they were not able flourish brand in India. They have dissolved the agreement. Then, they have JV with Reliance Brands and the CEO is Mr. Darshan Mehta, COO of the VF Arvind Brands. In India, he is coming up with strategy of Pricing. They have two brands under roof of M&S i.e Blue Harbors & Autograph. Blue Harbour is affordable in nature and Autograph is Premium brand of it. M&S targets the Indian mid market segment In an interview with Hindu Business Line, Mr Mehta strongly advocates the need to cater to the mass markets rather than the premium segment. M&S has long way to go in the market because people still do not know that they have slashed their prices in India. Marks & Spencer is attempting to reduce its prices and be perceived as a mid-market retail brand as it is in the UK. Therefore building economies of scale into its sourcing operations will hold the key to its pricing strategy. Considering apparel commands steep duties of nearly 38 per cent, the UK-based retailer has decided to bring down its sourcing from abroad and source up to 70 per cent of its apparel indigenously. To expedite this process, the retailer has already set up its new sourcing office in Bangalore which would make apparel specifically for sale in India. Going forward, 70 per cent of its merchandise will be sourced in India. India opens up to foreign retail brands

Under current FDI rules, entry is restricted to wholesale, license or franchise arrangements. The newly formed joint venture with Reliance Retail is a change in M&S entry strategy from the franchise model of the past. The 51:49 partnership between M & S and Reliance is likely to open 50 new stores in the next five years in India. While apparel will be its mainstay, it will continue with the existing categories such as toiletries, food and add home-ware as a new category.

Another expert in retailing Harminder Sahni, MD, Technopak believes By forming a joint venture, M&S has shown its confidence in the Indian market. The fact that it has invested serious money goes to show that it wants to create value in this market. In any case, for a company of its size, it is not a good idea to exist as a franchise and it has taken the right step for itself in the long term.

Oonmeshikha, Darshan, Bidhya, Sanam, Niharika Our June 2010 Strategy batch at Tasmac reviewed and presented the M&S case a couple of weeks ago. Their special focus on M&S India was very enriching as one of the team members Darshan shared his observations based on his personal visit to the M&S store located at SGS Mall Pune.
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Marks & Spencer plans to expand ops in India E-Tex Staff - Mumbai The UK-based retail company Marks & Spencer is looking at catering to a larger market in India. The company plans to address a larger section of

the market with its Autumn Winter 2004 collection, prices of which begin at the entry level. Marks & Spencer general manager, Mr Atul Nayar said, Since Marks & Spencer made its entry in India, it has been well received. The range of our collections is a reflection of that. And by virtue of a bigger collection, we can have difference. The mens shirt starts Rs 1,150, a ladies top starts Rs 950 onwards, the toiletries start Rs 250 onward. While refraining to divulge the specifics, Mr Nayar added, With the new collection being unveiled, we expect the sales to go up. The company also introduced a limited catalogue of the Marks & Spencers food which includes chocolates and cakes. In addition, the retailer plans to expand its presence in the country by setting up shop in Hyderabad early next month. Marks & Spencer also has Bangalore in its radar and will enter the city for its Spring Summer 2005 collections.
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Marks & Spencer Drops Prices To Boost Sales

April 20, 2009 by Cris | 1 Comment

Business Standard: Marks & Spencer Reliance India (MSRI) has lowered the prices of its cheapest products by 20 per cent by stepping up its sourcing from Indian manufacturers, in a bid to retain customers who are moving away to competitive products.

A Polo Shirt is now available for Rs 395, compared with Rs 495 earlier, while the formal shirt will now be available for Rs 695, compared with Rs 795 earlier, said Mark Ashman CEO, Marks & Spencer Reliance India. During the ongoing recession, the entry price of the products matters and that is why a part of the margin saved through increased sourcing from India would be passed on to the customers, said Ashman. MSRI is a 51:49 joint venture between British department store chain Marks and Spencer Group Plc and Mukesh Ambani-Promoted Reliance Retail Ltd. Marks & Spencer previously had 14 stores in India under a franchisee agreement with Planet Retail. This agreement ran for six years,

but wasnt very successful. One reason was the high pricing of products, as the company used to pay high duties on imports from the UK.
In Franchises, Franchising In India, Strategy, Trends ////////////////////////////

Neerja Sinha, 43, a senior executive with a private bank, is a recent convert to the Marks & Spencer (M&S) outlet at Phoenix Mills, Central Mumbais bustling mall complex. Sinha, who has never been to an M&S store overseas, is now addicted to its not-so-busy ambience and the distinctly upmarket feel. She drops in at least once a month to buy stuff worth a few thousand rupees for her home and kids. The store has really become affordable in the last few months, she says. Sinha is exactly the kind of customer who will make Martin Jones, the new head of M&S India operations, happy. Over the last 30 months, the very British 9.5 billion pound shopping chain has been trying very hard to shed its exclusive and expensive image to make itself more accessible to Indian shoppers. Importantly, in the next 30 months, it is customers like Sinha that M&S will try to attract to propel its ambitious growth plan. Early results are heartening. Though they wont talk specific numbers, a senior executive says that some stores sales have increased 25 percent since the decision to change was made. Fifteen months after the repositioning, M&S is quickening its growth plans in the country. Jones wants to nearly treble the number of stores to 50 from the current 18 by 2013. Store sizes are consistently increasing and M&S will now also be in smaller and fast growing cities across the country. Though M&S owns its Indian venture jointly with Reliance Retail, its expansion here will be its boldest bet in any emerging market. In China, another fast-growing market M&S directly invested in, the company is said to be still struggling with the first store that it established a few years ago in Shanghai. There is great hope in the headquarters that India may well be their biggest emerging market success, says a senior M&S executive, who did not wish to be named. The intent appears serious so far. From 2000 till 2007, M&S in India was run as a franchisee operation. Its local partner, Planet Retail, put up the stores and purchased merchandise from UK and sold it here. M&S did not want to risk its capital in lieu of a cut in margins on the products it sold the franchisee. It also allowed Planet Retail to have smaller stores of 5,000 to 8,000 square feet, compared to the international norm of 15,000 square feet plus stores. All this has changed in the new scheme of things. M&S parted ways with Planet Retail a franchisee who still runs its store in Indonesia mainly on account of the pace of expansion it wanted in the country. It was also committed to change the biggest road block to its growth in the country a perception that its merchandise was way too expensive for its target audience. The brand was being perceived as much more premium than it was in the UK. Joness predecessor Mark Ashman, who was the first M&S head of the Indian venture, quickly picked the low hanging fruit. Earlier, M&S franchisee imported clothes from UK, paid duty and

put them in the stores here. With import duty at over 50 percent, its clothes seemed unaffordable compared to competition. Says Jones, When we took over the business we took a call to source more product from the South Asian region. At the time just about a single digit percentage of products were locally sourced. Now it is 42 percent. We intend to take it to 70 percent eventually. Ashman was also instrumental in making minor changes to merchandise to make it more appealing to the Indian customer. M&S shirts sported a pocket for the first time, and ladies shirts got longer. This was the first time M&S localised its offering. Based on the success of these experiments, M&S is now implementing similar changes in parts of Europe and China. The tricky part was to prove that customers liked what we did and that this did not prove to be a risk to the brand, says an executive, who was part of team that bought in the changes, There was also a feeling that M&S could have had a better brand standing than it currently had. Benetton, which also started as a franchised operation, went independent around the same when M&S came to India. Benetton is now considered more popular, as it had a longer time to implement its 'brand-strategy'. When M&S parted ways with Planet Retail, one point of disagreement was the size of stores that were already in the country. The franchisee believed that larger stores in smaller cities were unwarranted, given the sales from existing stores. M&S executives felt that having smaller stores would not give the intended experience of the brand. In Mumbai, M&S doubled the store size, a feeling that shoppers like Sinha resonate with now. Store sizes will be upwards of 15,000-25,000 square feet even in tier II towns like Pune. In Amristar, however, the company has gone back on this strategy as it has opened a 7,000 square feet store recently. M&S will have to tweak even some of its core propositions eventually, says an industry expert. In the UK and even in China, M&S gets a lot of revenues from food and beverages, though that line of business is still not functional in India. To enlarge the portfolio, M&S has introduced two new lines of business: Home and kids. Though sales from these lines are still insignificant, and company executives say both categories have had steep learning curves, the company is establishing sourcing links to get cheaper products into the shelves. The idea is to slowly bring the overall M&S experience into India rather than set revenues clicking right away. Says Jones, We are not trying a build a business only around customers who have been to M&S in the UK. Everything we are doing with product proposition, customer experience and store design is aimed at targeting the mid market Indian consumer in a way that is relevant and appealing to them. Will M&S new-found fervour guarantee a profitable business in the next five years? Experts feel that it may be too soon to give an answer. Already, their growth plans have been hampered by delays in store opening. Competitors like Esprit are learning the business quickly. Esprit bought down the retail price of its cotton shirts directly sourced from Vietnam by Rs. 1,000 over the last one year. It is also putting in place a local sourcing mechanism. Jack & Jones, the popular European sportive brand, has also begun bringing locally sourced products. The key, therefore, will lie in positioning its brand firmly in the Indian customers mind. Devangshu Dutta, CEO, retail consultancy Third Eyesight says, In the UK, they are firmly in

the middle of the market. Their new strategy to have more mass merchandise in India should not alter that. Read more: http://business.in.com/article/big-bet/marks-spencers-retailrethink/17712/1#ixzz1ZWHOPdtU