Services and Retail Marketing: Marks & Spencer Case Study (Case Study Sample)

Services and Retail Marketing: Marks & Spencer Case Study
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Services and Retail Marketing: Marks & Spencer Case Study
The UK retail industry was hit hard by the coronavirus pandemic. As part of the public health response following the outbreak of COVID-19, the government introduced restrictions which included local and national lockdowns, voluntary social distancing, and wearing masks to curb the spread of the virus. In March 2020, the government ordered the closure of non-essential retail stores (restaurants and pubs, fashion stores, entertainment and leisure) as part of the first national lockdown. Two other lockdowns with near-similar public health guidelines would soon follow. The measures heavily impacted the UK retail industry. The pandemic wiped out thousands of jobs and put nearly 7.6 million others at risk, significantly reducing consumer spending. Consumers prioritized spending on essential goods and services over discretionary services, increased precautionary savings, and delayed the purchase of non-essential goods (Office for National Statistics, 2021). These changes would have long-term implications for the UK and the global retail sectors.
Marks & Spencer (M&S) was hit hard by the COVID-19 crisis. The company had to shut its clothing and homewares segments due to multiple lockdowns. However, its food halls remained open as they fell under the essential services classification. During the first lockdown, the company closed nearly half of its clothing selling space, reducing by more than 60 per cent in the six months to September 2020. The homewares sales fell by more than a third (Marks & Spencer, 2021). The food division remained profitable with sales of 2.8 billion, which helped the company keep the overall pretax loss at £87.5 million (Marks & Spencer, 2021). The dismal financial performance was also partly due to a myriad of challenges that the firm faced long before the COVID-19 pandemic – changing customer preferences, a decline in consumers’ disposable income, Brexit, and a shift to online shopping by customers (Bevan, 2007). The 137-year-old retailer has been over-dependent on the UK market, generating nearly 90 per cent of its revenues from the domestic market. External macro factors such as cost and pricing pressures, macroeconomic uncertainties, and intense competition have created a challenging business environment for M&S (Thomas, 2016). These factors, particularly changing consumer behaviours and buying choices, have led to questions about the relevance of department stores on the high street. COVID-19 compounded these challenges, and in order to emerge strong from the current crisis, M&S must re-strategize to serve customers better and improve its multi-channel marketing strategy to attract customers and enhance customers’ in-store and online shopping experiences.
M&S can offer high-quality service to its customers in various ways, including innovation and product quality improvements, ensuring that its strategic direction is in line with changing consumer behaviour, listening to customers, ensuring reliable and agile supplier linkages, and effectively using technology to increase customer satisfaction. M&S must build on the philosophy that has sustained its business for decades: service, quality, and value for money. Regarding quality and value for money, customers are demanding “more for less” (Gujrati & Uygun, 2020). They want more quality at a lower price. Thus, M&S needs to partner with low-cost but quality suppliers across its food, clothing, and home businesses. The company must also increase the variety of goods in its stores, especially in the food and clothing segments. Although it has increased its food segment offering in recent years, further expansion is needed. The firm can improve customer satisfaction by keeping abreast of the fast-changing fashion trends. Customers’ fashion preferences are constantly changing, and ensuring that it provides the latest fashion, especially for women, is a crucial step in setting itself apart from the competition.
To ensure high-quality service to its 30 million-a-year customer base, M&S should listen and respond to what customers are saying. Prior to 2017, the company maintained a web-based survey that asked customers to rate their shopping experience on a scale of 0-5. The survey also asked customers how likely they were to recommend M&S to their friends and family. In addition to the survey, the company employed a mystery shopper program. Every month, one mystery shopper would be sent to each store to ascertain the level of service provided. This approach yielded little feedback. In 2018, the retail chain introduced a cloud-based fresh voice of customer (VOC) approach to get deeper and more comprehensive customer insights (Cameron, 2020). In the new system, customer questions and messages are put into receipts to generate analyzable feedback. Customers are encouraged to participate through a discount program. The new approach has yielded significant feedback, with the company making the necessary changes to increase customer satisfaction. For example, VOC feedback led the firm to identify problems with its fitting room in its Hungarian stores and implement a refurbishment program. Such insights are positive and go a long way in preventing the loss of customers to competitors. While this is a positive step towards enhancing customer in-store experiences, M&S needs to devise ways to engage with customers on their preferred channels. Customer feedback should be the ultimate guide to the firm’s business and marketing decisions.
Moreover, M&S can provide quality customer service by implementing in-store design and service innovations. Although e-commerce sales are on the increase in the UK’s retail sector, many customers still prefer to visit the physical store. According to (Rose et al., 2011), store layouts, in terms of their organization and how frequently the layout is changed, significantly matter to customers. Compared to fashion competitors such as John Lewis and Zara, most M&S stores' design is outdated. Although M&S appeals to an older demographic who may not be inspired by flashy design elements, the company should redesign its stores to appeal to and grab the attention of passers-by. Innovations such as self-service kiosks are crucial. In-store kiosks do not serve to replace workers; instead, they help employees transition from process-oriented roles to customer service-oriented tasks. Such innovations allow employees to spend most of their time engaging with customers rather than attending to back-of-the-house assignments.
M&S should also do more to appeal to the increasing younger customer demographic. Traditionally, M&S has appealed to an older generation. However, in recent years, younger customers with middle incomes are shopping more and wider. In addition to implementing a seamless e-commerce platform to encourage young shoppers, it should innovate its in-store experience to attract this customer segment. Programs such as the Browse & Buy in-store kiosks are a step in the right direction (Davies, 2016). Through these in-store kiosks, customers can scan bar-codes on items and view and purchase them on the company’s online platform, M&S.com or order the items in their size during stock-outs. To enhance the customer experiences of younger shoppers, M&S can blend its old and classical fashion image with flashy designs in its stores and online. It can use technology to provide features such as virtual dressing rooms, magic mirrors, touchscreens, and interactive digital displays or storefronts that appeal to the younger demographic. Currently, COVID-19 infections are on the decline, and more people are gradually returning to work, which could witness a shift from online to in-store purchases. As one of the leading UK retailers, M&S should revamp its store layouts and increase its advertising budget to reach a broader existing and potential customer base.
Multi-channel marketing is the practice by a firm to interact with customers using a combination of direct and indirect communication channels such as retail stores, websites, mobile, email, and mail order catalogues. An Omni-channel marketing strategy combines the firm's promotional and distribution channels to communicate the service or product’s value using the specific strengths of each marketing channel. There are several ways in which M&S can improve its multi-channel marketing strategy to attract more customers and enhance the shopping experience. These include using store-based, online, and click-and-collect strategies to attract and retain customers.
One of the areas where M&S has lagged is investing in online shopping. For years, the company did not have a website, and when it launched a website, it was non-appealing and slow. The delayed investment in digital transformation was not in line with the fast-changing customer behaviour. While Britons went into isolation following the outbreak of COVID-19 and non-essential retail stores were closed, customers increased the volume of products they bought online. However, M&S did not have an internet-based delivery service, and customers could not purchase items from M&S online while self-isolating (Cameron, 2020).
However, the COVID-19 pandemic presented an opportunity for M&S to reshape and remodel its business to compete in the new normal facing global retail (Busby, 2020). As most consumers shifted to online purchases, M&S had to transform itself into a more digital, agile, and leaner bu...