By Nicole Parker-Hodds

1. Marks & Spencer Can its new store design turn around its fortunes? By Nicole Parker-Hodds Associate Analyst August 2012 A Service

2. Contents Background M&S Bank Clothing Food Beauty Home Footwear Multi-channel Conclusions All data correct at time of publishing.

3. 1 Background The roll-out of the new store design comes as Marks & Spencer reported its worst financial figures in three years, with profits falling to GBP489.6 million (USD774.8 million). • M&S has failed to be in the space race because the majority of its estate is variety stores, which are hard to expand due to the space required. • M&S has suffered from an overly complicated womenswear collection, that confuses customers and makes for a disorderlystore journey – a key area the company needs to address. • Although the food department has performed well, it has been reliant on its ready meals – M&S needed to broaden its range to allow customers to do more of their weekly shop at the stores. • Since the successful trial of the new food hall design in November 2011 it has been rolling the concepts outacross its stores. • The company is hoping this new store design can help it turn its fortunes around in the UK. • Planet Retail’s take • Because the company is not in the space race Marks & Spencer will look to its store overhauls to improve sales. • Because the UKcurrently accounts for 89% of its sales, the store designs are a vital move for M&S.

4. 1 Background Planet Retail visited Marks & Spencer’s Marble Arch flagship store to analyse the improved offering and customer experience. The new store concept covers all departments within the Marks & Spencer store. • The Marble Arch shop now has 170,000 square feet of selling space, after the new design increased this space by 4,800 square feet. • Marks & Spencer (M&S) will spend GBP500 million rolling out the store concept – GBP100 million less than originally planned. • The new concept was designed to make stores more inviting and easier to navigate for customers, with clearer signage and a bigger selling space. • Phase one of the redesign (which was part of the trial) focused on the food hall and clothing sections. • Phase two (recently introduced) looks to redesign the beauty, footwear and home departments. • The Marble Arch outlet also includes the company’s first M&S Bank branch.

5. 2 M&S Bank On trend with grocery retailers diversifying away from their core offering, Marks & Spencer has launched its own banking service. The Marble Arch store boasts the first of 50 planned branches it hopes to open by mid-2013. • M&S Bank, through a partnership with HSBC, is an extension of the company’s M&S Money, but now includes current accounts and mortgages. • The service is designed to offer convenience to customers. The bank branches will be located within existing Marks & Spencer stores and will operate the same working hours, including evenings and weekends. • Self-service banking points and private meeting areas will be available, alongside the existing bureau de change kiosks, and will be supported by 24-hour online banking and a UK-based call centre. • This service will be managed by a dedicated M&S Bank team. • Planet Retail’s take • Marks & Spencer needs to utilise its strong brand and customer trust for this venture. • Marks & Spencer are nicely positioned to take advantage of the prolonged recession weakening consumers’ trust in banks and the financial sector. • Because Marks & Spencer struggles in the space race, financial services - which are easier to roll out and grow - will help Marks & Spencer compete more successfully in a market where other retailers are diversifying their offers e.g. Sainsbury’s entering the music download sector.