The retail sector has in the past decade experienced an increase in competition levels. In the quest for gaining a competitive edge over their rivals, individual firms have implemented unique business models and technological innovations. The report provides an overview of how Marks " Spencer has positioned itself in the market with the aim of maintaining its competitive advantage over the competitor. The structure of the report will include an introduction, description of the company, measures that it has embraced in maintaining its competitiveness and recommendations.
Company Overview
Marks " Spencer is a British multinational organization that has specialized in the selling of home products, luxury food products and clothes. The company has been in the market for more than a century and this is among the reasons behind the firm’s competitiveness in the retail sector. In the past decade, M"S has experienced immense growth and this is attributed to various factors. Firstly, the organizational leadership has implemented suitable strategies that have been critical I cutting down the firm’s costs of production. Product diversification is another strategy that has played a major role in the enhancement of productivity for the company. Archie Norman serves as the chairman of the company while Steve Rowie is the firm’s CEO. As at the end of 2017, Marks " Spencer had an estimated 84,939 employees and over 800 stores around the world. According to the CEO, the company is expected to continue experiencing immense growth in the future, despite the fact that competition intensity in the retail sector is on the rise. Marks " Spencer’s headquarters are located in London, United Kingdom.
Competitive Advantage
Competition intensity in the retail sector has in the past decade increased significantly. In the quest for maintaining its competitive edge in the market, Marks " Spencer has implemented various strategies and made numerous adjustments to its business model. Integration of advanced technology, for instance, has improved the relationship between the company and the customers, thus contributing to an improvement in its sales.
SWOT Analysis
Strengths
The company relies on aggressive marketing and advertisement strategies hence the reason for high recognition of the brand and enhanced revenue generation.
Marks and Spencer has a wide variety of products and this helps the customers to select those products that meet their tastes and preferences (Bhasin, 2018).
The company has an estimated 900 stores around the world and this provides a platform for it to expand customer base while increasing its financial health.
The spirit of innovation has been critical in improving the quality of the firm’s products and services. Integration of advanced technology within the company is among the factors that has strengthened its financial stability across the years.
Marks and Spencer has a healthy financial position and a strong brand. A combination of the two factors has led to an improvement in its productivity.
The company has a multichannel presence. Marks and Spencer has brick and mortar stores, online presence and a variety of franchising options. Consumers can shop merchandise from the firm’s physical stores and via its webpage.
Weaknesses
Marks and Spencer is faced with the challenge of penetrating into foreign markets. The company has currently dominated the U.S., UK and the Europe markets. In as much as it has opened stores in Asia and the Middle East, they have not been successful.
Cases of low customer satisfaction levels have on several occasions been reported and this has led to increased brand switching and low brand loyalty. Frequent product recalls have also contributed to a reduction in the consumer confidence levels.
The company struggles with the problem of poor scalability of its supply chain. The effort by the firm to rely on online in ensuring that its products are accessed by consumers globally has hardly been successful.
Too much dependence on the UK market has made Marks and Spencer vulnerable on the global market.
Opportunities
Fashion is an evolving segment and this is evidenced by an increasing in the consumer demand in Asia. By capitalizing on the segment, Marks and Spencer will benefit from an improvement in revenue generation.
The company is in the process of simplifying its business model and this will be critical in cutting down its costs of production (Bhasin, 2018).
Marks and Spencer need to take advantage of its online presence in tapping into emerging markets in Asia and Africa.
Threats
Marks " Spencer faces stiff competition from companies such as Tesco, John Lewis Partnership and Next. The threat has a negative impact on M"S market share.
The decision by the UK exiting the EU has created uncertainty for M"S in terms of productivity in the future European market.
Tight market regulations and an influx in counterfeit products in the global market has a negative effect on the sales of Marks " Spencer (Bhasin, 2018).
PESTLE Analysis of Marks " Spencer
Political factors: M"S abides by the market and government regulations in those countries where it has operational bases. The Brexit deal has brought uncertainty into the UK market and this has a direct impact on the performance of Marks " Spencer. Free trade agreement on the international market has led to a decline in the firm’s sourcing costs (Adamkasi, 2018). However, high costs structures in some of the countries have had a negative impact on M"S.
Economic factors: The Company faces stiff competition in the market from various rival firms such as Next and Tesco. Conflict with the small retailers in Europe as a result of the currency impact brought about by Brexit has led to a drop in product prices. The company has embraced aggressive marketing and advertisement strategies and these are aimed at capturing the attention of a large consumer base on the global market.
Social factors: Changes in the workforce from baby boomers to the generation X and millennial requires that the organization implements recruitment strategies that will have a positive impact on its financial performance. The company has adopted various initiatives that are aimed at supporting the surrounding communities and this has contributed to a decline in its internal cost. An increase in product recalls has a negative impact on the reputation of M"S (Adamkasi, 2018). An influx in counterfeit products in the market makes it challenging for the company to meet its targeted sales.
Technological factors: Marks " Spencer has a strong online and social media presence. By capitalizing on this platform, the company has captured the attention of a large customer base around the world. The company’s website is constantly updated by a team of sales representatives (Blackwell, Miniard, and Engel, 2012, p.87). Integration of advanced technology has also contributed to an enhancement in the firm’s operational efficiencies.
Legal factors: Market regulations around the world are ever-changing and firm’s such as M"S have to abide by them. The company, for instance, adheres to the Company Act 2006 and the environmental rules and regulations that are applicable in the various countries where it has operational base. With a strong online presence, the company also follows all the internet privacy policies.
Environmental factors: Mark " Spencer has heavily invested in environmentally friendly and sustainable product. Through Corporate Social Responsibility, the company has implemented various environmental protection initiatives in the surrounding communities. M"S is well aware that global warming is a major issue that has to be dealt with (Adamkasi, 2018). According to the firm’s CEO, M"S is planning on implementing more measures that will have a positive impact on the environment.
Aspects relevant to the firm’s competitiveness
Marketing mix (7Ps)
Products: Marks " Spencer sells high-quality products that meet the tastes and preferences of consumers. Implementation of product diversification strategy is among the factors that have given the company a competitive edge over the rivals in the retail sector.
Place: The Company has both physical stores and online presence around the world. A combination of the platforms has provided the firm with an opportunity to strengthen its global presence and this has contributed to an improvement in its financial performance (Grimshaw, Rubery, and Almond, 2011, p.40). Through e-commerce, the firm has witnessed an increase in the number of customers purchasing its products.
Price: Marks " Spencer relies on various pricing strategies and this is focused on sharpening its competitiveness in the retail sector. The company sets its prices slightly lower for some of its products compared to its rivals. Customers will always prefer high quality and affordable products, thus the reason for an increase in revenue streams (Bhasin, 2018). During seasonal times, the company sets a dynamic pricing strategy by offering discounts on various products to capture the attention of customers.
Promotion: The Company chooses its marketing strategies carefully and this is aimed at aligning the advertisement campaigns to the digital and store strategy. Website and social media platforms are among the strategies that the firm has adopted in expanding its market segmentation. Consumers can find fashion tips and blogs by accessing the company’s website. The firm also runs a specialty loyalty program ‘Sparks’ that adds points on the accounts of customers on the basis of the amount of time that they spend shopping. The reward points can then be used by the customers for future purchases. Aggressive marketing and promotional techniques embraced by the company has helped it maintain a competitive edge over its competitors.
People: Mark " Spencer hire skilled and qualified workers in all its stores (1000 stores) around the world. The HR department rolls out various training programs that are instrumental in the sharpening of the performance of the employees. M"S runs a learning and development program for the new trainees and this has a positive impact on their performance. Employees also enjoy special discounts on the products that they purchase from the firm (Bhasin, 2018). Marks " Spencer boasts of high retention rates and this is attributed to factors such as flexible working hours for its employees and a competitive payment policy. Benefits such as pensions, health insurance schemes, and life insurance schemes are used by the firm to improve workplace productivity, thus an increase in its competitiveness.
Processes: The Company has stores located in malls within suburban areas. Most of the stores are beautiful and well-organized. There are separate sections within the stores and this makes it easy for consumers to identify specific products to purchase. Customers can also make purchases by logging into the firm’s website. The company also encourages its customers to apply for the Marks " Spencer special Sparks, and this is part of the loyalty program.
Physical evidence: Currently, Marks " Spencer has over 1000 stores around the world. The stores offer various products and services to consumers. The location of the stores in the sub-urban areas makes them accessible to several customers, thus an increase in revenue generation. A range of products in various stores also serves as physical evidence. The high-quality commodities provide a competitive edge over some of its competitors.
Recommendations
There are various strategies that the company can adopt in sharpening its competitiveness in the retail sector. Firstly, M"S need to invest heavily in Research and Development and this will help in identifying new markets. The strategy will also be critical in learning more about the levels of competition and the needs of customers in different market segments (Griffin, Ebert, Starke, Dracopoulos and Lang, 2014, p.80). Subsequently, this will contribute to an improvement in the financial performance of the firm in the next three years.
Another strategy that M"S need to embrace in improving its financial performance in 2-3 years’ time will entail involves disposing of some of the non-functional business units. With more than 1000 stores, it will be advisable for the company to reduce the number of stores to less than 800 (Hill and Hult, 2018, p.20). The move is expected to cut down on the high costs of production that it has experienced in the past five years.
Conclusion
The strategies that are adopted by companies will always determine either their success or failures. In the case of Marks " Spencer, aggressive marketing, product diversification and cost reduction are some of the strategies that have given M"S a competitive edge over most of the competitors. The company needs to dispose of some of its stores and heavily invest in Research and Development if it has to maintain its competitiveness.
Bibliography
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Bhasin, H. (2018). SWOT analysis of Marks " Spencer - Marks " Spencer SWOT analysis. [online] Marketing91. Available at: https://www.marketing91.com/swot-analysis-of-marks-spencer/ [Accessed 1 Dec. 2018].
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