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M&S

Smriti Mehrotra, vice president of a media channel, works in close proximity to the Marks & Spencer’s 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 Spencer’s stores but all of them seem to agree on one fact – Indian Mark and Spencer stores (previously operated by their franchisee, Planet Retail) don’t 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 B’Gosh 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 cut down on costs and reduced imports. At the time just about a single-digit percentage of products were locally sourced. ―When we took over the business we took a call to source more products from the South Asian region.: 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. They even when to the extent of redesigning their apparels to suit the Indian body type. the £9.5 years. Many brands like Reliance Fresh. Reliance Mart. Reliance Time Out. These are the home grown brands. ―The Indian shopper has now turned into a globe trotter and can clearly differentiate the local good available at M&S. they hold rights for several international brands like Marks and Spencer and Hamleys. Reliance Wellness.Over the past 2. considering that Indian women generally have heavy bottoms.―M&S was then compelled to adapt to the Indian markets and restructure their sales strategy‖. Now it is 42%. The main problem lies in the fact that the Indian consumer is acquainted with most of the merchandise available at M&S stores abroad. Reliance iStore. The brand was not being perceived as a mid-market retailer as it is in the UK. head of M&S India operations in an interview told Forbes. light blues. maroons etc. deep yellow in their apparels as opposed to the subtle greys. 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. Reliance Digital. Reliance Retail does not sub-franchise its brands. The two-year-old joint venture with Reliance Retail is a change in M&S entry strategy from the franchise model of the past.5 billion shopping chain has been putting in great effort to shed its expensive image to make itself more accessible to Indian shoppers. and Reliance Jewel come under the Reliance Retail brand. orange. Reliance Trendz. Another interesting change that has been observed by frequent shoppers is that they have started using Indian colours such as hot pink. Reliance Autozone. Reliance Super. The 51:49 partnerships between M&S and Reliance are likely to result in 50 new stores over the next five years in India. at the same time. Consumers Complain Even after going through such dramatic changes M&S does not seem to match up to it’s contemporaries like Zara. Martin Jones. The slim fit trousers for women now come with an extended curve at the hips. hence these franchise opportunities are not listed at our websit . Reliance Footprint. silvers. For e. So in order to increase sales and reach out to the midmarket customers. About Reliance Retail Reliance Retail is the retail business wing of the Reliance business. said the source.g.‖ Jones now sources 70% of the raw materials from the South Asia region. Reliance Home Kitchens. Why should I pay a high amount for a product that does not meet internationals standards?‖ questions Mehrotra.

the UK-based retailer has decided to bring down its sourcing from abroad and source up to 70 per cent of its apparel indigenously. While apparel will be its mainstay. M&S has long way to go in the market because people still do not know that they have slashed their prices in India. . M&S entered in India with JV Planet retail pvt ltd but they were not able flourish brand in India. The 51:49 partnership between M & S and Reliance is likely to open 50 new stores in the next five years 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. it will continue with the existing categories such as toiletries. Blue Harbour is affordable in nature and Autograph is Premium brand of it. Then. the retailer has already set up its new sourcing office in Bangalore which would make apparel specifically for sale in India.” M&S targets the Indian mid market segment In an interview with Hindu Business Line. Going forward. The newly formed joint venture with Reliance Retail is a change in M&S entry strategy from the franchise model of the past. he is coming up with strategy of Pricing. Therefore building economies of scale into its sourcing operations will hold the key to its pricing strategy. They have dissolved the agreement.e Blue Harbors & Autograph. entry is restricted to wholesale. Darshan Mehta. Mr Mehta strongly advocates the need to cater to the mass markets rather than the premium segment. Considering apparel commands steep duties of nearly 38 per cent. India opens up to foreign retail brands Under current FDI rules.Marks & Spencer the right strategy for India Entry The M&S case was discussed in an earlier post http://tiny. food and add home-ware as a new category.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. In India. They have two brands under roof of M&S i. COO of the VF Arvind Brands. license or franchise arrangements. To expedite this process. 70 per cent of its merchandise will be sourced in India. they have JV with Reliance Brands and the CEO is Mr.

///////////////////////// Marks & Spencer plans to expand ops in India E-Tex Staff . MD. The company plans to address a larger section of . for a company of its size. 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.Another expert in retailing Harminder Sahni. The fact that it has invested serious money goes to show that it wants to create value in this market.Mumbai The UK-based retail company Marks & Spencer is looking at catering to a larger market in India.‖ Oonmeshikha. Technopak believes ―By forming a joint venture. Darshan. Sanam. it is not a good idea to exist as a franchise and it has taken the right step for itself in the long term. In any case. Bidhya. M&S has shown its confidence in the Indian market. Niharika Our June 2010 Strategy batch at Tasmac reviewed and presented the M&S case a couple of weeks ago.

―Since Marks & Spencer made its entry in India. Mr Nayar added. While refraining to divulge the specifics. prices of which begin at the entry level. compared with Rs 795 earlier. we expect the sales to go up. ―During the ongoing recession.‖ The men’s shirt starts Rs 1. Marks & Spencer Drops Prices To Boost Sales April 20.’’ said Mark Ashman CEO.‖ said Ashman. Marks & Spencer also has Bangalore in its radar and will enter the city for its Spring Summer 2005 collections. 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. it has been well received. 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. The range of our collections is a reflection of that. MSRI is a 51:49 joint venture between British department store chain Marks and Spencer Group Plc and Mukesh Ambani-Promoted Reliance Retail Ltd. Mr Atul Nayar said. while the formal shirt will now be available for Rs 695. …………………………………. in a bid to retain customers who are moving away to competitive products. A Polo Shirt is now available for Rs 395. we can have difference. Marks & Spencer previously had 14 stores in India under a franchisee agreement with Planet Retail. This agreement ran for six years. . And by virtue of a bigger collection. Marks & Spencer general manager.‖ The company also introduced a limited catalogue of the Marks & Spencers food which includes chocolates and cakes. In addition.the market with its Autumn Winter 2004 collection. compared with Rs 495 earlier. the retailer plans to expand its presence in the country by setting up shop in Hyderabad early next month. the toiletries start Rs 250 onward. Marks & Spencer Reliance India. a ladies top starts Rs 950 onwards.150. ―With the new collection being unveiled.

43. ―The store has really become affordable in the last few months. One reason was the high pricing of products. M&S is quickening its growth plans in the country.‖ says a senior M&S executive. Importantly. The intent appears serious so far. All this has changed in the new scheme of things. Early results are heartening. In China. its expansion here will be its boldest bet in any emerging market. a senior executive says that some stores’ sales have increased 25 percent since the decision to change was made. From 2000 till 2007. ―There is great hope in the headquarters that India may well be their biggest emerging market success. Store sizes are consistently increasing and M&S will now also be in smaller and fast growing cities across the country. a senior executive with a private bank. it is customers like Sinha that M&S will try to attract to propel its ambitious growth plan. Fifteen months after the repositioning. M&S did not want to risk its capital in lieu of a cut in margins on the products it sold the franchisee. Sinha is exactly the kind of customer who will make Martin Jones. In Franchises. Jones wants to nearly treble the number of stores to 50 from the current 18 by 2013. the very British 9. quickly picked the low hanging fruit. She drops in at least once a month to buy stuff worth a few thousand rupees for her home and kids. is a recent convert to the Marks & Spencer (M&S) outlet at Phoenix Mills. M&S in India was run as a franchisee operation. another fast-growing market M&S directly invested in. Planet Retail. The brand was being perceived as much more premium than it was in the UK. compared to the international norm of 15. Jones’s predecessor Mark Ashman. put up the stores and purchased merchandise from UK and sold it here.000 square feet. the company is said to be still struggling with the first store that it established a few years ago in Shanghai. the new head of M&S’ India operations. is now addicted to its not-so-busy ambience and the distinctly upmarket feel. Franchising In India. Earlier. Strategy. happy. It also allowed Planet Retail to have smaller stores of 5. Trends //////////////////////////// Neerja Sinha.but wasn’t very successful. who was the first M&S head of the Indian venture. Though they won’t talk specific numbers.‖ she says. 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. Over the last 30 months. as the company used to pay high duties on imports from the UK.000 square feet plus stores. Sinha. 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.000 to 8. Central Mumbai’s bustling mall complex. paid duty and . M&S’ franchisee imported clothes from UK. who did not wish to be named. Though M&S owns its Indian venture jointly with Reliance Retail. in the next 30 months. Its local partner.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. who has never been to an M&S store overseas.

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

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

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