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Marks and Spencer, India Strategy Review - Important Lessons for Retailers
| Guest post by: Dhawal Shah |
Article Overview: 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.
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Free Download - GordonMax, Creators of the World's Finest Diamond Simulants, expand their India Operations in 2011 By Dhawal Shah |
Marks and Spencer, India Strategy Review - Important Lessons for Retailers
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 franchise rights']);"> 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 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 it’s 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
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About the Author: Dhawal Shah RSS for Dhawal's articles - Visit Dhawal's website Click here to visit Dhawal's website   Central Cottage Industries Corporation of India to Franchise overseas in New Zealand India tells foreign luxury brands to wait a decade Sanjeev Kapoor and Better Value Brands launch 1st Global Chain of Indian Restaurants Future of Franchising in India OfficeDepot marks its foray into the Indian Business Product Market |
Related Forum Posts
Book: Secrets of Six Figure Women
- Secrets of Six Figure Women: Surprising Strategies to up your earning and change your life
Barbara Stanny, 2002
Jacket:
Maybe you've noticed - a subtle trend is gathering steam. Quietly and steadily, the number of women making six figures or more is increasing, and it continues to rise at a rate faster than for men. From entrepreneurs to corporate executives, from white collar executives to free lancers and part timers, women are forging careers with considerable financial success.
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She amplifies on these in the book itself.
Table of Contents
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Appendces:
Resources and websites
Tips for getting out of dent
Investing Basics: Wealthbuilding 101
Re: What works for you?
- Hi Yinka,
I work better under pressure of deadlines when I am doing something for other people. However, I like to have the leisure to develop my own projects. The first case is what Stephen Covey calls a "Quadrant 1" activity ("Important and urgent") whereas the second case is a "Quadrant 2" activity ("Important, not urgent").
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