Marks and Spencer has become the latest company to run screaming from the idea of selling electronics in the high street. We recently saw Best Buy announce plans for surrender, so why has the UK’s retail darling joined the rush to the emergency exits? KitGuru scans the barcodes and tries to understand what the new totals will be.
Having started his career with Heineken, Marc Bolland has a tradition of returning brands to their roots. Just before he was fingered by Stuart Rose as M&S CEO, Marc had brought supermarket chain Morrison’s back to basics.
Having been paid a reported signing-on deal of £7.5m, Marks and Spencer must have been pretty certain that he could (a) re-energise the company here in the UK and (b) spearhead growth into other markets.
Reports into KitGuru from industry insiders say that M&S has had enough of trying to make money in the ultra-competitive electronics market place. With margins in the single digits, on slow moving, expensive products – there is little appeal for a company that’s more famous for underwear than software.
Speaking just after Marc’s appointment, Stuart Rose commented, “Marc understands brands, has international experience and turnaround experience. He was the unanimous choice”. Nice to be wanted.
So just how tough is the UK market right now?
Well, there was a big wobble when M&S announced that profits might fall to just £692 million in 2012. That’s only £30m down from where the company thought it would be. So not quite the end of the world as we know it.
KitGuru says: Things would look rosy for M&S if it wasn’t for companies like John Lewis. While completely failing to impact John Lewis’ sale of electronics, M&S has seen its rival grow in store and online business in new and innovative ways. Right now, M&S is playing pure defence, while John Lewis is on the front foot – targeting aggressive growth. As soon as we have the inside track on how much growth is planned, we’ll come right back atcha.
Comments below or in the KitGuru forums.