British Heavyweight Expanding In China
Founded by Michael Marks and Thomas Spencer in Leeds in 1884, Marks & Spencer (M&S) is an emblematic success story of British commerce, with 700 stores in England and nearly 400 in 40 countries worldwide. However, compared to other Western retailers that hit the Chinese market early (some of them now with hundreds of stores across Hong Kong and the mainland) Marks & Spencer is something of a paradox.
Recently, I had a chance to chat with Richard Thomas, M&S Head of the Far East Region, to learn more about the company’s history and regional strategy. A 12-year resident of Hong Kong, Thomas has extensive experience in fashion retail, and joined M&S again last year after bringing British brand All Saints to fame in the 2000s.
M&S set foot in Asia very early on, with the opening of its first store in Hong Kong (then a British colony) in 1988. By the time of the Asian Financial Crisis in 1997, M&S had seven locations across Hong Kong, yet none on the Chinese Mainland. As Thomas explains, “The Company was in trouble at the time and the strategy was to focus on the domestic [UK] market. Most stores – even some profitable ones – were closed around Europe and even our presence in Hong Kong was questioned.”
Along with a transition in top management came a renewed international development strategy, and M&S finally turned its eye to the Mainland. The first flagship-sized store opened to great media fanfare on trendy Nanjing Road in Shanghai in late 2008. Yet the buzz quickly faded, be it because of the price range (too expensive for the local, middle-aged target customer), product mix (“too Western for Chinese, too Chinese for Westerners”), empty food shelves (imported products often being blocked at customs) or bad Feng Shui.
This initial setback slowed the M&S expansion plans in mainland China until very recently. Last June, the British retailer announced plans to double its Mainland stores by the end of 2013 (up from 12 as of the end of 2012, half of them in Shanghai). A regional warehouse is also in the works, part of the “Plan A” global initiative for sustainable growth.
Marks & Spencer’s product development and supply chain are still highly centralized in the UK, but Hong Kong (now the regional HQ) has already seen its duties extended to textile innovation, select product design, direct sourcing & buying (switching away from “full service vendors”) and marketing innovation (think product-swapping in stores). The team has grown from 25 in the 2000s to over 150 today. Explains Thomas, “My role is to structure our regional HQ so we can seize market opportunities in the most efficient, profitable way for the group.”
Owing to a late entrance to mainland China, the challenges M&S faces today are all the more acute. Provided it can learn from its competitors’ mistakes and write its very own local story while leveraging its legendary name, M&S hopefully will be able to repeat in China the success it built at home.
Cedric Delzenne is the founder of Shop des Créateurs, the first online sales & marketing agency for emerging fashion designers, carefully handpicked around the world. With a top-notch e-commerce platform and genuine expertise in social media and PR, the Shop helps up-and-coming labels turn the Internet into a brand-building and revenue-generating tool. Currently supporting over 35 brands from Asia, Europe and the US, the Shop organizes or sponsors creative events and design competitions in Hong Kong and beyond.
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