Marks & Spencer is shifting away from town centres, citing an increase in online clothing and homeware sales. During the pandemic, the firm stated, the shift to online purchasing “raised the pressure” to shrink its clothes and home trade space.

According to M&S, many town centres have “lost momentum” as a result of “failing local authority or government policy.” It said that it was moving certain stores from older, multi-story buildings with limited access and parking.

“As a result, a high proportion, but not all, of our relocations are to the edge of town,” the retail giant said.

Over the next three years, M&S plans to open 15 new full-line stores and 40 new food outlets, according to the company. The retailer announced that it would invest in a number of stores that had been relocated to the outskirts of towns, including former Debenhams locations in Leamington Spa and Thurrock.

It did, however, affirm that it would continue to eliminate 100 locations by the end of this year, with another 32 expected to close in 2022. M&S is “going with the customer, where the customer is working and buying,” according to CEO Steve Rowe.

He said the firm has “some excellent city and town centre stores,” but that it needed to make sure its portfolio was “balanced,” with a greater emphasis on food in the future.

M&S, which is reviving its company after several years of downturn, said its clothes and home divisions performed well last year.

A 55.6 percent increase in online sales contributed to this. However, in-store sales dropped by 11 per cent.

Meanwhile, its food sales increased by 10.1 per cent.

Overall, the company made £392 million in pre-tax profits for the year ended April 2, up from a deficit of £209 million the previous year.

However, due to rising expenses and increased pressure on customer budgets, M&S expects sales growth to stagnate. Food costs are rising due to global supply challenges and labour shortages, while factory, transportation, and freight expenses, as well as ongoing supply issues in China, are placing pressure on the company’s clothes and home businesses.

Inflation, the rate at which prices rise, reached 9% in April, the highest level in 40 years, putting a strain on household budgets.

M&S customers tended to be wealthier and less affected by growing expenses, according to Julie Palmer, a retail specialist at Begbies Traynor, “but they may still choose to economise.”

“How long cash-strapped shoppers will feel comfortable splashing out on M&S’s upmarket foods remains to be seen,” she added.

(Adapted from BBC.com)

Categories: Economy & Finance, Strategy, Sustainability, Uncategorized