Retail winners and losers Christmas 2013.

A number of  commentators in the broadsheet business press are predicting dire news from M&S when they release their Christmas trading results. It would seem M&S attempted to drive sales via flash promotions, the most notable the 30% off deal the weekend before Christmas, all of which is expected to have backfired.

On the other hand we have seen some cheering news from Next and John Lewis. So winners and losers which seems to be the way of the world in retail. Also with more news to come from a variety of players over the next week.

Interestingly both Next and John Lewis avoided the temptation to go early with discounted offers, waiting until Boxing Day like all good retailers used to do.

I fully understand there are numerous operational issues that are key to sales won or lost, for example click and collect, and there are examples of late adopters being left behind. I got to understand the crucial issue of distribution and routes to market back in my marketing days at Cadbury and UB. However I don’t believe great logistics compensate for weaker brands, logistics are todays hygiene factors, necessary, maybe essential but not sufficient.

Working in the fmcg world with leading companies such as Unilever, P&G, Cadbury et al the distribution machines were awesomely effective but it was no guarantee a particular brand could hold on to its retail listings if sales were slipping. Getting a brand de-listed was the nightmare for any brand manager. In the end the brand either prospered or experienced sudden death.

I live in an apartment building with a reception area manned by an excellent team of staff. Each day prior to Christmas the reception area always had a big pile of deliveries for residents and the two most visible brands were John Lewis and Amazon. John Lewis must have had a special delivery truck arriving every day to disgorge the volume of parcels. Maybe my fellow residents are all JLP loyalists or is it just  a reflection of their brand strength and appeal?

I’ve commented several times on M&S over the last year or so because from where I stand M&S is a fading star in the retail environment, losing its customer loyalty to competitive options. As I have said in the past M&S has a problem with ‘positioning’ versus the alternative brands out there. I think it suffers from multi-layer positioning challenges such as target audience - age group, gender, trading up or down, social grouping and that’s before you get to product lines, store ambiance, pricing, food versus clothing, etc., etc.

Their advertising campaign this year was excellent, widely liked, talked about and often compared with the John Lewis Bare & Hare advertising. The problem though with the M&S work was very simple; it was not a mirror on the M&S brand, it was a kind of wannabe expression of what they would like to be rather than what they are. If it had been for Selfridges I suspect it would have been spot on.

The deeper point here is it feels like a management team trying to turn around an ocean going oil tanker but not sure which direction to make the turn. They have already tried a few different directions but without success; I read yesterday they are about to release a range of men’s more fashionable clothing that again feels like another directional experiment.

Some city analysts are suggesting M&S needs to radically re-think its business model from top to bottom. Whilst it is easy for people like me to observe and comment, it is a different kettle of fish doing something about the challenges in a speedy and effective way.

The comparison between John Lewis and M&S is two retail brands in very different places on the brand equity curve; JLP continues to be a rising star whereas M&S has slipped from being an orbiting star to become a fading star. The latter position is very dangerous and we have seen a number of well known retail brands crash and burn once they are in this zone – e.g. Comet, Clintons, Blacks, Woolworths, Blockbuster.

The problem becomes a self fulfilling prophesy as more bad news is heaped on existing bad news leading to confidence tipping from neutral to negative ripples within and outside the business. Rising stars mostly enjoy positive publicity whereas fading stars mostly enjoy negative coverage pouring petrol on to a smouldering fire. M&S has seen good growth in its share price in 2013 based on confidence the management team are on top of the challenges. That confidence is fragile and bad results for this Christmas might be the straw that breaks the camels back on the share price front as confidence collapses. If this happens it will have a fundamental impact on the business going forwards.

Brand management is complex with a business like M&S, nobody is suggesting it is a doddle but by comparison Next and John Lewis appear to have a strong hand on their brand levers and pulleys. We wait with baited breath for M&S to announce their results.

 

 

 


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