Rowe lowers the ensign
THE retreat of Marks & Spencer from imperial ambitions is understandable given the challenges it faces in Britain.
Even so, the withdrawal from Hong Kong, where Britain’s freewheeling ways are still preferred to domination from Beijing, does seem regrettable.
In addition to the M&S store in the heart of Hong Kong’s central district, over the road from the headquarters of HSBC, the UK’s most-loved retailer has a network of stores which reach deep into the New Territories, challenging the domination of Li Ka-shing’s ParknShop and the Keswick family’s Wellcome.
At a time when some overseas operations have struggled, Hong Kong and Macau have been the exceptions. Family friends with factories in Hong Kong and across the border in mainland Guangdong regard access to M&S food as a lifesaver.
What makes the stores special is the supply of upmarket foods flown in from Britain in special refrigerated containers aboard jumbo jets and distributed across greater Hong Kong, offering a real point of difference from competitors.
In keeping with a revised strategy of sharing the risk, M&S has extended its franchise arrangements with the Dubai-based Al-Futtaim group. It already operates the retailer’s stores in the Middle East and Asia and will now have 72 stores using the admired UK brand. M&S uses a similar franchise model with the Reliance group in India.
The approach is almost the opposite to that of luxury British fashion concern Burberry. It has sought to buy out franchise operations around the globe so that it has full control over the product, the look of Burberry stores and prices.
A particular bugbear has been the tendency of US department stores to go on sale too often, cheapening the image.
Under the leadership of chief executive Steve Rowe, M&S decided it was too thinly spread overseas. It radically has pruned operations including loss-making stores on the Chinese mainland as well as vanity projects such as the Paris store.
Rowe is counting on Jill McDonald, recruited from Halfords, to deliver better outcomes in Britain from core womenswear, children’s clothing and homeware.
McDonald acknowledges she is no fashion expert but does know about running operations more efficiently. Among her priorities is to revamp the retailer’s website, which is seen as clunky and difficult to navigate.
Elsewhere, M&S finally has come round to the view that if it is to compete with other upmarket food operations, such as Ocado and Amazon-owned Whole Foods, in the UK it will need to offer fresh food delivery. It is currently piloting a grocery delivery scheme in Swindon.
The retreat of some of Britain’s strongest retail brands, including Tesco and M&S, from overseas is hugely disappointing at a moment when the UK is trumpeting its global ambitions post-Brexit.
But given the rapid changes in shopping habits it could prove sensible.
M&S remains one of Britain’s most recognised brands overseas.
By choosing to franchise in Hong Kong, India and elsewhere it at least preserves presence, if much diminished. But it must be wary of franchisees weakening a label where quality is the watchword.