13th Jul 2016
M&S suffered an 8.9% slump in clothing and homeware sales during the first quarter of the financial year, its latest trading report shows, but long-term plans to offer customers value for money are starting to pay off.
Total group sales were down 0.4% in the 13 weeks running up to 2 July, but the company’s clothing line bore the brunt of the fall.
The drop in sales follows plans by M&S chief executive Steve Rowe to permanently lower prices for customers and reduce the number of one-off promotions, in a bid to offer consistent value for money. The company has repriced 1,000 lines since January 2016 and is pleased with the early results, though it admits this has had a knock-on effect on short-term sales figures.
“A key part of our recovery plan for Clothing & Home is lowering prices and reducing promotions,” says Rowe. “As a result, we ran fewer price promotions while continuing to lower prices to deliver real value to our customers, and moved the summer sale to July. We knew our actions would reduce total sales but we are seeing some encouraging early signs.”
While conceding that it’s too early to determine the impact of Brexit, Rowe also claims that the EU referendum may be partly to blame for the Group’s shaky sales numbers. “As highlighted in May, consumer confidence weakened in the run up to the EU referendum,” he notes. “While it is too early to quantify the implications of Brexit, we are confident that our strategic priorities and the actions we are taking remain the right ones to deliver results for our customers and our business.”
The company’s saving grace is its food division, which outperformed the market. Food sales rose by 4%, with like-for-like sales down 0.9%, of which M&S attributed over half to the timing of Easter.
Value for money is a high priority for customers, according to the latest UK Customer Satisfaction Index (UKCSI) published by the Institute of Customer Service, so organisations should aim to offer value wherever they can. However, this is just one of several priorities that companies need to respond to. Competence and helpfulness of staff, along with employees sticking to their word when following up customer complaints, are key to customer satisfaction, the UKCSI shows.