MARKS AND SPENCER'S

Marks And Spencer's Approach to the Closure of Its 18 Stores in France

Marks And Spencer's Approach to the Closure of Its 18 Stores in France

Introduction

Mark and Spencer Group (M&S) is among the leading retailers of foods, clothing, and home ware in the United Kingdom. However, Mark and Spencer Group plc enjoys a dominant market position in the clothing segment due to the factors such as the diversified range and quality of products in its product segment. Primarily, the company's operations are divided into both wholly owned stores and franchise stores. M&S or formerly known as Marks & Spencer Plc is retailer based in united kingdom, which has more than 700 retail outlets locations across thirty four countries where the group sells almost everything from clothing to foods under the name and trademark of St. Michael in another 300 outlets in the U.K. Since inception the company's main aim has been to offer consumers quality, value, and service (Wightman, 2007, pp. 54).

M&S as a company has always been known to have a great management support that contributed to its growth. Previously, the company's managers failed to comply on their decisions, leading the group to lower sales and profits. Also, the prices per share dropped which affected the shareholders insecurity (Swain, 2006, pp. 46).

Porters Five Forces Model

Bargaining Power of Buyers

In general, bargaining power of buyers is high. It very much depends on the segment we target. Buyers´ power is lower in the elite segment (i.e. cloths from luxury designer firms) and higher in other segments, as they can usually choose from a variety of companies. M&S gained customer loyalty from high quality products that were priced competitively. One of M&S´ current problems is that people demand either brand names or discounted products. M&S is therefore, stuck in the middle. M&S´ product-orientated strategy in the late 1990s has become ineffective. The bargaining power from buyers is increasing and therefore, a more consumer-orientated strategy is needed.

The Bargaining Power of Suppliers

M&S´ success has a lot to do with its long-term relationships with its suppliers. Some of them had supplied M&S for over a hundred years (i.e. Dewhirst). M&S bought directly from a few UK suppliers, without the use of an intermediary, like most of its competitors. This created a heavy reliance of those suppliers on the company (Reid, 2000, pp. 9-185). M&S could then try to lower its costs by putting pressure on suppliers (e.g. rappel from large purchases). The bargaining power of suppliers is quite low in this industry. M&S' value chain has made it even lower. Also, when sales declined rapidly in the late 1990s, M&S outsource globally to reduce its costs. As a result, the bargaining power of UK suppliers was also lowered.

The Threat from New Entrants

Brand name and large capital requirements build up high entry barriers. It´s difficult for any new entrant into this market to compete directly with some established retailers already operating on a large scale. Another entry barrier is ...