Marks and Spencer enters China

Group 9:Ankur Mukherjee(2014007)Khayal Dave(2014023)Abbas Bhinderwala(2014002)Krati Jain(2014091)Priti Kumari(2014162)Mousumi Dey(2014154)Sumpunn Kapoor(2014060)

Facts Broad retailer

Women’s and men’s clothing, children clothing, housewares, foods and gifts under various brand

Origin-United Kingdom but has footprints in Europe, the Middle East and Asia By 2012, M&S had 337 stores in 41 countries

1100 stores in United Kingdom and in 43 other countries Which employed 80,000 employees worldwide

Vision To sell high quality , great value clothing and home products and outstanding quality

food

Best Practices Adapted entry strategy according to market

Acquisitions in Canada, JV with Marinopoulos Group in Greece, Russia, Bulgaria and Switzerland

Franchise model in Middle East (Bahrain, Egypt, Kuwait, Libya, Oman, Qatar, Saudi Arabia, Turkey and United Arab Emirates)

Started with acquisition of Brook Brothers(supermarket chain) in Japan and later wholly owned subsidiaries

Wholly owned subsidiaries in China and JV with Reliance (Govt. regulations) in India

Developed Two Management Teams : One Focused On UK market and the other on International Markets

Director of International OperationsInternational Team

(Merchandising and Marketing)

Director MiddleEast Director AsiaHead Business Development

China-Country Head

Director Europe

Best Practices(Continued) Tailor product to a country’s needs

Shorter skirts in Greece and longer ones in Turkey

Snugger fitting clothes, French wines in France

Discontinued policy to sell only British-made goods Cheaper to source from India, Pakistan, China and Vietnam

Simplified, focussed and accountable hierarchy

Problems In China Chinese consumers thought that M&S clothing were directed towards 40-50 year olds

Because clothes were expensive & older people were less reluctant to spend money

Stores located in faraway suburbs populated with senior citizens

Have to increase sales in China Shopping market expected to grow from 609 Bn Euors in 2011 - 950 Bn Euors by 2015

Shift towards purchasing of expensive foods coupled with strong economic growth

Pricing Core values of quality, affordability and service Unaffordable to most Chinese consumers (even food was comparatively expensive) Imbalance as in the case of rice and wine

Problems In China(Continued) Unprepared launch in China

Poor paint job, scuffed walls, poor collection, customs problems etc.

Lost on first impression

High power distance & low collectivism This might make them think that western clothes are still aspirational and not actually

affordable

3 stores in 2011-12 were located on the outskirts of Shanghai Was contradictory to their convenient location strategy

Lack of Market Research Low local responsiveness (Sizing mistakes, dull merchandising, outdated,

unfashionable)

Consumers were not educated about M&S products (Chinese crackers mistake)

Other minor problems included no promotional material, western looking mannequins, photos etc.

Basically they didn’t research the Chinese market thoroughly as China has many cultural, behavioural differences as compared to other countries as well as differences within China

itself

Problems In China(Continued)

Solution Branding

Choose local brand ambassadors to improve connect with consumers

Stores should be bright and new collections need to be put on display to attract young to middle-age population

Local specificities Need to design and switch clothes according to local needs

More intensive market research and feedback from customers are needed

Locations Stick to convenient location strategy as it will increase visibility Stores should be larger in size (1500 sq. ft v/s 3500 sq. ft) to show product ranges

Solution Local Employment

Employ more local employees so that they get the sizing and pricing right

Focus groups Understand Chinese consumers better to understand fashion trends, store layouts, food

preferences and tastes etc.

Test markets New strategies should not be universally implemented across China but should be

implemented in regions doing well and with continuous feedback they can tweak products as needed

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