Marks & Spencer is cutting the price of about 10% of its food products and targeting promotions more carefully as part of its plan to combat the tough economic climate.
After revealing this morning that profits were down by 34%, M&S chairman Sir Stuart Rose said that improving its performance in food was a key plank in its survival plan.
He said: “The economic environment has changed dramatically and we are now facing the most difficult retail conditions since the early 90s.
“We remain confident in our long-term growth prospects: to drive our brand in the UK and improve the quality of our trading space; to grow M&S Direct; and to develop our international business.
“We must also respond to the current climate and changing needs of our customers. Accordingly, our priorities for the remainder of this year and next place a greater emphasis on managing our business through the current downturn and underpinning our strong financial position to ensure that we come out of it in the best possible shape.”
On food, he said: “Market conditions and increased competition through aggressive pricing, along with some key operational issues, impacted on our performance during the half.”
A focus on value was top of the list of measures designed to improve food performance.
Said Rose: “In the current market customers are increasingly concerned about value and we know that we have to respond accordingly. During the half, we realigned prices on around 530 products comprising over 10% of our total food catalogue.
“These products are mainly Key Value Indicators which customers buy across the market and where we have less obvious ability to differentiate.
“These products are being marketed as ‘Wise Buys’. Quality has been maintained. This investment has made us more competitive and customers are starting to respond positively.”
There was also an increased focus on “fewer, larger, more targeted” promotions such as its “Dine in for £10″ and “weekend specials” deals.
Rose said these were “starting to drive footfall and encourage renewed interest from our more occasional customer.”
Availability issues were also being addressed, he added: “We are working hard to improve availability across our food store base. We have focused on improving availability of key lines in our Top 100 stores.
“Sell-through in these stores is starting to improve and waste reduced. Our significant investment in supply chain systems is an important enabler to drive better availability over time.”
Costs would also be managed tightly.
