14th Jul 11
M&S boosted by premium goods demand
by Paul Russell
Lighting up the gloom: M&S doing well as shoppers purchase premium products
Lighting up the gloom: M&S doing well as shoppers purchase premium products
Marks & Spencer announced a rise in sales as customers trade up to premium food and clothes in spite of the squeeze on Britain’s high street.
The retail giant’s like-for-like sales climbed 1.7 per cent over the 13 weeks leading up to 2 July, a rise of 0.1 per cent from the previous quarter. Mark Bolland, the company’s chief executive, said the retailer had taken advantage of a consumer trend to “buy once, buy well”, resulting in a positive response to premium ranges like body shaping swimwear and Italian meats.
M&S, which boasts 703 stores across the UK, has increased its share of both the clothing and food markets to 11.7 per cent and 3.8 per cent respectively, revealed industry figures. The rising demand for quality and increasing costs resulted in average selling prices going up by seven per cent, in comparison with six per cent during the previous quarter.
The tightening of consumer spending power has pushed retailers including Jane Norman, Habitat and TJ Hughes into administration over recent months, while others, including Thorntons, Comet and Mothercare, have announced store closures.
However, Mr Bolland described M&S as one of the high street’s anchors and said it would keep investing in its stores. The company’s sales figures were partly boosted by an early start to its summer sales as a reaction to rivals’ activity. The second part of the retailer’s sale is being launched today. The better-than-anticipated sales results arrived as Mr Bolland got ready to face shareholders regarding executive pay, which one lobby group described as excessive.
General merchandise sales remained flat, in comparison with a decline of 3.4 per cent in the previous quarter; however, volumes were marginally down reflecting difficult market conditions as nervous consumers put off all but essential purchases.
Among the best-selling lines was an Autograph suit which was modeled by Sky TV football pundit Jamie Redknapp and maxi dresses priced at £49.50. But sharply priced basic ranges were also popular, said Mr Bolland, revealing that 500,000 Brazilian-cut knickers had also been purchased, a 64 per cent increase on a year earlier, after being offered on a deal of three-for £10.
Food sales increased by 3.3 per cent after being helped by the royal wedding and Easter bank holidays when consumers purchased more party food. Around 500 new ranges have also been introduced over the period, including an Italian deli range, new healthy eating products and antipasti. The group’s ‘dine in for £10 for two’ meal deals also were a continued success as consumers opted to eat out less.
However, shares declined two per cent after the update when the company said that high street conditions would remain challenging as a result of pressure on the disposable incomes of consumers.
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