News & Insight

There's a future for M&S stores, if they don't look like M&S stores

Christian Nellemann

Several major retailers announcing profit warnings or store closures.

It’s been announced that M&S plans to close 100 stores by 2022. The retailer is also edging closer to relegation from the FTSE 100. This news comes in the wake of several other major retailers announcing profit warnings or store closures, including household names like House of Fraser and New Look.

M&S’ plans are, at least on the surface, forward-thinking. They’ve recognised that sales are moving online, so want to cut out retail space that’s underperforming. But in reality, as its senior leaders well know, these closures are a warning, loud and clear, that the retailer is struggling – just as many of the UK’s oldest and most treasured brands are.

However, other retailers are fighting back, and showing that physical stores do have a place in retail’s future.

UK leading the shift to online buying

The UK leads the way in online retail, selling more online as a percentage of total sales than any other country in the world. Plus, it’s widely agreed that the vast majority of retail spending, on or offline, is now influenced by a multitude of digital interactions. Online isn’t king yet, but it will be soon.

But despite having the most digitally-hungry buyers on the planet, many of our biggest retailers haven’t changed the way their stores operate. Meanwhile, the few that have are reaping the benefits.

Take Game, a video games retailer that went into administration in 2012 but is now growing again. How? By completely rethinking their store in light of online challenges. Game now focuses on its stores as places to play video games – running competitions and pay-to-play sessions. They are selling more games – and have added a new revenue stream. Win-win.

Meanwhile Burberry, recognising that its customers were digital early adopters, started making drastic changes to its stores as far back as 2009. They invested heavily in ecommerce; were one of the first luxury brands to use Facebook; built an app for sales staff that recorded customer purchase history to personalise experience; and use RFID chips in certain products that trigger bespoke digital content.

It’s this sort of innovation and customer understanding that’s lacking at M&S.

Rethinking the store in the digital age

As far as M&S is concerned, there is inspiration to be found far closer to home, too. John Lewis, famed for its traditional values, is in fact setting an example for future-focused retail. Head to a John Lewis department store, and you’ll find some truly innovative departments. Its ‘connected home’ installation gives customers the chance to use and experience a range of smart devices, first-hand. It’s more like visiting the Science Museum than an old British shop.

Elsewhere, you might find its ‘residence’ – a changing space that was most recently a fully equipped apartment, stuffed with beautiful furniture, in which customers can book to dine, relax or even sleep in. At its flagship in London, it’s opening a roof garden. Not to sell products or promote deals; simply to give its customers somewhere beautiful to spend time.

Why is it doing all this? Because John Lewis is now doing 40% of its business online – compared to 10-15% for many of its rivals. And that percentage is growing every year. So stores have to offer richer experiences than online can, or more convenient ones; slow, or fast.

That’s why John Lewis has also opened a micro store in St. Pancras station. With high street footfall plummeting, they’ve responded in a simple but ingenious way: go where the customers are. 15,000 people pass every day, and all can now enjoy John Lewis’ ‘click and commute’ service.

Nothing inevitable about offline decline

Business isn’t exactly booming at John Lewis. But importantly, John Lewis isn’t standing still and lamenting the enormous changes that are happening.

I’ve said it before and I’ll say it again – retailers have to adapt, and fast. Sure, poor weather doesn’t help. Lower consumer spending habits are a factor. Amazon’s shadow is never far away. But it’s too easy to just blame these reasons for an inevitable and unstoppable decline.

There is hope for bricks and mortar in retail. And there is hope for traditional retailers. What is happening to M&S isn’t inevitable – and there are plenty of retailers around to prove that.


Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for Follow him on Twitter @christianxln