Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Essential Retail Magazine, you agree to our use of cookies.

Okay, I understand Learn more

M&S's online sales drop 8.1% in Q1: what the analysts say

Food and fashion retailer Marks & Spencer (M&S) has reported an 8.1% year-on-year decline in online sales for the 13 weeks to 28 June 2014, despite the launch of its new website in the spring.

In its quarterly statement, released on Tuesday, the retailer said the site's "settling in" period had negatively impacted general merchandise (GM) sales, but improvements are expected over the coming months, in the build-up to the peak Christmas period.

M&S launched its new website in February, working with Tata Consultancy Services and Sapient Nitro to bring a magazine-led site to market and replace the Amazon platform it had been operating since launching online in 2007. The investment in eCommerce comes at a time when M&S is battling to turn around its declining GM sales and replicate the success it is achieving with its growing food offering.

During the first quarter, GM sales dropped down 1.5% but food sales jumped up 1.7%, on a like-for-like basis. Like-for-like clothing sales declines slowed to -0.6% during the three-month period, with group sales up 2.3% overall.

In the trading summary, M&S said it was making progress with improving its womenswear and added that the company is "now focused on optimising the website commercially, with updates made on a regular basis".

"We have recently seen a gradual improvement in sales performance, despite a lower level of promotional activity," the business remarked.

Essential Retail has gathered together a selection of opinions from UK retail industry commentators, who have given their views on the Q1 trading figures, and in particular the online sales slump.

Neil Saunders, managing director at retail research group Conlumino, said: "While Marks & Spencer was right to invest in this channel [online], we believe that the present site is a literal victory of style over practicality.

"It succeeds in showcasing ranges and presenting outfit ideas; but in falls down in the more critical function of making it easy for customers to purchase. Indeed, there are some parts of the site where it is extremely difficult for customers to understand the path they need to take to buy product. After the significant investments made a result of very negative sales over the past three months is highly disappointing, especially since this part of the market is witnessing growth in double digits."

Nick Hood, business risk analyst at financial health monitoring specialists Company Watch, told Essential Retail: "On clothing, management needs to concentrate more on re-connecting with existing customers and worry less about wooing a new demographic, which is already better served by nimbler competitors. This has nothing to do with technology, it's a positioning issue.

"In-store service doesn’t just have to be better, it must be seen to improve.  Social media is constantly awash with negative comment and the company's response is inadequate. The service may well be just as good as it always has been; unfortunately the contrary public perception is more powerful than any statistics or reassurances can ever be and needs tackling head on with smarter social media engagement. 

"The new website launch has been unfortunate, though not a total disaster yet.  The site looked fussy with far too many poorly-differentiated generic brands, allied to stock availability issues and navigation complexities; absolutely basic errors in a fashion world with some great examples of how to do these things well. Management doesn't have long to get this right, with Christmas very close in remedial action plan terms.

"The prospects for the next 12 months look muted at best; the food offering cannot be immune from the general supermarket malaise, while the vague hints of improvements in womenswear won’t compensate for a menswear performance still heading in the wrong direction and lacklustre non-clothing general merchandise. As always, much will depend on a decent festive season, so management needs to make sure it isn’t too distracted by technology issues to deliver it."

Jonathan De Mello, director, head of retail consultancy at Harper Dennis Hobbs, told Essential Retail: "The major issue is that customers had to re-register for the new site. They had six million customers and they all had to re-register on the site, which was a hassle for the company and a number of customers have complained about it.

"The internet is becoming increasingly important for John Lewis, Debenhams and House of Fraser, and obviously M&S, it's going to be the driving force to future sales and transactions in-store, because you're going to get blurring of boundaries through services such as click & collect.

"It's a great site overall, but it's a question of whether M&S can win back the shoppers it lost from the transition. That's the challenge for them, but I think they'll be successful.

"My view is there are too many lines and they need to streamline the brands they have – and from that they need to think about what H&M and Topshop are doing in terms of celebrity endorsements. Such a strategy refreshes the range and brings people in who wouldn't usually shop in the store. It creates interest and they can create marketing around it, so they need to think strongly about this to customers back to M&S again."

What do you think? We are keen to hear the industry's views on the M&S multichannel strategy and the retailer's new web platform. Please feel free to comment below or share your comments on Twitter @EssRetail.

What’s Hot on Essential Retail?