Industry | 2009.11.04
M&S gives shelf space to other brands
• Tradition abandoned to lure Waitrose shoppers
• Supermarket has suffered as customers trade down
Marks & Spencer has declared war on Waitrose, putting top brands on its shelves and cutting prices, in the battle to provide middle England consumers with their entire weekly shop as well as the luxuries and party foods it is famous for.
M&S is abandoning its tradition of stocking only own-brand items in its food halls. Over the coming weeks up to 400 big-name brands, including Kellogg\'s, Nescafé , Coca-Cola and PG Tips will be sold in all its UK food shops.
The radical change is part of a fightback plan after shoppers traded down to other supermarkets. The decision to stock brands follows a year-long trial in a handful of stores in the north-east and is intended to stop M&S shoppers having to go elsewhere for what many shoppers regard as irreplaceable essentials.
M&S chairman Sir Stuart Rose said he personally found it frustrating he could not buy Tabasco sauce, Kit Kat bars and Colman\'s mustard in his own stores. He admitted that M&S versions of the most popular household names could "simply never compete".
The new products, which will be on sale alongside M&S alternatives, will be sold at Tesco prices: "There is no reason why you should expect to pay more for Heinz tomato ketchup in M&S than you do in Tesco," said Rose.
At the same time M&S has embarked on a big advertising campaign comparing its prices to those of Waitrose, designed to prove that it is no more expensive than the John Lewis-owned supermarket chain.
"There is a misconception that we are more expensive, which we are trying to correct," said Rose. He claimed M&S was cheaper on 1,200 lines than Waitrose.
However, Mark Price, managing director of Waitrose, hit back at Rose, saying M&S "does not have 1,200 comparable lines" and claimed Waitrose is 6% cheaper than M&S on the 200 lines that are directly comparable.
M&S food halls, which for many years were seen as offering the highest quality food, have been battered by rivals over the past two years. Sales went into reverse while other supermarkets posted strong growth, even through the worst of the recession. M&S axed the boss of its food division and has slashed prices in a bid to compete.
At the same time Waitrose, which many analysts had thought would be hit hard by the economic downturn, has prospered. It has overtaken M&S, in terms of market share, for the first time this year and recently announced plans for a huge network of 300 convenience stores and a deal to sell Waitrose-branded food in hundreds of branches of Boots. The strategy appears to be a direct challenge to M&S and its smaller Simply Food outlets.
Rose todayunveiled better-than-expected half-year profits of £298m at M&S. He said the recession seemed to have "bottomed out" and that consumer spending had stabilised, partly because shoppers were "fed up with being fed up". But he warned that recovery would be a "long, slow burn".
Further evidence of an improvement in the health of the high street came from rival fashion retailer Next – which said recent sales had been well ahead of expectations – and property firm Liberty International, which operates shopping centres including the Manchester Arndale.
Retailers think the return of VAT to 17.5% in January and rising unemployment will hit growth next year and Rose said he thought VAT might go even higher or be applied to food. "The government has got to make some hard choices to refill the coffers," he said.
M&S also revealed its £10m Christmas advertising campaign, which features celebrities including James Nesbitt, Joanna Lumley, Jennifer Saunders and John Sergeant. They show Stephen Fry extolling the virtues of "a little mince" and Philip Glenister reprising his role as Ashes to Ashes\' Gene Hunt, explaining why he likes "a big juicy bird".
For more information, please visit
http://www.guardian.co.uk/business/2009/nov/04/marks-and-spencer-food
