Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — Investor Day (October 2021)
77 slides from Marks And Spencer's investor day presentation, Oct 7, 2021
Slide 1: Forging a reshaped M&S
Forging a reshaped M&S MARKS AND SPENCER 7 OCTOBER 2021
Slide 2: Steve Rowe, Chief Executive Officer
FORGING A RESHAPED M&S Steve Rowe CHIEF EXECUTIVE OFFICER
Slide 3: Our Transformation Journey
FORGING A RESHAPED M&S OUR TRANSFORMATION JOURNEY STEP THREE MAKING STEP TWO M&S SPECIAL STEP ONE SHAPING THE FUTURE FIXING THE BASICS
Slide 4: Fixing the Basics: The Transformation So Far
FORGING A RESHAPED M&S FIXING THE BASICS: THE TRANSFORMATION SO FAR 1 Simplified structure and greater accountability 2 Substantial increase in digital and data capability 3 Shifted to trusted value and more contemporary styling in C&H 4 Outperforming in Food and entering growth markets 5 Simplified
Slide 5: The Market Outlook Remains Uncertain
FORGING A RESHAPED M&S THE MARKET OUTLOOK REMAINS UNCERTAIN CONFIDENCE RECOVERING SUPPLY CHAIN COST AND DISRUPTION UK consumer confidence was back to pre-pandemic levels in August 0 -10 -20 -30 -40 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 POSITIVE CHRISTMAS SPEND INTENTIONS THIS YEAR BREXIT Net positive o
Slide 6: A Clear Plan to Shape the Future
FORGING A RESHAPED M&S A CLEAR PLAN TO SHAPE THE FUTURE Food and omni-channel stores Clothing & Home and MS2 Group financial and strategic priorities M&S Sears Solihull
Slide 7: Plan A – Our Journey to Net Zero
FORGING A RESHAPED M&S Rapid carbon reduction NET ZERO NET ZERO ACROSS 2030 ACROSS OUR OWN OPERATIONS BY 2035 2035 ENTIRE VALUE SUPPLY CHAIN BY 2040 2040 Reduced waste Change driven in partnership and emissions with suppliers, partners and customers Zero emissions property Suppliers and business par
Slide 8: This Morning's Agenda
FORGING A RESHAPED M&S THIS MORNING’S AGENDA Welcome Steve Rowe Food and omni-channel stores Stuart Machin Food – creating the magic George Wright and Sharry Cramond Property renewal and rotation Sacha Berendji Food supply chain George Wright Clothing & Home and MS2 Katie Bickerstaffe Clothing & Hom
Slide 9: Stuart Machin
FORGING A RESHAPED M&S Stuart Machin COO – FOOD, OPERATIONS, PROPERTY, STORE DEVELOPMENT, ISLAND OF IRELAND, TECHNOLOGY AND HR
Slide 10: Five Areas of Responsibility
FORGING A RESHAPED M&S FIVE AREAS OF RESPONSIBILITY Store and Central Operations Technology People Island of Ireland Property and Store Development Food
Slide 11: Our Strategy Storefront
FORGING A RESHAPED M&S OUR STRATEGY STOREFRONT
Slide 12: Customer Shopping Behaviour Has Changed
FORGING A RESHAPED M&S CUSTOMER SHOPPING BEHAVIOUR HAS CHANGED M&S sales vs.19/20 15% of baskets Family shoppers Hospitality transactions still down +9.6% £30+ 13% -35%
Slide 13: Strong Headwinds
FORGING A RESHAPED M&S STRONG HEADWINDS Costs of Brexit for Industry Number of UK driver CO2 island of Ireland vacancy rate shortages in industry prices up £27-33m 13% 100,000 ~5x
Slide 14: Protect the Magic: Obsession with product and own label
FORGING A RESHAPED M&S PROTECT THE MAGIC Obsession with product and own label
Slide 15: Protect the Magic: Focused, targeted range
FORGING A RESHAPED M&S PROTECT THE MAGIC Focused, targeted range
Slide 16: Protect the Magic: Careful category management
FORGING A RESHAPED M&S PROTECT THE MAGIC Careful category management
Slide 17: Protect the Magic: Trusted value
FORGING A RESHAPED M&S PROTECT THE MAGIC Trusted value
Slide 18: Protect the Magic: A loved and trusted brand
FORGING A RESHAPED M&S PROTECT THE MAGIC A loved and trusted brand
Slide 19: Protect the Magic
FORGING A RESHAPED M&S PROTECT THE MAGIC Obsession with product and own label Focused, targeted range Careful category management Trusted value A loved and trusted brand 19
Slide 20: George Wright, Commercial Director, Foods
FORGING A RESHAPED M&S George Wright COMMERCIAL DIRECTOR, FOODS
Slide 21: Two Years Ago We Highlighted Our Opportunity
FORGING A RESHAPED M&S TWO YEARS AGO WE HIGHLIGHTED OUR OPPORTUNITY M&S INVESTOR DAY 2019 Growth in Medium and Large baskets Growth with Families Growth in core Fresh and Ambient categories, particularly outside our heartland areas
Slide 22: A Consistent and Rigorous Approach to Tiering
FORGING A RESHAPED M&S A CONSISTENT AND RIGOROUS APPROACH TO TIERING TIER DESCRIPTION OUR RANGE Affordable Luxury – highly premium BEST products, only relevant in Gifting, BWS, Meat & Fish, Deli, Cheese & Dairy Differentiated vs. Good through improved recipe, BETTER ingredients, process, packaging (
Slide 23: Transforming Each Category – Dried Pasta Example
FORGING A RESHAPED M&S TRANSFORMING EACH CATEGORY – DRIED PASTA EXAMPLE THEN NOW • Single grain, durum wheat semolina BEST 500g: £2.50 • Exclusive 4th generation family-owned pasta manufacturer in Italian Alps 4 lines (+4) • Organic and vegan recipe • Exclusive premium durum wheat mix BETTER 500g: £
Slide 24: Transforming Each Category – Dried Pasta Example
FORGING A RESHAPED M&S TRANSFORMING EACH CATEGORY – DRIED PASTA EXAMPLE THEN NOW • Single grain, durum wheat semolina BEST 500g: £2.50 • Exclusive 4th generation family-owned pasta manufacturer in Italian Alps 4 lines (+4) • Organic and vegan recipe • Exclusive premium durum wheat mix BETTER 500g: £
Slide 25: Transforming Each Category – Tiering Examples
FORGING A RESHAPED M&S TRANSFORMING EACH CATEGORY – TIERING EXAMPLES GOOD BETTER BEST Meals for One Classic Wines Single-origin Coffee
Slide 26: Transforming Each Category – Tiering Examples
FORGING A RESHAPED M&S TRANSFORMING EACH CATEGORY – TIERING EXAMPLES GOOD BETTER BEST Meals for One Classic Wines Single-origin Coffee
Slide 27: Transforming Each Category – Seasonal Events
FORGING A RESHAPED M&S TRANSFORMING EACH CATEGORY – SEASONAL EVENTS STRETCHING INTO AFFORDABLE LUXURY FOR RELEVANT CATEGORIES …AND LEADING ON COLLECTION 3.1m 1.2m 0.1m 2019 2020 2021 UNITS
Slide 28: Price and Value Perception
FORGING A RESHAPED M&S PRICE AND VALUE PERCEPTION “WHICH OF THE FOLLOWING SUPERMARKETS DO YOU THINK REPRESENTS GOOD / POOR VALUE?” Net Score (% Good - % Poor). 52 week average 4 2 M&S value perception +8pts vs. 2019 0 -2 Market value perception -4 +3pts vs. 2019 -6 -8 05-19 08-19 12-19 03-20 06-20 1
Slide 29: Promotions Remain Low; Growth from Full Price
FORGING A RESHAPED M&S PROMOTIONS REMAIN LOW; GROWTH FROM FULL PRICE M&S PROMO PARTICIPATION M&S WEEKLY SALES Average monthly % sales £m sales (trend line) In-store promotion 30% 200 picture - salmon 175 25% 150 20% 125 Full price 15% 100 75 10% 50 5% 25 Promo 0% 0 Jan-18 Jan-19 Jan-20 Jan-21 Sep-21
Slide 30: Three Key Levers to Driving Value Perception
FORGING A RESHAPED M&S THREE KEY LEVERS TO DRIVING VALUE PERCEPTION REMARKSABLE VALUE FRESH MARKET SPECIALS DINE IN Great everyday value on A consistent drumbeat of Our occasion-led solution M&S quality products value and freshness for dinner tonight
Slide 31: Great Everyday Value on M&S Quality Products
FORGING A RESHAPED M&S GREAT EVERYDAY VALUE ON M&S QUALITY PRODUCTS Bread Fibre and Vitamin D enriched Milk From RSPCA assured farms Beef 100% traceable to farm Salmon Responsibly source from Scotland Produce M&S Select Farms Bacon Outdoor bred, RSPCA assured Eggs 100% free range, RSPCA assured Past
Slide 32: A Consistent Drumbeat of Value and Freshness
FORGING A RESHAPED M&S A CONSISTENT DRUMBEAT OF VALUE AND FRESHNESS High-quality, seasonal product Great value price points Bold, abundant displays FRUIT VEGETABLES MORE CORE AND +1.4ppt Penetration +0.8ppt Penetration OCCASIONAL SHOPPERS Sources: Internal reporting.
Slide 33: Our Occasion-Led Solution for Dinner Tonight
FORGING A RESHAPED M&S OUR OCCASION-LED SOLUTION FOR DINNER TONIGHT From this... To this... QUALITY AND PROFITABILITY UP DRIVING FOOTFALL OVER 1/3 OF SALES FROM FAMILIES
Slide 34: Category Management & Trusted Value Driving Share
FORGING A RESHAPED M&S CATEGORY MANAGEMENT & TRUSTED VALUE DRIVING SHARE FAMILIES, MEDIUM / LARGE BASKETS FRESH AND AMBIENT AREAS Families 1.9% to 2.2% Bakery 7.0% to 8.1% Small Basket 9.0% to 9.2% Vegetables 5.6% to 6.3% Medium Basket 2.3% to 2.7% Meat 6.6% to 7.3% Large Basket 0.6% to 0.9% Dairy 3
Slide 35: Modernise the Rest
FORGING A RESHAPED M&S MODERNISE THE REST Rotating our estate; closing, replacing, opening and renewing our stores
Slide 36: Modernise the Rest: Embracing a digital world
FORGING A RESHAPED M&S MODERNISE THE REST Embracing a digital world
Slide 37: Modernise the Rest: Modernising our supply chain
FORGING A RESHAPED M&S MODERNISE THE REST Modernising our supply chain
Slide 38: Modernise the Rest: Lowering costs
FORGING A RESHAPED M&S MODERNISE THE REST Lowering costs
Slide 39: Modernise the Rest: One Remarkable Food Team
FORGING A RESHAPED M&S MODERNISE THE REST One Remarkable Food Team
Slide 40: Modernise the Rest
FORGING A RESHAPED M&S MODERNISE THE REST Rotating our estate; closing, replacing, opening and renewing our stores Embracing a digital world Modernising our supply chain Lowering costs One Remarkable Food Team
Slide 41: Both Elements Are Critical
FORGING A RESHAPED M&S BOTH ELEMENTS ARE CRITICAL PROTECTING THE MAGIC & MODERNISING THE REST
Slide 42: Where We Were in 2018
FORGING A RESHAPED M&S WHERE WE WERE IN 2018 CUSTOMER EXPERIENCE Confusing customer experience in stores Room to improve store standards PEOPLE Customer Over index in small store formats Experience Only a dozen shops stock full range Lack of accountability and empowerment No real presenc
Slide 43: Our Transformation - Today
FORGING A RESHAPED M&S OUR TRANSFORMATION - TODAY CUSTOMER EXPERIENCE Engaging new store environment Improving standards – but more to do PEOPLE Customer Focus on bigger new stores Experience Greater full range coverage Empowered, high performing team Online through Ocado and bigger M&S.
Slide 44: Our Strategy Storefront
FORGING A RESHAPED M&S OUR STRATEGY STOREFRONT
Slide 45: Katie Bickerstaffe
FORGING A RESHAPED M&S Katie Bickerstaffe COO – CLOTHING & HOME, INTERNATIONAL, DATA AND SERVICES
Slide 46: We Have a Substantial Customer Opportunity
FORGING A RESHAPED M&S WE HAVE A SUBSTANTIAL CUSTOMER OPPORTUNITY Known C&H Womenswear customer Number of single Online only purchase customers wallet share only business unit shoppers frequency just 12.9m 11% 50% 2.4x
Slide 47: The Past Year Has Accelerated Change
FORGING A RESHAPED M&S THE PAST YEAR HAS ACCELERATED CHANGE STEP CHANGE IN ONLINE PENETRATION Permanent step up in online market % of total market sales Substantial shift to 49% casual dressing 78% 75% 73% 69% Spending more on 51% homes 22% 25% 27% 31% 2016/17 2017/18 2018/19 2019/20 2020/21 Multipl
Slide 48: But Covid Exposed Some Weaknesses
FORGING A RESHAPED M&S BUT COVID EXPOSED SOME WEAKNESSES Customers more Categories weighted Channels weighted Limited operational likely to isolate towards formal towards stores flexibility
Slide 49: There Are Four Key Pillars to Our Strategy
FORGING A RESHAPED M&S THERE ARE FOUR KEY PILLARS TO OUR STRATEGY Building a brilliant Driving online and exploiting Deepening customer product engine omni-channel advantage relationships Sustainable future
Slide 50: We Have Already Made Some Progress on Product
FORGING A RESHAPED M&S WE HAVE ALREADY MADE SOME PROGRESS ON PRODUCT Option count for October down c.28% on 18/19 20,000 14,445 Focused shape of buy 18/19 21/22 Goodmove now a £70m brand 70 53 42 Pivoted to casual 19/20 20/21 21/22 Stock into sale down 36% since 18/19 Reduced promotion and 1000 mark
Slide 51: Resulting in Improving Customer Perceptions
FORGING A RESHAPED M&S RESULTING IN IMPROVING CUSTOMER PERCEPTIONS Customer value perception has increased over the past 3 years to be #1 in the market 40 M&S 35 #2 in market 30 Average of 7 25 other competitors 20 Dec ‘17 Dec ‘18 Dec ‘19 Dec ‘20 Aug ‘21 % of positive responses from sample size of c
Slide 52: We've Made Improvements to Our Proposition
FORGING A RESHAPED M&S WE’VE MADE IMPROVEMENTS TO OUR PROPOSITION Customer data engine Launched and Doubled peak capacity and Sparks relaunch grown 3P brands for online growth 12.9m Members £115 Basket Size 570k Singles
Slide 53: So We Are Going Faster to Reshape Clothing & Home
FORGING A RESHAPED M&S SO WE ARE GOING FASTER TO RESHAPE CLOTHING & HOME A brilliant C&H product engine Leveraging Sparks customer data Driving growth online Expanding International presence
Slide 54: Richard Price
FORGING A RESHAPED M&S Richard Price MANAGING DIRECTOR, CLOTHING & HOME
Slide 55: Building a Brilliant Product Engine
FORGING A RESHAPED M&S BUILDING A BRILLIANT PRODUCT ENGINE The changing shape of the market What M&S is doing to win How we are going to win consistently
Slide 56: Some of the Challenges Are Not New
FORGING A RESHAPED M&S SOME OF THE CHALLENGES ARE NOT NEW CUSTOMER SPEND STATIC EVEN BEFORE COVID £ annual spend, constant 2020 prices Average spend flat and 787 778 777 758 wardrobes increasingly full 581 FY17 FY18 FY19 FY20 FY21 Shift to casual dressing ONLINE SPENDING LESS FREQUENT FY20 Average O
Slide 57: Existing Strengths and Weaknesses Amplified
FORGING A RESHAPED M&S EXISTING STRENGTHS AND WEAKNESSES AMPLIFIED GROWTH DEPARTMENTS FY21 YoY Growth (%) Women's Activewear 29% Kid's Nightwear 24% Men's Activewear 17% Women's Sleepwear 11% Boy's Essentials 5% Women's Sports Footwear 5% Men's Nightwear 5% DECLINING DEPARTMENTS FY21 YoY Growth (%)
Slide 58: Substantial Opportunities for Growth
FORGING A RESHAPED M&S SUBSTANTIAL OPPORTUNITIES FOR GROWTH % OF MARKET SPEND BY ‘LOOK’ (£%) Families spend more than average 22% 22% 23% 36% 40% Strong shift towards casual 40% 40% 41% 37% 35% Clear opportunity in home 37% 37% 35% 23% 16% FY17 FY18 FY19 FY20 FY21 Competitors leaving the Sporty Casu
Slide 59: Clear Sales Potential Across Categories
FORGING A RESHAPED M&S CLEAR SALES POTENTIAL ACROSS CATEGORIES WOMENSWEAR KIDSWEAR HOME 4m lingerie customers do not shop 6m shoppers buy kidswear elsewhere 22m M&S customers do not shop
Slide 60: Clear Sales Potential Across Categories
FORGING A RESHAPED M&S CLEAR SALES POTENTIAL ACROSS CATEGORIES WOMENSWEAR KIDSWEAR HOME 4m lingerie customers do not shop 6m shoppers buy kidswear elsewhere 22m M&S customers do not shop
Slide 61: We Are Targeting the Largest Part of the Market
FORGING A RESHAPED M&S WE ARE TARGETING THE LARGEST PART OF THE MARKET Comfort First Modern Fashion Forward Mainstream Customers who do not Customers most concerned follow the latest fashion with staying up-to-date trends and prioritise with latest trends comfort over style Quality, style & value se
Slide 62: What Our Customers Tell Us
FORGING A RESHAPED M&S WHAT OUR CUSTOMERS TELL US Highest purchase consideration Lacks inspiration Highest rated for quality Too formal Improvement in value for money Poor availability
Slide 63: We've Made Some Progress
FORGING A RESHAPED M&S WE’VE MADE SOME PROGRESS MADE THE FOCUSED ON REIMAGINED AND IMPROVED FULL PRICE BIG BIGGER HERO PRODUCT RELAUNCHED CASUAL SELL THROUGH 44% in top 100 lines Schoolwear market Strong growth in activewear Less stock into sale vs. 32% 2 years ago share now over 24% and kids daywea
Slide 64: And Are Now Focused on Winning Consistently
FORGING A RESHAPED M&S AND ARE NOW FOCUSED ON WINNING CONSISTENTLY WORLD CLASS DESIGN FLEXIBLE OPTIMISED SHOWCASING AND SELECTION SOURCING PLANNING PRODUCT Never the Same Again Academy Reducing lead times Channel specific forecasts Store rotation Test and repeat Introducing ‘speed lane’ Never out of
Slide 65: Showcasing Product to Best Effect: The Edit
FORGING A RESHAPED M&S SHOWCASING PRODUCT TO BEST EFFECT: THE EDIT
Slide 66: What Does a World Class Product Engine Look Like?
FORGING A RESHAPED M&S WHAT DOES A WORLD CLASS PRODUCT ENGINE LOOK LIKE? Strategic pre-season planning and increased availability More open to buy to back growth A speed lane for popular lines aligned with sourcing Never out of stock on brilliant basics Full-price sell through up to 90%
Slide 67: Katie Bickerstaffe
FORGING A RESHAPED M&S Katie Bickerstaffe COO – CLOTHING & HOME, INTERNATIONAL, DATA AND SERVICES
Slide 68: MS2: M&S.com at the Centre of What We Do
FORGING A RESHAPED M&S MS2: M&S.COM AT THE CENTRE OF WHAT WE DO MS2 Digitally led Commercial Trading & Retail operations Operations Customer Supply chain & logistics first M&S.com Customer Experience Speed Digital Product / Marketing Technology Finance Data driven
Slide 69: The Opportunity
FORGING A RESHAPED M&S THE OPPORTUNITY Food and Clothing customers Compared to those Number of cross-channel using Sparks, online, Bank and shopping only in store, dual customers shopping the app spend 10x as much channel customers spend 4 or more business units £1400 p.a. 2x as much 61%
Slide 70: Our MS2 Programme
FORGING A RESHAPED M&S OUR MS2 PROGRAMME BEST OFFER BRILLIANT SELLING FAMOUS SERVICE Engage and excite our customers via Attract, retain and drive frequency Deliver trusted, easy, fast and friendly our products, giving them reasons to through data driven curated experiences service solutions at unbe
Slide 71: MS2: Relevant, Authoritative Offer
FORGING A RESHAPED M&S MS2 Relevant, authoritative offer Maximising availability Compelling gifting BEST OFFER Engage and excite our customers via our products, giving them reasons to visit and shop more often Broadening our reach through brands
Slide 72: MS2: Mobile-led Omni-channel Experience
FORGING A RESHAPED M&S MS2 Mobile-led omni-channel experience Make it easier to shop BRILLIANT SELLING Attract, retain and drive frequency Personalisation and lifetime value through data driven curated experiences that inspire, engage and reassure
Slide 73: MS2: Leading Click and Collect
FORGING A RESHAPED M&S MS2 Leading click and collect Superb delivery FAMOUS SERVICE Deliver trusted, easy, fast and friendly Frictionless returns and support service solutions at unbeatable value
Slide 74: Our Strategy
FORGING A RESHAPED M&S OUR STRATEGY Building a brilliant Driving online and exploiting Deepening customer product engine omni-channel advantage relationships Sustainable future
Slide 75: Eoin Tonge, Chief Finance Officer
FORGING A RESHAPED M&S Eoin Tonge CHIEF FINANCE OFFICER M&S Hedge End
Slide 76: Strategic Priorities
FORGING A RESHAPED M&S STRATEGIC PRIORITIES RIGHT NOW ENABLING GROWTH TODAY AND TOMORROW FUTURE M&S Core focus of growth plans Efficiently investing in capacity and capability Long term change and innovation PLAN A Target scope 3 carbon net zero by 2040 OCADO RETAIL FOOD AND C&H PROPOSITION FOOD AND
Slide 77: Our Financial Principles
FORGING A RESHAPED M&S OUR FINANCIAL PRINCIPLES Unswerving focus on cash Transparency of reporting Return to sustainable profitable growth c Robust balance sheet v
Marks and Spencer Group — Investor Day (October 2021) on 6ix