Marks & Spencer small but nimble in Australian assault

Published 29 January 2014 09:46, Updated 30 January 2014 10:39

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Marks & Spencer small but nimble in Australian assault

One in four Britons wears underwear from Marks & Spencer. Buying your “smalls” from M&S is something that is deeply ingrained in British society and the department store has used its quality offerings of briefs, knickers, lingerie, Y-fronts, bras and boxer shorts to secure a stronghold in this sector of the market at home.

The $13 billion department store retailer has appointed two new directors tasked with the job of finding retail space in Sydney after the corporate entity known as Marks & Spencer (Australia) had been lying dormant for more than six years.

On the company’s own figures, 60 per cent of the adult population in the UK shop at M&S and more than 25 per cent of them have M&S underwear sitting snugly around their bodies as they go about their daily lives.

M&S already is making its presence felt here with M&S online, which offers free shipping to Australian customers who spend more than £30 ($57) on underwear and lingerie. A flagship bricks and mortar store in a smaller 2000-square-metre format in each of Sydney and Melbourne for starters will do wonders in lifting the brand’s profile in this country and enable the brand to substantially increase its web traffic.

Chief executive Marc Bolland has a major focus on turning M&S into a multi-channel retailer around the globe. Currently in the spotlight is India, where he intends to more than double store numbers to 80 within two years.

The accelerated rollout in India, announced in November, is supported by M&S’s sourcing operations in south Asia and India. By setting up small-format stores in Australia, where 80 per cent of the space is dedicated to clothing and fashion and 20 per cent to gourmet food, M&S will have stores about one fifth of the size of Myer and David Jones.

The savings on rent and labour costs are substantial and position the group to maximise investment returns in the clicks and bricks world, without over-committing capital. Myer has a store network of 68 stores around Australia and David Jones has 38.

The CBD stores are the most profitable for the home-grown duo and some in lower socio-economic areas are only marginal. But the big plus is incumbency. Myer and DJs both have the prime sites in Australia’s capital cities and the big challenge for M&S is getting the right locations to capitalise on the solid economic growth that Australia offers.

Read the full story in The Australian Financial Review.