M&S has turned a corner – the tough decisions are paying off

Near where I live, there are two Marks & Spencer food halls and two Waitroses.

The M&S branches are well laid out, clean, brightly lit, usually fully stocked. Everything appears as it should be. The Waitrose outlets, by contrast, seem something of a mess – not terrible but enough such that you notice. Counters appear in odd places, packaging sometimes lies around, there are empty shelves.

It’s not scientific, but it says something. Gordon Ramsay always does two things on his Kitchen Nightmares TV show: he inspects the kitchen and shortens the menu. The first is a sign of discipline and pride; the second signifies the ability of the chef to deliver consistent high quality.

This is similar. Right now, Waitrose, to my untutored eye, lacks rigour. It carries all sorts of products, but some appear gimmicky, designed to create a stir rather than make money and be bought en masse. But there is little point in stocking Heston Blumenthal’s clever desserts if you can’t get the basics right.

A bit further afield from my house there is the cathedral that is the John Lewis store. It sells pretty much everything but not enough people are buying; it’s eerily empty and cavernous.

So, that Retail Week is predicting that M&S will overtake the John Lewis Partnership, which also owns Waitrose, in sales by the end of this year, comes as no surprise. The former gives the distinct impression of being smartly managed and on the up; the latter, of having lost direction and momentum. Retail is detail and on evidence, the folks at Waitrose aren’t paying enough attention to those finer points.

There’s no doubt that after decades in the doldrums M&S has turned a corner. Tough decisions by management regarding store closures are paying dividends. They deserve special medals for this – every time an M&S store announces it is shutting down, all hell erupts. The local press, MP, council, unions, other retailers who count on M&S drawing in their customers as well – they all chime in. It is regarded as a betrayal, a vote of no confidence in that location.

Yet, M&S sticks to its task. At the same time, it’s transformed clothing, streamlining its own labels and bringing in outside brands that work well – something that was always regarded as anathema by previous regimes who remained glued to in-house only and nothing external.

Online has also caught up. For too long, M&S was behind the curve regarding digital sales, preferring to believe that bricks and mortar would somehow prevail and continue to appeal. Rivals invested in smart technology; M&S stood still. That’s all changed.

It can’t be a coincidence that Ocado, the specialist in supplying internet groceries, has switched from partnering Waitrose to M&S. Waitrose’s loss is most definitely M&S’s gain.

On pricing as well, M&S is displaying clever thinking, showing that this retailer knows its customer. The “Dine In” offers of midweek, gastropub-type meals have gone down a storm. They’re cheaper than eating out and offer excellent quality.

Often criticised for being too upmarket, M&S is showing that where its middle-class clientele, many of whom are struggling with rising household bills, are concerned, it understands.

This, and more, is responsible for driving M&S forward. Waitrose and the John Lewis mothership, by comparison, lack the same impetus.

Waitrose, in my view, has never been the same since its chief, Mark Price, aka the Chubby Grocer, departed in 2016. Now Lord Price, he served as a trade minister in the David Cameron and Theresa May governments.

Not everything Price did was positive; some of his innovations failed to take off. Possibly, he expanded Waitrose too much and too rapidly, and he opened too many stores, but he was a whirlwind of ideas, who brought energy and purpose to the supermarket. Under his leadership, the chain oozed confidence and gained an identity that is currently absent.

The choice of Cameron to have Price join his administration was deliberate. There was a period when Cameron was in power and the talk was of “Big Society”, when Downing Street could not get enough of John Lewis and its senior management. Ministers used to cite the group as the exemplar of business, as capitalism at its purest and finest.

They were referring not only to the performance of the department stores and food supermarkets but also to its ownership model. John Lewis was, and is, a mutual. It is, as it says, a partnership.

While others were embroiled in rows about executive bonuses and share options and the bosses being paid vast sums in relation to the rest of the workforce, John Lewis sailed on, impervious. Its employees all shared in the business. They had a say in how it was run. Compared with them, John Lewis was the happiest of ships.

Significantly, I cannot remember the last occasion John Lewis was referenced favourably by a politician and in the media as something to aspire towards. Now what you hear, if anything, are gripes about products being out of stock, long waiting times and shoddy online service versus how it used to be.

At the same time, department stores stocking electrical equipment and all manner of kitchen and household tools and devices are out of kilter with the times and audience. Many of these are one-off or at least long-lasting purchases – and therefore put on hold when the family purse is suffering. They’re also best bought these days online. Who wants to lug a steam iron and ironing board home, when they can be delivered to your door?

Dame Sharon White, who took charge in 2019, has said John Lewis must “adapt or die”. That entails taking the group into other areas, such as financial services. Into areas that John Lewis, a retailer, knows little about.

What her strategy does not involve, not on a great scale anyway, is tightening and strengthening the core business by discarding underperforming stores. Sixteen sites went during the pandemic, but John Lewis currently still has 332 supermarkets and 34 department stores. Yet, instead of wielding the axe, the group is diverting. It’s also moving into property rental - rather than close a department store, it is going to divide up the space for rent. Again, being a commercial landlord is not something in which John Lewis is an expert.

The John Lewis strategy smacks of awkward conversations and of decisions being avoided – perhaps because in a mutual they’re more painful.

M&S is in the ascendant. Perhaps there is also a lesson here, for government, especially this one, which is focus and execute. Have a clear vision of where you’re going and go there.