M&S changing layout of stores to make shopping trips easier

The UK’s biggest clothing retailer said the new formats will sell products which suit the demographics of the area, reflecting the age and affluence of shoppers, as well as the region and its ethnic strengths.

The tests are part of M&S chief executive Marc Bolland’s plan for growth.

“Customers have told us that our stores are not always easy to shop,” said Mr Bolland, adding that the firm’s last store modernisation, under his predecessor Stuart Rose, had not delivered the “inspirational shopping environment” he desired.

He said the tests, part of a plan announced in November to deliver additional UK sales of £1bn to £1.5bn over three years, will start in October.

“We’re not here doing rocket science, we’re doing best practice good retailing,” he said, noting that he successfully carried out a similar segmentation exercise at Bradford-based Morrisons before he joined M&S a year ago with a £15m pay deal.

“If we are in an area that is kid-rich and is highly affluent, then that store will get more space for the kidswear department,” said Mr Bolland.

Such an area would also stock more of the higher-priced Autograph and Indigo clothing ranges to appeal to the wealthy mothers buying the kids’ clothing.

M&S said it was too early to say where the test stores will be or how many it will convert.

The stores will also have improved layout and signs and will better showcase M&S’s sub-brands.

“We’re also going to give more life to the sub-brands and make it easier for people to find what they like,” said Mr Bolland.

M&S said it made a good start to the new financial year, but expects trading conditions in the year ahead to be challenging.

“It’s going to be a difficult year on the consumer side, but consumers know that. They know it’s going to be a year of more choices,” said Mr Bolland.

“They are buying into quality, they are buying into smaller-ticket items instead of bigger-ticket items, and they are buying into treats,” he said.

The 127-year-old group made a profit before tax and one-off items of £714m in the year ended April 2, up 13 per cent on last year and ahead of forecasts, helped by market share gains in both clothing and food.

New products such as stormproof suits, a Nearly Naked lingerie range and French-inspired Bistro ready meals helped to drive sales.

Revenues rose 4.2 per cent to £9.3bn and the dividend was raised 13.3 per cent to 17p a share.

Analysts at Espirito Santo said: “There is a feeling that a lot of work has been going on behind the scenes which will not be visible until later in the year.”

They said the revamped stores and improved presentation of sub-brands would address a key criticism from M&S customers.

M&S, which saw profits plunge from £1bn at the start of the economic downturn, has been outperforming rivals recently, helped by its focus on older and more affluent customers.

Investors have also welcomed Mr Bolland’s plan to revamp the UK stores, expand online and overseas, and improve logistics and marketing, all of which have seen him make a string of high-profile management appointments.

Mr Bolland said surging cotton prices have had less of an impact on M&S than its rivals, many of which sell cheaper goods where raw materials make up a larger proportion of the price.

Finance director Alan Stewart played down suggestions that M&S might be interested in the auction for grocer Iceland Foods, which is understood to have attracted the attention of Morrisons.

“I think the fit with Iceland and M&S is one which most people would struggle to perceive as a good fit,” said Mr Stewart.

Helped by an advertising campaign featuring former X-Factor judge Dannii Minogue and retired footballer Jamie Redknapp, M&S has had a resilient performance over the year in the face of uncertainty in the high street.

After strong trading over the past few months the shares closed down 11.4p at 385.6p.

Seymour Pierce analyst Freddie George said: “We suspect the stock will now see a period of consolidation after an almost 15 per cent rise in the share price over the last quarter.”

M&S said industry figures showed it had increased its share of the clothing market by 0.5 per cent to 11.7 per cent and its share of the food market by 0.1 per cent to 3.9 per cent over the year.