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Online sales now account for 34.4% of M&S clothing and home goods
Ongoing digital transformation sees online sales grow for M&S as pandemic consumer habits continue
Online sales for clothing and home took off in 2021 for Marks & Spencer (M&S), according to its half-year results.
When compared with the 26 weeks to 28 September 2019, M&S found in the half-year to the 2 October 2021 that while overall clothing and home sales were down 1%, online sales for the category were up 60.8%, now accounting for a total of 34.4% of the retailer’s sales of clothing and home goods.
The retailer chose to make comparisons to its pre-Covid half-year results, as the retailer claimed the coronavirus pandemic makes comparison with the same period in the previous year “less meaningful”.
Overall, the past two years has seen online grow as a channel for the retailer, with active online customers increasing to 9.6 million.
Highlighting some of the difficulties all retailers will be facing, Steve Rowe, chief executive of the M&S group, said: “Given the history of M&S, we’ve been clear that we won’t overclaim our progress. Unpacking the numbers isn’t a linear exercise and we’ve called out the Covid bounce back tailwinds, as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year.
“But, thanks to the hard work of our colleagues, it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception. The hard yards of driving long-term change are beginning to be borne out in our performance.”
Part of the reason for strong online growth for clothing at M&S lies in the retailer’s MS2 project, launched earlier in the year to allow customers to purchase a selection of non-M&S brands through M&S.com.
The retailer claimed MS2 has already boosted online growth and customer retention, with the brand noting its acquisition and digital relaunch of fashion brand Jaeger has received “an encouraging early customer response”.
It’s hardly surprising that M&S reported sales in stores were down 17.6% compared with the half-year ending 28 September 2019 – when consumers stayed at home due to lockdowns in the early part of the pandemic, there was a surge on online sales for various market segments as people settled into lives spent predominantly at home.
While food sales grew 10.4% for M&S in the half-year ending 2 October 2021 when compared with 2019, regional differences were apparent as a result of the pandemic, with M&S claiming food sales in retail parks had increased by 23.3%, whereas in city centre stores food sales dropped 18.4%, when compared with two years ago.
But despite poor performance of store sales, M&S reported a profit before tax of £187.3m for the half-year ending 2 October 2021, an improvement on the £87.6m loss in the same period last year.
In relation to its digital transformation, the retailer said it is now moving on from “fixing the basics” into the next phase, and predicted sustained demand due to pandemic “bounce back” and “improved customer perception” of the brand.
But the retailer acknowledged that rising cost pressures will make it more important to work on the group’s productivity plans, store shakeup and technology investment over the next year.
These results are not unusual for the retailer – M&S has been undergoing digital transformation for many years after admitting online remit is behind that of its competitors.
When the firm reported a drop of profits in 2019, the same pattern occurred – revenue for clothing and home dropping whilst website traffic increased and food sales “outperformed the market”.
In its second half of fiscal year 2021 results, M&S said Ocado Retail has opened three more central fulfilment centres, and the retailer plans to reach the ability to fulfil around 700,000 orders a week.
The latter half of 2020 saw M&S and Ocado enter the first week of their online delivery partnership, allowing customers to order M&S food through the Ocado platform as part of a £750m deal which saw M&S take ownership of half of Ocado UK Retail business.
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